Are Freelancers The Key To Recovering The Economy?
- Freelancing on the rise as many realise the perks of the gig economy
- But as the pandemic sees freelancer uncertainty spread, should we all be worried?
- Research reveals the vital role gig workers play in stimulating entrepreneurship
Uber recently announced a dramatic U-turn in its policy, revealing that it would pay all 70,000 of its UK-based drivers the National Living Wage, as well as guaranteeing them holiday pay and pensions. The decision has led politicians, union leaders and employment lawyers alike to call on other major gig economy heavyweights, from Deliveroo to Just Eat (to name a few), to offer similar terms and follow Uber’s lead.
Around five million workers in the UK are considered to be part of the gig economy – making their living through short-term engagements, often as freelancers. And up until 2019, there had been year-on-year growth in the number of freelancers operating in the UK, with the sector expanding by around 53% between 2008 and then. But as COVID-19 caused freelancer confidence to tumble, with quarterly earnings dropping by 8.4% in the first quarter of 2020 due to the pandemic, it hasn’t looked so bright for the gig economy as of late.
According to the Association of Independent Professionals and the Self-Employed (IPSE), almost half of all freelancers in the UK plan to quit self-employment for good. According to IPSE’s study, around a quarter of those planning to quit will look for work abroad, and a sixth intend to return to full-time employment.
But gig workers aren’t alone in their hardship. Businesses everywhere have faced immense barriers to their survival. Small-to-medium-sized firms across the planet have struggled with cash-flow issues and now face an uncertain future. Yet in spite of the challenges that both businesses and freelancers face, there could still be room for optimism.
As COVID has demanded new ways of doing business – notably in the form of flexible, often remote working – and has left many firms operating on a variable cost model, businesses turning to freelancers on an on-demand basis could be a way forward. Trinity Business School’s Professor Andrew Burke seems to think so.
According to Professor Burke, Dean and Chair of Business Studies at Trinity, gig workers bring with them a whole host of benefits to individual businesses, as well as the wider economy.
In previous research, Burke found that freelancers, working in sync with existing employees, bring with them expertise and innovation that would otherwise be unavailable within that firm. And in doing so on a swift basis, these gig workers enable a faster rate of growth for the business, which leads to more employee jobs being created.
A recent study from Burke has revealed that freelancers actually stimulate entrepreneurship levels across entire economies. According to the research, which was taken in conjunction with faculty from Cranfield School of Management, by increasing the number of freelancers operating in an economy by 10%, entrepreneurship levels rise by a whole 1%.
Having undertaken a global study, in which the researchers looked at the impact of independent contractors on entrepreneurial activity across 75 countries over the period of 2002 to 2012, Burke found that his findings hold for economies across all levels of economic development, as well as across all types of entrepreneurship.
According to Burke, the significance of this research and its findings lies in the fact that it provides indubitable proof of the value of freelancers and gig workers on a macro-level. It’s true, freelancers contribute significantly to the global economy. In the UK alone, freelancers contributed around £300 billion to the economy each year before the pandemic. And so as gig worker numbers dwindle, the economy stands to lose out.
But is this fall in freelancers truly a global issue? According to Upwork, a US-based platform for freelancers, the pandemic has seen more than one-third of America’s workforce turn to freelancing. To put that in to numbers, that’s 59 million people that are making a living via freelancing, which has contributed $1.2 trillion to the economy.
According to the CEO of Upwork, Hayden Brown, such a spike in freelancer activity is unsurprising considering the sheer level of uncertainty we find ourselves in. She also noted that she expected this trend of growth to continue.
So maybe a dwindling freelancer population is only a British problem. Who knows? But one thing’s for sure, freelancers have a lot to offer. Whether for the individual business or to an entire economy, gig workers contribute significantly to entrepreneurship levels, which at one point or another translates into cash. So as we look to rebuild post-pandemic, the gig economy looks to be the answer to our problems.
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