Life for self-employed people and small businesses in Spain has become increasingly difficult in the last few years, and new data from the main freelance workers’ association has revealed just how much, and just how pessimistic many are about their prospects in the future.

Self-employed workers (autónomos) have been affected by a perfect (or imperfect) storm of conditions: first the pandemic kneecapping job prospects and income, then inflation pushing up their living costs and business expenses, and then the combination of hiked social security contributions and tax threshold reforms.

READ ALSO: Self-employed in Spain – What you should know about being ‘autónomo’

But figures released by the National Federation of Autonomous Workers’ Associations (ATA), have released just how bad the situation has gotten for some self-employed people.

Four out of five self-employed workers in Spain believe that their business is in the same position or worse off than a year ago, in large part due to an increase in expenses. Overall, self-employed people are recovering work they might’ve lost during the pandemic, but this is being offset by inflationary pressures on their businesses. 

“There is more activity in 2023, but the self-employed at the end of the month earn the same or less than in 2022,” Lorenzo Amor, president of ATA, said during the presentation of the survey.

Freelance pessimism 

Only 20.8 percent of the self-employed surveyed say that their business has grown in the last year, compared to 45.6 percent who estimate that the situation has remained the same and 33.6 percent who feel it has worsened.

Prospects for the coming month are not positive for many autónomos, either: only one in five freelancers expect their business to grow in the remainder of 2023, compared to 37.8 percent who believe it will remain the same and 32 percent who think it will decrease.

READ ALSO: Self-employed in Spain – The many ways to save money on your income tax return

This pessimism has been reflected in freelance salaries in Spain. Three out of four self-employed people say that their income has stayed the same (38 percent) or decreased (38.1 percent) compared to March 2022. Among those whose incomes have fallen, in most cases, the fall has ranged between 10 percent and 15 percent.

Rising costs

According to the ATA survey, 85.3 percent of respondents say that their expenses have increased compared to 2022. Almost forty percent (39.4 percent) estimate that the increases have been somewhere between 10 percent and 20 percent, although for one in four, the increase has almost reached a third (30 percent).

ATA officials emphasise that the spike in expenses, particularly the cost of electricity and fuel, has meant that for many self-employed and small businesses, their expenses are now more than their income altogether. “600,000 open their business every day knowing that they will have more expenses than income,” Amor says.

Not only rising expenses, but for many self-employed in Spain following changes at the start of 2023 they now have to pay more for their monthly social security contributions, already some of the highest rates in Europe. According to the ATA survey, 90 percent of respondents feel their tax burden has increased in the last three years.

READ ALSO: Will you pay more under Spain’s new social security rates for self-employed?

Yet following the changes to the Special Regime for Self-Employed Workers (RETA), only 12.5 percent of self-employed workers have sent their income forecasts to Social Security, something that would allow them to more easily adapt their contributions to their real income, despite the fact that around half of respondents who had done so managed to decrease their monthly quota. “The vast majority of the self-employed have not changed their contribution base,” Amor said, who has attributed the low percentage to the difficulty of making income forecasts in such uncertain times.

What is perhaps even more surprising is that among the self-employed who have not yet sent in their forecast, only 13.2 percent plan to do so. The new system allows the self-employed up to six changes in contribution bases, depending on their income forecasts.

Upping rates

A common response to struggling freelancers is to tell them to increase their rates. Though data from the ATA barometer for May 2022 showed that well over half (57.3 percent) upped the prices of their products and services in 2022, this is not something possible for all self-employed people.

READ ALSO: Why you should be raising your rates if you’re self-employed in Spain

For freelancers just starting out in their careers, trying to build up a regular client base, often it is a case of taking any work you can get, especially so when one considers the multi-faceted cost of living crisis putting pressure on people to find work.

For more established freelancers with long-term clients, many may worry about upping their prices by too much and causing clients to look elsewhere, wary that their clients likely also have increased expenses to deal with and not wanting to damage a long-standing working relationship.

All this while more and more of the little income freelancers do have goes on increased social security contributions and skyrocketing prices. Autónomos in Spain are, you might say, stuck between a rock and hard place – as the ATA survey data clearly shows.