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Freelancers and Contractors Shown to Create Jobs and Fuel Growth

As freelancers and contractors continue to deal with the uncertainty caused by Coronavirus, while also readying themselves for IR35 reform in the private sector, research showing independent professionals improve productivity, create jobs and contribute to growth could not have come at a better time. That independent workers could prove important in the UK’s economic recovery […]

By Laura Nixon on 03 Sep 2020
Read time: 3 minutes

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As freelancers and contractors continue to deal with the uncertainty caused by Coronavirus, while also readying themselves for IR35 reform in the private sector, research showing independent professionals improve productivity, create jobs and contribute to growth could not have come at a better time.

That independent workers could prove important in the UK’s economic recovery was another conclusion drawn from this study, which was carried out by Trinity Business School’s Professor Andrew Burke and Marc Cowling of The College of Business, Law and Social Sciences University of Derby.

Contractors found to be a catalyst for growth

Having surveyed 1028 UK businesses, the pair found that when freelancers and contractors make up 11% of a company’s workforce, the firm’s productivity will increase, which in turn generates additional revenue.

The study, exploring the impact freelancers have on business performance and job creation, concluded that the businesses with a contractor workforce of just 11% reap considerable financial benefits, with the output equating to an extra £4,669 per employee.

Independent professionals assist employment levels

Professor Burke, who has produced numerous reports examining the freelance workforce, said the research shows that independent workers assist growth which creates opportunities for permanent employees:

“People normally associate the use of freelancers with employment destruction as they are perceived as doing work that otherwise could have been done by employees. This view overlooks a different type of freelancer who works in sync with employees but brings expertise and innovation not available within firms and on a swift basis, thereby enabling these businesses to innovate, grow faster and ultimately create more employee jobs.”

Contractors complement permanent employees

When addressing the issue of job creation, which is increasingly important given rising unemployment in recent months, Burke and Cowling calculated that the number of jobs created by businesses with a freelance workforce over the 11% threshold was 914,400. According to the report, this equates to 1.2 additional new jobs per firm.

According to the pair, these figures cement the theory that freelancers are “non-competing complementary providers of differentiated labour”, helping create jobs by “enabling businesses to become more agile and entrepreneurial.”

Freelance myth debunked

The study also claims to be the first research examining the effect that different types of freelancers have on businesses. Marc Cowling said the research dispels the myth that independent professionals are only brought in to replace employees, offering “low value” services:

“Our research was the first to debunk the view that freelancers are cheap, low value workers who cause job losses by replacing core employees. Rather we found they add specialist skills and expertise that create value and profit and allow firms to increase their core workforce as they accelerate their growth.”

This is an opinion also shared by IPSE, the association for freelancers, contractors and the self-employed, whose CEO Derek Cribb recently said independent workers will be “vital in getting the UK back to business.”

There’s no doubt that this research supports IPSE’s view and, following a concerning slump in contractor hiring during the months of lockdown, it may even offer the businesses the encouragement they need to engage these workers going forward.

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