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Not the gig economy: business productivity depends on the freelance project-based sector

Freelancers working in the project sector contribute more to the economy than the creative industries and drive wider economic performance, new research by the Centre for Research on Self-Employment (CRSE) has found.

Published in a report titled ‘The Freelance Project and Gig Economies of the 21st Century’, the research was conducted by the Dean of Trinity Business School, Professor Andrew Burke – who is the Chairperson of the London-based CRSE international think tank on freelancing.

The research examined the value of freelancing to the economy and contrasted the use of the high-skilled freelance intensive workforce model in both the project-based and gig economies. The analysis is based on UK data and so is relevant for other innovation-driven economies in Europe (such as Ireland) and North America.  The ‘project economy’, made up of freelancers brought in for individual projects such as new products, innovation and infrastructure, contributes approximately £104bn to the UK economy every year. That is more than the £100bn of the creative industries and close to the £110bn contributed by the construction sector.

The findings show how the project economy supports businesses and helps to boost productivity across the country. The research found that project freelancers add value by giving businesses flexible expertise beyond their permanent employees, enabling innovation and entrepreneurship as well as by helping them to navigate peaks and troughs in demand.

The report identified technological advances, managing risk and uncertainty as well as new product development as key areas that would be far more challenging for businesses without freelancers working on projects.

Summarising the key outcomes of the report, its author Professor Andrew Burke writes:

“The rise of self-employment has created challenges for public policy. This has been exacerbated by a lack of research into the sector and the widespread belief that all self-employment can be treated in a similar way.

Ireland’s success in the 21st Century has been due to its transformation to an innovation-driven economy. Corporate growth and innovation alongside entrepreneurship are the vehicles delivering the outstanding economic growth. The firms involved rely on expertise beyond the confines of their employees to deliver projects which drive innovation and growth. While there has been huge negative press and focus on the freelance gig economy, the real action in the flexible labour market is actually taking place elsewhere in the project-based economy. In fact, the research in this report shows that the project-based economy is five times larger than the gig economy, plays a hugely important role in driving economic performance and notably the high skilled freelancers involved earn more than twice the earnings of equivalent employees. 

The research finds that innovation-driven economies such as the UK, Ireland and the USA would be far less entrepreneurial, innovative and ultimately would be more sluggish if firms did not have access to high-skilled freelancers. It shows that freelancers add a huge amount of value to firms both through their flexibility and their specialist skills.

Policymakers across the world must recognise that while it is important to improve the position of dependent and insecure workers, it is also essential to catch up with this rapidly developing sector by giving it the support and encouragement it needs and ensuring that any policies introduced do not put at risk the independence, autonomy and job satisfaction enjoyed by the legitimately self-employed.”

Read the full report here.