Digital and design agencies ‘running on empty’

PUBLISHED: 12:30 27 December 2011 | UPDATED: 07:28 31 December 2011

Archant Norfolk Photographic / James Bass © 2011

Digital and design agencies are increasingly being asked to work for free in the tough economic climate, according to a survey published today.

Design Industry Voices shows how small firms have suffered following the financial crisis, during the recession and the long, slow recovery.

Meanwhile an Institute for Public Policy Research think tank said the country’s “faltering” economic recovery was putting pressure on firms to cut costs and reduce staff.

A survey of 500 agency workers showed that most clients in the design and digital industries expected more work for less money, leading to fewer permanent staff and more unpaid interns.

Staff turnover had increased in recent years, with people working for digital and design agencies saying they were feeling the brunt of the “long, slow recovery” from recession.

A minority of those questioned said their agency helped employees deal with stress or rewarded them if they put in extra work.

Rachel Fairley, lead author of the research, said: “Digital and design agencies appear to be running on empty. 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 12 months, with far reaching consequences in this uncertain economic climate.”

The report follows a warning by Revenue & Customs that fashion companies could be prosecuted for not paying their interns.

In a move welcomed by the deputy prime minister, Nick Clegg, HMRC said it had written to all 102 fashion houses involved with September’s London fashion week, warning them about non-payment of the minimum wage of £6.08 an hour for those aged 21 and over.

Kayte Lawton, Institute for Public Policy Research (IPPR) senior research fellow, said: “If an intern is doing work for a company, then they need to be paid. It’s as simple as that. Employers often mistakenly believe there is a grey area around internships in the national minimum wage legislation that allows them to take on unpaid interns as long as both sides understand it is a voluntary position - but this is simply not the case.”

The Design Industry Voices survey also found:

More than eight out of ten (85pc) say that clients expect more work for less money

More than seven out of ten (71pc) say clients expect more work in pitches for free

More than eight out of ten (82pc) say client budgets have been reduced

More than half say agencies are employing fewer permanent staff (58pc), using more freelancers (55pc) and more than two fifths are using more unpaid interns (43pc).

Design Industry Voices also shows that agencies are experiencing more staff turnover than ever, since the recession began in 2008:

More than half (58pc) of staff intend to change job in the next twelve months

More than a third (35pc) have been with their agency less than a year.

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’ (12pc), ‘rewards people for going the extra mile’ (15pc) and provides ‘appropriate workload for staffing levels’ (15pc).

Stef Brown, managing director of On Pointe Marketing, which was also involved in the survey, said: “Clients are increasingly nervous that the ‘A’ team pitched, but an unstable ‘B’ team are delivering. 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.”

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