Freelancing Enables Agility and Innovation

This report was published by the PCG (Professional Contractors Group) last week to coincide with National Freelancers Day and the PCG’s Freelance Lecture.

The report is in two parts and gives a high level summary of two pieces of research.

Freelancing Increases as Traditional Employment Declines

Dr John Kitching of the Small Business Research Centre at Kingston University updated his 2008 research to find that there are now an estimated 1.56m freelancers in the UK.

The number of people freelancing as their main job has increased by 11.9 per cent since the original 2008 study. In the same period, traditional employees have declined by 1.5 per cent and unemployment has grown by 49 per cent.

Kingston have defined freelancers in way which accords with the idea of Sovereign Professionals, to “include ‘managers, directors and officials’, ‘professional workers’ and ‘associate professional and technical workers’” as defined in the ONS’s Standard Occupational Classification.

Freelancing Enables Economic Agility and Innovation

Professor Andrew Burke of Cranfield School of Management shares some early findings as a precursor to his study of “The value that freelancers bring to the 21st Century economy”.  Burke, who was one of the speakers at the Freelance Lecture, identifies four important roles that freelancers play in adding value to the modern UK economy:

  • Businesses are increasingly contracting out parts of their innovation and entrepreneurship activities to freelancers, a move which aligns with the trend towards an “open innovation” approach.
  • Freelancers cycling through a number of short-term projects has he effect of unlocking an economy’s creative potential.
  • Using “expertise on demand” freelancers means businesses always have access to the “A Team” rather than making do with jacks of all trades.
  • The pay as you go model of freelancers allows businesses to ring-fence and stage the financing of innovation projects with the effect of enabling further innovation and competitiveness.  Burke also finds that the availability of freelancers “encourages some multinationals to base more of their enterprise activities in the UK”.

Professor Burke’s current work builds on his earlier study of freelancing in the construction industry the findings of which are also applicable to freelancing across all industries.

One of Burke’s broader themes is that freelancing should be recognised, nurtured and celebrated.  In the past, he finds, research has tended to categorise freelancing into one of two rather negative buckets: either as a reluctant, oppressed and disempowered workforce or as failed entrepreneurs.  Recognising the true nature of freelancing will better enable the economy as a whole to benefit.

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Thanks for picking up the Business Answers infographic and for this interesting information.

I think this country still needs to overcome its cultural sneer about freelancers and indeed anyone who doesn’t work for a big ‘respectable’ firm.

The government also needs to get over the idea that the only objective a small business should have is to become a large business with lots of employees.

Small is beautiful and if we can get this country to embrace startups, entrepreneurs and freelancers, the economy will do much better.

Thanks Matthew. I agree. I believe the future belongs to “sovereign professionals”, very much in the way that Charles Handy foresaw back in the 1990s with his Shamrock organisation. Technology has caught up with the concept making it so much easier for large organisations and individual freelancers to talk to each other. It’s fascinating to read Charles Coase’s 1937 paper on the Nature of the Firm that suggests firms exists at the size they do because of transaction costs. Technology educes those costs and changes the economics. So many people don’tt yet see it and government particularly is myopic, possibly because – when professionals are independent businesses – government can no longer out-source tax collection to PAYE scheme employers.

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