Ireland’s first research report on the country’s project economy and the high-skilled independent professional contractor has shown high levels of confidence among contractors in the engineering sector, it has been revealed.

Trinity Business School and Contracting PLUS collaborated on the work which examines the extent and nature of professional contracting, and recognises the impact this key cohort has on employment and on the economy in Ireland.

Variously known as professional contractors, freelancers, and solo self-employed workers, these workers earn more than one and a half times the earnings of equivalent employees.

Professional contractors charge an average rate of €501 per day and, in 2020, earned an average income of €109,066. Compared to equivalent employees in the same occupational codes, contractors earn roughly 58% more.

Three quarters of professional contractors do project-based work and earn even more, charging €535 per day and earning €116,802 per annum, or 70% more than equivalent employees.

Independent professionals typically take less days off than their permanent counterparts. Average holidays were reported as 17 days per annum with 80% of respondents taking less than 22 holiday days in a year.

The research is based on a sample of 1,458 valid responses and was carried out by researchers at Trinity Business School led by Professor Andrew Burke, dean and chair of Business Studies.

A total of 95% of the professional contractor sample had a third level education, and some also had professional qualifications. 

A total of 73% work in knowledge-based sectors such as pharmaceuticals, finance, ICT, engineering and technical activities, medical devices, life sciences and medical locum. Contractors are distributed throughout the economy, but are overrepresented in pharma, finance and ICT. 

A total of 80% of their work is carried out for private sector organisations.

Opinions in engineering

Within Ireland’s engineering industry the significant gender bias is highlighted, with just 7% of all engineering and technical respondents in the survey being female. The average age of contractors in the sector is 49. A total of 86% work in the private sector, with 11% in the public sector, and 79% have a Bachelor’s Degree or higher. 

The average daily rate is €460 with median earnings also in the €400-€499 bracket. The average contract length is 20 months, although most are in the seven to 12 month range.

The Engineers Ireland Engineering 2020 review reported that engineering organisations and recruitment agencies are finding it difficult to fill vacancies, which bodes well for those interested in gaining new experiences in the sector through contracting.

Independent professionals in the engineering and technical sector are generally optimistic about the future of their sector, with 75% agreeing their skills are in demand and 60% thinking it will be easy to get another contract. A total of 90% of respondents believe the contracting sector will either stay the same or grow in the next 3 – 5 years.

Higher earnings and personal fulfilment

Trinity research shows the project economy is a hugely important sector and driver of the Irish economy that deserves greater attention and support, Professor Andrew Burke comments.

“Project-based professional contractors are key in driving growth and innovation in corporations and SMEs alike. We find that they get well rewarded for the high value they create for business; earning approximately 70% more than equivalent employees, and with greater personal fulfilment for the work they do.  The high skilled project economy provides a combination of great value to the economy and the life satisfaction of professional contractors.”  

The new report is the first in what is intended to be a longitudinal study, and has found that amongst the highly educated and skilled freelance workforce, the project economy is over five times larger than the gig economy. 

Ireland needs to better understand, guide and harness the value-added that this project economy can generate, Pro Burke believes.  

“This research is a step towards this goal. It will better inform both contractors and policy makers on best practice, opportunities, threats and relative performance of the professional contracting sector in Ireland”.

Older and female contractors fare better than equivalent employees

The average and the median age of professional contractors was 46 years old. Almost 70% of respondents were over 40, suggesting a certain amount of time and experience is required to develop a valuable skill set before contracting is an option.  

Older contracting workers are able to remain active in the workforce longer than employees, and a track record appears to be highly valued, with older independent contractors earning more than their younger counterparts.

Day rates become progressively higher with age, with the highest charged by independent contractors who are 60 years of age or older. Highest annual earnings are also amongst this oldest age group, who earn €116,007 per annum.

In an economy struggling with a pensions’ deficit, a working model creating opportunities for over 60s, contractually obliged to leave employment, makes sense, the report editors suggest.

High-skilled independent contracting also appears to be a route to dealing with discrimination in the labour market. The survey indicated a gender pay-gap of less than 8%, as opposed to a national average of 25%, a positive trend in the iPro sector.

The research showed a 75/25 split in male/ female participation in the project economy.

A total of 71% of contractors voluntarily choose to contract, with flexibility and choice in work important. The average contract length is 14 months and almost half of the sample reported their contract length between six to 12 months. 

Having a network is important to ensure continuous work, with almost four in 10 relying on their own initiative to find new work.

Economic contribution

Survey responses covered the views of three groups; contractors, recruiters engaged in contract recruitment, and employers availing of contracting services. 

The key drivers in the creation of contract roles are tighter skills markets (89%) and client companies’ demand for contractors (84%). Employers’ demand is driven by factors including economic and market uncertainty, headcount targets, specialist project needs, and contractor rates weighed against the cost of specialist full-time employment.

The solo self-employed in the ‘project economy’, who, by definition, do not hire employees, are often overlooked as a business community, according to Jimmy Sheehan, managing director of Contracting PLUS, who collaborated in and funded the Trinity Business School research.

Having a clear view of the sector and of contractors’ economic contribution is important, he says.  

“Many major business and industrial sectors rely on the project economy, making extensive use of high-skilled independent contractors to help them compete and to drive innovation and entrepreneurial activity. They make a massive contribution in businesses where agility and ability to manage uncertainty and risk supports competitive advantage,” said Sheehan.

Global surveys on the project economy repeatedly reinforce the notion that using high skilled contractors to support research and development and business expansion creates net employment growth, where independent professionals help create new jobs for employees, complementing employers’ growth strategies.

Apart from the obvious economic contribution, government and policy makers have a duty of care to ensure a fair and balanced business and tax environment for those in this small but important sector, said Sheehan.

“Better regulation and parity in taxation that puts professional contractors on a par with other self-employed business owners is needed, so that we do not inadvertently create hurdles and hamper the significant entrepreneurial contribution of this high-skilled professional cohort.”

Contracting PLUS is Ireland’s largest provider of accounting services and umbrella companies to high-skilled independent contractors.

The Trinity report on Ireland’s Project Economy is to be produced on an annual basis, going forward, for longitudinal tracking of the nature, contribution and confidence of the sector. 

The 2021 study was carried out in February 2021, using an anonymous online survey.