So exactly what is the Gig Economy

GIG

Recently I had a coffee meeting with a good friend and associate, reminiscing over our cappuccino’s we decided to talk about the UK economy, politics and 2016, when Zaur said ‘so what exactly do you know about the Gig Economy’ my first reaction was to smile and say ‘the gig economy’ the word gig has many connotations particularly in the US, people relate to the word gig with statements like so how’s your latest gig, you can think of music, employment and many other subjects.

With all of these new economies in our every day life, exactly what is the Gig Economy?

Broadly speaking the gig economy is an online platform which connects people who have space to spare in their daily life with skills and competencies with those looking for a short stay at a competitive price. Services such as these, along with Uber, are driving the ‘gig economy’. Their platform enables people to become freelance service providers without the inspections and legal oversight that traditional lodging and cab industries are subject to.

Today, more and more of us choose, instead, to make our living working gigs rather than full time. To the optimists, it promises a future of empowered entrepreneurs and boundless innovation. To the naysayers, it portends a dystopian future of disenfranchised workers hunting for their next wedge of piecework.

Today’s digitally enabled gig economy was preceded by marketplaces such as ELance and oDesk, through which computer programmers and designers could make a living competing for short-term work assignments. But the gig economy isn’t just creating a new digital channel for freelance work. It is spawning a host of new economic activity. More than a million “makers” sell jewellery, clothing and accessories through the online marketplace Etsy. The short-term accommodation platforms Airbnb, Love Home Swap and onefinestay collectively have close to a million ‘hosts’.

This explosion of small-scale entrepreneurship might make one wonder whether we are returning to the economy of the 18th century, described by the economist Adam Smith in his book “An Inquiry Into the Nature and Causes of the Wealth of Nations”. The economy Smith described was a genuine market economy of individuals engaging in commerce with one another.
The gig economy has lots of positives but it is undermining the traditional employer-employee relationships that have been the primary channel through which worker benefits and protections have been provided.

Unless government act, employment will continue to drift toward a two-tier employment market. One tier will be populated by fully employed high-skill workers with generous employer-provided (and tax-advantaged) benefits, as well as high-skill individuals who finance their own benefits from high incomes earned as independent contractors or from self-employment. The other tier will include a large pool of contingent middle- and low-skill workers without the benefits, income, or security on which a robust and resilient middle class depends.

New policies are needed to provide workers in contingent employment relationships access to benefits, and new institutions are needed to deliver them. There is growing support for the view that benefits should satisfy at least three conditions. They should be portable, attached to individual workers rather than to their employers. They should be universal, applying to all workers and all forms of employment. And they should be pro-rated, linking employer benefit contributions to time worked, jobs completed, or income earned.

There is a lot of potential in the new world of work. The McKinsey Global Institute, the research arm of the management consultancy, estimates that what it calls “online talent platforms”, job sites such as Monster.com and platforms such as Uber, could add 2 per cent to global gross domestic product by 2025, increasing employment by 72m full-time equivalents.

The UK has added 1.4m “micro-firms”, those with between zero and nine employees, since 2000. The Freelancers Union, a US employee group, estimates that 53m Americans now freelance in some form, including 21m independent contractors. Some 82 per cent of millennials believe that the best days for freelancers lie ahead.

The ideal working life for many millennials is not finding a safe job that will last them a lifetime but creating a technology start-up, a glamorous form of small business that is backed by angel investors. They dream of being Mark Zuckerberg of Facebook or Larry Page and Sergey Brin of Google, not an executive of a professional services firm or public company.

The new world of work must chart a course between the twin dangers of corporate conformism and worker exploitation

The dream can be just that; the average income from self-employment fell 22 per cent in the UK between 2009 and 2014, even as self-employment contributed 732,000 of the 1.1m rise in total employment. The rewards of new forms of employment contract accrue to a minority, while others lose out.

So the facts and more importantly the trends are showing the number of gig’s within the economy will only increase.  The changing generational workforce is a major factor of the growing gig economy.  Through technology, other types of work in the gig economy, such as driving for Uber, or listing a rental on Airbnb, has brought offline activity to online.  As the old concepts of work are being challenged, the gig and freelance economy is being viewed as a legitimate option to participate in, and build a career.

The bigger sentiment is how this will effect business culture, values and community behaviour, as Jeff Weiner once said:

“You have to maintain a culture of transformation and stay true to your values.”

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