The rise of the gig economy
Like other parts of the world, the G21 Region labour market is undergoing significant structural change due to new technologies and the decline in full-time work. If the Region is to ensure that it has a robust labour market which is accessible to all, then it is important to gain a deeper understanding of the new economy and its impact on jobs.
What is the gig economy?
Also termed the ‘collaborative economy’, the ‘sharing economy’ or the ‘on-demand economy’, the ‘gig economy’ describes the rise of non-traditional ways of working and providing goods and services that involve temporary, task-by-task forms of employment. Gig forms of employment are not necessarily new – for example, freelancing has been the predominant mode of employment in several industries for a long time - but the emergence of digital talent platforms, such as Uber, Airtasker and Deliveroo, has seen the creation of new markets and recruitment platforms.
According to some employer groups, the rise of the gig economy is being driven by workers who are expressing an increasing demand for autonomous and flexible work (Australian Industry Group 2016, p.5). Research by the McKinsey Global Institute suggests there are four key segments of ‘independent’ workers:
- free agents, who actively choose independent work and derive their primary income from it;
- casual earners, who use independent work for supplemental income and do so by choice;
- reluctants, who make their primary living from independent work but would prefer traditional jobs; and
- financially strapped, who do supplemental independent work out of necessity (McKinsey Global Institute 2016).
How many people are employed in the gig economy?
No direct figures are available as yet for Australia, but figures from around the world can help paint a picture of how gig work has grown:
- UK gig workforce is estimated at 4% of working adults (aged 18-70)
- US data suggests 14-20% of all employed people engage in gig work
- Almost 29% of jobs added post-GFC (2010-14) were attributed to an increase in the number of independent contractors
- Data from the US & Europe combined suggests 20-30% of the working age population engage in some form of independent work
- Of this group, 15% have used a digital recruiting platform
- Foundation for Young Australians (FYA) found around 70% of Australians aged under 34 were open to using a digital platform (eg. Uber, Airtasker) to source income in the next year
Benefits of the gig economy
- Flexible working hours
- Complementary/supplementary income (to main income source)
- Job creation through gig work can lead to a rise in the GDP
Risks of gig work
- Inherently insecure and unpredictable
- No guaranteed minimum income (if relying on gig work as your entire income source)
- Employers have no obligation to provide education/training/equipment necessary to perform the role
- Potential for rise in ‘zero hours’ contracts – exacerbating the existing problem of underemployment, which is a significant barrier for young people’s successful participation in the labour market.
Challenges of the gig economy
- Legal classification of gig workers – are they independent contractors? Employees? Workers?
- What rights do gig workers have to: minimum wage, unfair dismissal protections, holiday and sick pay, superannuation?
- What pathways for support/redress are available to workers who feel they have been exploited?
Gigging is likely to be significant in the future of work. As we move further away from the standard employment relationship of a full-time permanent job, towards the model of the ‘portfolio career’, which can involve various combinations of part-time employment, self-employment, and other working arrangements, gig work is likely to be something that individuals dip in and out of across their working lives. The CEO of the Foundation for Young Australians, Jan Owen, maintains that ‘the increasingly flexible nature of the modern workforce will likely see a 15-year-old today navigating a portfolio of 17 jobs in 5 different industries’ (Owen 2017). If her predictions prove correct, then preparing young people for the reality of their future working lives will require a fundamental shift in the way we approach work, and the meanings and expectations we attach to it.
Geelong Region LLEN’s Expansive Learning Network will be hosting a series of Events on the impact of the gig economy in the G21 region. The next set of these events will begin again in March 2018. Please see GRLLEN Events for more details when they become available.
Edited extract from a paper prepared by Geelong Region LLEN Labour Market Analyst & Futurist, Dr. Jude Walker, and Researchers-in-Residence, Meave Noonan and Atticus Gray.