Hoping for long-term, secure employment with one organisation? Or perhaps you’re planning to build your career on a freelancing model? Whatever your personal preferences, the world of work is changing, not least in the extent to which people are employed on a permanent basis. In this post, Careers Consultant Marc Steward looks at the rise of the so-called Gig Economy and the implications of this.
If you’ve spent any amount of time around campus you will, by now, have come into contact with Uber; either through ordering a ride home after a night out, or simply by trying to avoid being run over by one of their more “excitable” drivers. Ubiquitous, they are!
You may or may not know, however, that Uber are probably the best proponents of the Gig Economy, a business model where “…temporary positions [of work] are common and employers contract with independent workers for short-term engagements.” Whatis.com.
Why “Gig Economy”?
The term – and model – was created at the height of the financial crisis in early 2009, when unemployed people paid the bills by “gigging” (taking on a number of part-time jobs) wherever they could. However, in recent times, many people have chosen this way of working by choice rather than necessity. Along with household names like Uber and Airbnb, there are a plethora of other online, on-demand talent marketplaces where people (freelancers) can promote their skills and experiences and where employers have a pool of freelancers to choose from for whatever work they have, for whatever period of time. Examples of these include: freelancer.com and 90 Seconds.
Benefits for the individual
So, what are the benefits of the Gig economy for the freelancer? For pretty much all of them it is the flexibility. They can work when they like, so they dictate their work-life balance. They can work where they like. For many, the appeal of being able to find regular work on their doorstep or, in some cases, simply work from home, is key. They can also work for whom they like. People can pick and choose their employers.
In many cases, working this way allows the freelancer to then concentrate on their own projects, sometimes for their own start-ups, where they may also make use of these online, on-demand platforms to recruit additional help for their own business. On the other hand, many freelancers use the various online, on-demand websites to secure all their work.
Benefits for the employer
This side of things tends to have had more press in recent years (see below). From the employers’ point-of-view, they have access to millions of sector specialists – e.g. graphic designers – in one place, and so they can receive offers of help within minutes of posting a job or project on-line.
It is cost-effective: companies can utilise freelancers looking for flexible working patterns and, in some cases, can rely mainly on this type of working relationship as opposed to renting (or owning) office space and paying out for associated costs. Alex Abelin, Chief Executive of Liquid Talent explains that in this article from the BBC that “Many times, employers don’t need full-time support, but rather targeted, objective talent infusion”. With healthy competition for work, employers can also find the best offer to suit their budget.
Disadvantages and controversy
From the employers’ point-of-view, there are issues with data sharing with people who are not full-time members of staff. “Freelancers” could work for one employer one week and their competitors the next.
As mentioned above, the amount of mainstream press coverage about the gig economy recently has focused on the negatives surrounding the life of the freelancer: no pensions, no healthcare, in fact, no workers’ rights at all! As a result, companies utilising the Gig economy have come under fire. Uber, for example, has faced lawsuits from disgruntled freelancers over a number of issues (it faced 50 lawsuits in America alone last year).
The bottom line for a business is to find a quality freelancer at a price that is right. This is achievable in a saturated freelance market (in some sectors). From the freelancers’ point-of-view, it might be about “taking a hit” just to get a job and, in doing so, a new contact or network for future work. While the freelancers do this, companies are seen by many – including employment lawyers – to benefit greatly (a Fortune.com article last year estimated that Uber had saved somewhere near $4.1bn in workers’ compensation rights, tax, expense claims and other reimbursements for workers).
As with a lot of changes to peoples’ work patterns, legislation regarding employee – or in this case, freelancer – protection and rights is slow to catch up. It is only now that politicians, unions and professional organisations, such as the Recruitment and Employment Confederation (REC), are looking into updating freelancer benefit models and how to protect workers in the Gig economy (i.e. fair pay and bad practice legislation).
Change will be slow, but at least the rights of these type of workers have now been recognised. However, others argue that the line between employee and freelancer will now become blurred. For example, Airbnb provides liability insurance for hosts and Lyft offers retirement savings programmes for drivers. A number of the lawsuits filed against Uber – as mentioned above – were from freelancers seeking employee rights from the company. Some argue that these actions are the antithesis of what the Gig Economy model and ethos is about.
However, the Gig economy is on the up: the number of self-employed people is rising, with over 5 million in the UK and around 54 million in the US (about a third of the working population). Peopleperhour forecast that by 2020, half the UK and US working population will be “freelance”. PwC forecasts that, also by 2020, the Gig economy and related services will be worth almost $63bn as opposed to $10bn now. This increase means that, unlike today, where the main sectors utilising the Gig economy are the service, design and technology sectors, professionals in sales, law and finance will also adopt the Gig economy model.
To highlight just how much the Gig Economy is expanding, The Associated Press published an article recently outling how, on July 28th 2016, China’s cabinet issued its first ever set of rules for “ride-hailing” and “on-line car booking services”, making this not only a milestone event for such services in China, but highlighting a complete turnaround in attitude: last year, Uber’s offices in a number of Chinese cities were raided by police after accusations of operating unlicensed taxi services. The new rules allow drivers to work for more than “two ride-hailing companies” and sign “different types of labor agreements” as opposed to the previous desire of the authorities to have them recruited as “fully-fledged employees”. As a result of these rules, Uber expects to increase its presence in China from 60 cities to 100 within the next 4 months!
So, it appears that the future of the world of work is a combination of technology and networking and that the “job for life” of previous generations is slowly disappearing as Robin Chace, Co-founder of Zipcar, alluded to in her book, Peers Inc
“My father had one job in his lifetime, I will have six jobs in my lifetime and my children will have six jobs at the same time”