New research by the Centre for Research on Self-Employment (CRSE) reveals that the project economy is by far bigger than the gig economy.
Around £104bn every year for the economy. Almost three quarters of the country’s most skilled freelancers. A massive impact on innovation and productivity. So why haven’t you heard of the ‘project economy’?
A big part of the problem is the interest in the ‘gig economy’. Because of the widespread (but largely untrue) narrative that automation is eroding stable jobs and driving them into insecure pseudo-self-employment, the media is almost obsessively focused on the so-called ‘gig economy’.
As a new report from the Centre for Research on Self-Employment (CRSE) shows, however, gig work is only a small proportion of the self-employed sector. Especially among the UK’s 2.1 million highly skilled freelancers, project work is much more common. And when you look at the overall picture, the £104bn project economy is by far the bigger story.
What is the 'project economy'?
So, let’s start with the basics, shall we? What are the ‘project’ and ‘gig’ economies? Well, the report The Freelance Project and Gig Economies of the 21st Century, defines gig work as freelancers being paid to repeatedly perform the same task or gig for a client. Project work, by contrast, is where freelancers are brought in to do all or part of specific projects – most often to do with new products, innovation and infrastructure.
The CRSE’s report focuses on the 2.1 million highly skilled freelancers in the UK (those in the top three Standard Occupational Classifications) which includes managers, directors, professionals and associated professionals. Among these high-performing professionals, it finds that instead of gig work, it’s actually project work that is most dominant. Three quarters (73%) of them work in the project, not the gig economy.
the UK economy would be more sluggish if firms did not have access to high-skilled freelancers
A question of impact
The big question, then: what difference does this major and under-reported sector make? Well, we know highly skilled freelancers contribute £140-145bn to the economy every year. And with project freelancers making up most of this group, it is estimated that the project economy contributes at least £104bn to the economy every year (just based on highly skilled freelancers).
That is more than the £100bn of the creative industries and close to the £110bn contributed by the construction sector. As a result, the ‘project economy’ plays a vital role in driving the productivity of the wider economy.
Gig-based work, by contrast, makes up just 14 per cent of the highly skilled freelance sector, meaning it contributes closer to £20bn – a fifth of the extremely productive project economy. The rest is made up of ‘portfolio’ freelancers, who do a variety of different kinds of work – both gigs and projects.
It is not just the amount of money the project economy contributes. The nature of the project economy also adds a huge amount of value. Professor Andrew Burke, chair of the CRSE and lead author of the report, said: “The research finds that the UK economy 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.”
The big picture
The ‘project economy’, then, is not only hugely productive: it is a vital driver of innovation in the UK. The CRSE report pointed out that much of the economic success of developed countries in the twenty-first century has been driven by innovation. And since project freelancers are essential for innovation, their role in driving developed economies cannot be overstated.
Although firms rely on employees for their day-to-day work, when they want to look beyond to innovate and expand, many turn to the flexible expertise of freelancers, according to the study. Bringing in freelancers for these projects gives them temporary specialist expertise, where otherwise they might have to risk taking on full-time staff. Freelancers allow firms to experiment and explore the bounds of possibility.
CRSE’s research highlights the government’s and industry’s obsession with the gig economy and the need for them to step back, adds Andrew. “It is time for government policy to catch up with this rapidly developing sector and design policies that will give it the support and encouragement it needs.”
