New evidence of the reality of the Britain's faltering economic recovery emerged today, in a survey which shows that digital and design agencies are increasingly being asked to work for free. The Design Industry Voices survey, conducted by conducted by Fairley & Associates, Gabriele Skelton and On Pointe Marketing, is now in its third year and shows how small firms have suffered following the financial crisis, during the recession and the long, slow recovery.
The new survey - of almost 500 agency staff - paints a picture of the squeeze being experienced by small firms in the private sector as public sector budget cuts begin to bite and economic confidence fails to recover.
- More than eight out of ten (85%) say that clients expect more work for less money
- More than seven out of ten (71%) say clients expect more work in pitches for free
- More than eight out of ten (82%) say client budgets have been reduced
- More than half say agencies are employing fewer permanent staff (58%), using more freelancers (55%) and more than two fifths are using more unpaid interns (43%).
"Digital and design agencies appear to be running on empty," said Rachel Fairley, MD of Fairley & Associates. "Clients expect more work for less money to make up for budget cuts. Staff have disengaged; they are overworked, undervalued, and fed up of poor leadership. More of them than ever intend to change job within twelve months (58%), with far reaching consequences in this uncertain economic climate."
The latest UK unemployment figures show that employment growth in the private sector is being far out stripped by job losses in the public sector. Private sector jobs have only risen by 5,000 but public sector jobs lost for the same period are 67,000. Overall, UK unemployment is at its highest level since 1994, at 2.64 million.
Design Industry Voices also shows that agencies are experiencing more staff turnover than ever, since the recession began in 2008:
- More than half (58%) of staff intend to change job in the next twelve months
- More than a third (35%) have been with their agency less than a year.
"For agencies, a high staff turn-over means extra costs," commented Karina Beasley, MD of Gabriele Skelton. "Finding and recruiting new staff, then inducting them and getting them up to speed to take over accounts all adds to costs and eats into margins. In the current jobs market, agencies that advertise are being swamped with applications meaning that short-listing takes far longer than it used to and candidates rarely get feedback and often do not even have their applications acknowledged."
People working in digital and design agencies say they are feeling the brunt of the long, slow recovery. Fewer than one in five respondents consider that their agency is performing 'very well' in respect of 'helps employees to manage stress' (12%), 'rewards people for going the extra mile' (15%) and provides 'appropriate workload for staffing levels' (15%).
"Clients are increasingly nervous that the 'A' team pitched, but an unstable 'B' team are delivering," stated Stef Brown, MD of On Pointe Marketing. "And feeling like you aren't on the 'A' team is demotivating, giving employees another reason to consider leaving. Not only this, but producing creative work for free during pitches means agencies are giving away their most valuable commodity: their intellectual property. I can't think of any other professional services business where this is tolerated, or even considered an option."