Everyone knows about the ‘gig economy’. In fact, the term is so widely used in the media, it can sometimes seem hard to avoid talking about it. But it is by no means the only form of work among the 4.8 million-strong self-employed community, and not enough is understood about the many other forms of freelance work.
A new report from the CRSE (Centre for Research on Self-Employment) is changing all that. The Freelance Project and Gig Economies of the 21st Century establishes the dominance not of the ‘gig economy’, but the much larger and more productive ‘project economy’. Among highly skilled freelancers, in fact, project work is five times more common than ‘gig’ work.
So, what exactly is the ‘project economy’? Well, in the report, we define ‘gig’ work as being paid to repeatedly perform the same task or gig for a client. ‘Project’ work, on the other hand, is where a freelancer is paid to help deliver all or a significant part of a particular business project.
The remarkable thing we found is that with these definitions, there are five times as many highly skilled ‘project’ freelancers (those in the top three Standard Occupational Classifications) as ‘gig’ freelancers. As a result, the ‘project economy’, we found, plays a vital role in driving the productivity of the wider economy.
Another key finding is that these 2.1 million highly skilled freelancers earn more than twice as much as equivalent employees. Highly skilled freelancers – including managers, directors, professionals and associate professionals – are by far the most productive part of the self-employed sector, contributing an estimated £140-145 billion to the economy every year.
Project-based freelancers account for 73 per cent – or £104 billion – of the £140-145 billion economic output of highly skilled freelancers. Gig-based freelancers, by contrast, account for just 14 per cent, or £20 billion, of this amount. The rest is made up of ‘portfolio’ freelancers, who do a variety of different kinds of work – both gigs and projects.
As we point out in the report, much of the economic success of developed countries in the 21st Century has been down to their innovation-driven economies. Corporate growth and innovation, as well as entrepreneurship, are the vehicles that delivered their outstanding growth.
A vital part of this innovation has been because of highly skilled freelancers. As our qualitative research has shown, many firms are able to tap into human resources beyond the confines of their employees to embrace the flexible expertise of project freelancers for their innovation and growth work. They also use skilled freelancers to help them navigate peaks and troughs in demand and boost their productivity.
The report found that the contribution of skilled freelancers to the workplace and economy is overwhelmingly positive. Digital technology advances and new product development were identified in the report as key areas that would be far more challenging for businesses without freelancers working on projects.
Overall, the report found that project freelancers contribute an enormous amount to the economy – more than the entire creative sector – and do much to drive economic performance.
Of course, the majority of our analysis was based on UK data. Our report showed, however, that our findings could also apply to other similar innovation-driven economies such as most Western EU member states and the USA. Developed economies would be far less entrepreneurial and innovative and, ultimately, would be more sluggish if their firms did not have access to highly skilled freelancers.
This blog post is based on the authors’ report The Freelance Project and Gig Economies of the 21st Century, Centre for Research on Self-Employment (CRSE).
The post gives the views of its author, not the position of LSE Business Review or the London School of Economics.
Featured image by 1Day Review, under a CC-BY-2.0 licence
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Andrew Burke is the dean of Trinity Business School, Trinity College, Dublin, and chair of the Centre for Research on Self-Employment (CRSE). He is the author of the report and is a graduate (MSc) of the LSE.