By Adi Gaskell
Originally published on Forbes
The gig economy has attracted no shortage of coverage in recent years, with advocates extolling the seemingly high engagement levels among participants given the freedom and autonomy to work when and how they please.
“The gig economy offers a fantastic opportunity to connect people up with highly skilled professionals via easy to use platforms,” says Roy Stein, CEO of pet-based platform BabelBark, a digital ecosystem that connects the entire ecosystem around pets. “Digital platforms allow these highly skilled professionals, including veterinarians, trainers and pet groomers, reach out to a critical mass of clients which probably might not have been within their reach before the gig economy boom. It also allows them to work in a way that suits them and their lifestyle. As opposed to low skilled workers, the gig economy era can only enhance high-value service providers whose work cannot be automated and taken over by technology.”
Critics however liken the sector to slave labor and bemoan the seemingly unequal power relationship between platform owners and workers, with workers expected to jump as requested and given none of the social safety features enjoyed by their salaried peers.
As with most things, the reality usually sits somewhere in between, and there is a sense that the narrative rests upon your opinion of the skill level of those engaged in gig work. Those who believe gig work liberates people to work autonomously surely have highly skilled practitioners in mind whose abilities are in high demand in the marketplace, whereas their more pessimistic peers probably have relatively unskilled delivery drivers or zero hour contractors in mind when they critique the dehumanizing nature of the work.
A new report from the Centre for Research on Self-Employment (CRSE) suggests that the former may be slightly nearer to the mark than the latter. The report explores the 4.8 million self-employed workforce in the United Kingdom to try and get a better understanding of who they are and what kind of work they engage in.
The authors argue that those working in the gig economy are far less prevalent than the hype suggests, and form a relatively small part of the overall freelance workforce. Instead, the most dominant segment is what the authors refer to as the “project economy,” which consists of highly skilled workers who operate on a project-by-project basis. It’s a form of work the authors argue is five times more prevalent than gig work.
Inside the project economy
The report defines the project economy as work conducted by highly skilled freelancers that have a clear and identifiable end point, with projects usually lasting for weeks or months. This contrasts with gig work that is usually the same task performed repeatedly for a specific client.
With the high-skilled nature of such work, it’s perhaps logical that there would be far fewer people working in this project-based form of freelance work than the gig-based alternative, but the reality was anything but. Indeed, the report found that there were five times as many project-based freelancers than gig workers, with the project economy therefore playing a driving role in the wider British economy.
“The project-based freelancers account for 73 percent or £104bn of the £140-145bn economic output that SOC1-3 freelancers contribute to the UK economy,” the authors say. “The freelance gig economy accounts for just 14 per cent or £20 billion. Portfolio and other freelancers make up the balance.”
This gravitas is reflected in the earnings of those engaged in project-based work, with the 2.1 million freelancers earning over twice as much as equivalent employees on average. The freelance workforce consists of the likes of managers, directors and other professionals, and represent by far the most productive aspects of the freelance economy.
Driving the economy
The size and nature of the workforce underlines the vital role the project-based workforce plays in driving a modern knowledge-driven economy. The report highlights how companies are increasingly able to tap into the pool of highly-skilled freelancers to scale up their workforce in an agile and effective manner, whilst also managing peaks and troughs in demand.
The report identifies six key forms of project-based work that drive much of this activity, including R&D and innovation, adoption of new technology and corporate ventures. Much of the work is facilitated via digital platforms and organizations specifically designed for project-based work, such as Hoxby.
Via these platforms, freelancers were making a profound contribution to the health and well-being of the British economy, and whilst the report was limited to the U.K., the authors nonetheless believe that the findings could be replicated in other developed economies.
There is a risk that discussions around the gig economy can become excessively simplified to fit the narrative of those leading the discussion, so it’s important that reports such as this one help to shine a light on the wider aspects of the freelance economy so that the gig-based tail doesn’t wag the dog and take an undeserved role in defining a crucial part of the labor market.
“It seems that skill rather than the nature of the employment contract is the most important determinant of a worker’s income and therefore this, rather than the contract, offers more opportunity to deal with low paid work,” the authors conclude.