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A few years ago, the financial services giant Prudential released a report looking at the financial security of people working in the gig economy. It found that not only are gig workers in the US earning around 58% of what those in full-time jobs earn, they miss out on the employer-sponsored benefits such as healthcare and pension policies.
The gig workforce makes up 16% of the total American workforce, with this rising 6% in the last decade. Whilst it has undoubted benefits, not least in terms of flexibility for both employer and employee, the authors worry about the unintended consequences of a rise in gig work.
“While the gig model is cost-efficient for employers, reduces their benefits costs and gives workers flexibility, these workers may in turn suffer from income volatility and lack of access to a benefits safety net,” Prudential say. “The money made by gig work may contribute to reducing the national income gap, but the decline in employer-sponsored savings and insurance plans is doing little to address the wealth gap. Without benefit protections, many gig workers are left financially vulnerable.”
An unstable world
It’s a topic that has also piqued the interest of researchers from the University of Oxford, who explore whether using gig economy workers helps to create a fundamentally unstable working world for both permanent and contingent worker alike. They suggest that the very practice of hiring people through sites like Freelancer.com may create instability in the working lives of millions in the developing world.
“Our findings demonstrate that companies such as Uber and Deliveroo are just the tip of the iceberg when it comes to potential concerns around the gig economy,” they explain. “In developing countries vast numbers of people are being hired to do outsourced tasks by people in countries such as the UK and the US who have no idea about local employment regulations and their application.”
The authors highlight how frequently workers can be fired immediately, with much of their working week spent looking or waiting for work. What’s more, they nearly always lack access to healthcare through their work.
“The increasing global nature of the digital economy also brings into question the idea that additional barriers to migration will benefit workers in the UK, US and other developed nations,” the researchers say. “Freelancers in the developing world can now offer their labour at cheaper prices through gig economy platforms and compete directly with domestically-based workers via the internet, from anywhere in the world. It is the commodification of labour rather than migration which needs to be challenged.”
The report paints a distinctly unhealthy picture of the gig economy and its impact on the labor market, but it must be said that their conclusions were drawn from just 152 face-to-face interviews and a survey of 656 online workers.
The team do build upon previous work they’ve done in this field however. This previous study found that the flexiblity and autonomy present in gig work was highly popular, it comes at the risk of developing long, irregular and unsocial hours. This can be especially true if you’re working internationally and have timezone issues to contend with.
What’s more, they suggest that gig work can be stressful as you’re constantly battling for good ratings to thrive in a highly competitive environment.
“The competitive nature of online labour platforms leads to high-intensity work, requiring workers to complete as many gigs as possible as quickly as they can and meet the demands of multiple clients no matter how unreasonable,” the authors say.
The nature of gig work
All of which doesn’t necessarily mean that gig work is inherently bad. After all, research from Villanova University found that gig workers were happier than most other forms of worker, due in large part to the autonomy and flexibility mentioned previously.
What it does mean however is that it probably suits people at different stages in their life. The Prudential research mentioned earlier, found, for instance, that gig work was most popular among Millennials who could fit the flexible work around their lifestyle. Gig workers in the Baby Boomer and Gen X age groups however tended to be forced into gig work because they lost their full-time job. For them, the lack of stability and uncertain income was a major concern as they were more likely to have mortgages to pay and families to support. This contributed to the perilous financial situation of 63% of the Gen X gig workers Prudential spoke to, who said they were struggling financially.
It’s tempting to use the gig economy phrase as a blanket expression, but the reality is that it covers a huge range of people, doing a huge range of things. Whilst there are highly skilled people doing very well in the gig economy, there are also those scrabbling to get by and who are turning to the gig economy as a last resort.
What is pleasing is that it’s a sector that is being examined more and more, with researchers such as Alex Rosenblat leading the way in her detailed examination of life as an Uber driver. The better understood the market is, the better society is able to provide some of the safety mechanisms that are present in more traditional forms of work.
The variable nature of both the work itself and the things workers wish to get out of the work underlines the challenges inherent in doing this however. Policy makers aren’t necessarily renowned for applying nuance to their work, but that, if nothing else, is certainly what is required in governing the gig economy.
April 15, 2019 at 09:49AM
Forbes – Entrepreneurs