Is the Gig Economy Exploitation or Empowerment?
In recent years, the gig economy has transformed the nature of work, offering workers more flexible opportunities to earn an income by working in freelance jobs, temporary jobs, or work in platform-based services. Companies like Uber and Fiverr have capitalized on this model through offering workers complete control over their schedules and adding an easy entry point into the labor market. However, despite its appeal, there is a growing concern on whether the gig economy genuinely empowers workers or exploits them. For the World at Work, examining this issue is crucial in understanding the hidden consequences of the gig economy. By exploring both perspectives, we assess whether the gig economy provides workplace freedoms or if it is a risky form of employment that leaves workers vulnerable and unsupported.
The global rise of the gig economy
The gig economy is a global phenomenon that is not limited to specific countries. In 2023, online gig work alone accounted for up to 12% of the global labor force(1). Gig platforms have grown faster than expected, filing in gaps in the job market. Gig jobs however are most of the time insecure and low paying, pushing higher income inequality. As highlighted by the International Labour Organization (ILO), gig workers in developing countries are paid significantly less than those in developed nations despite working comparable hours(2). For example, global platforms like Fiverr and Upwork show varying costs for jobs offered by individuals from developing countries compared to those from developed countries, showing that those from developing countries receive less financial compensation for their services. In developed countries such as the U.S. and Europe, most of the gig economy supplements existing job markets rather than serving as the primary source of employment in comparison to Southeast Asian gig workers. Many gig workers in these regions earn additional income through platforms like DoorDash and Deliveroo, a current common form of second income in light of growing living costs. A 2020 report indicated that 11% of EU citizens have participated in some form of gig work, with different levels of reliance on it for their livelihood(3).
The graph reveals a significant concentration of online gig workers in East Asia and the Pacific, accounting for the majority of the global gig workforce(4).
Additionally, the global growth of the gig economy is heavily reliant on technological infrastructure and the surge in technological globalization. Gig workers rely on access to smartphones and the internet, especially in emerging markets. However, this reliance on technology creates a digital divide, excluding those without access to smartphones or stable internet connections from participating in the gig economy. This divide is clear in countries where high mobile data costs and inaccessibility in rural areas prevent many potential gig workers from participating in the economy. Another critical factor in a gig economy, is the regulatory environment. While some countries have more developed labor laws, like Saudi Arabia’s Future Work programs, that provide greater protection and oversight for gig workers, regulatory oversight is generally weak or nonexistent in others.?
Despite these challenges, gig platforms are actively expanding into new markets as these platforms are globally interconnected online. The globalization of the gig economy is reshaping labor markets worldwide, resulting in mixed outcomes on wages and security. While some workers benefit from increased flexibility and opportunities, others find themselves trapped in low-wage, insecure jobs with few protections.
The promise of flexibility
The gig economy is often praised for its flexibility. Gig workers are free to decide when and how much they want to work, allowing them to achieve a work-life balance that is often challenging to get in traditional employment. According to the Pew Research center, 49% of gig workers in the U.S. cited having control over their schedules as a key reason for choosing gig jobs(5). In comparison, 28% report not having many other job opportunities in their area as a key motivation for doing this work. For many individuals, especially those seeking additional income or unable to commit to a full-time job, the gig economy is a crucial support source. The Pew report added that 56% of gig workers utilize platform-based work as supplementary income to complement their primary job. This highlights the flexibility gig work can offer to empower workers to handle financial insecurities and even explore alternative career paths while maintaining their current employment.
Furthermore, the gig economy serves as an accessible entry point for individuals who may face challenges in securing traditional employment. Common barriers to entry like education, experience, and skills gaps are lower in gig platforms compared to traditional jobs. This allows disadvantaged groups to enter and participate in the labor market. In this sense, gig work can be seen as an empowering model that creates opportunities for earning an income.
The hidden challenges in instability and exploitation
The benefits of flexibility and independence in gig work are significant but may come at a high cost. The main issue is the instability and lack of traditional job protections in the gig economy. Many gig workers are considered independent contractors, meaning they do not receive benefits like health insurance, paid sick leave, and retirement plans and are responsible to provide this to themselves. This serves as an issue in countries where healthcare is inaccessible and costly leaving gig workers in vulnerable positions, with little support in case of injury, illness, or job loss. In the U.S., during COVID-19, 21% of drivers had no health insurance, and nearly 15% relied on public assistance(6). As essential workers during the pandemic, gig workers, particularly delivery service workers, relied entirely on gig work and were at greater risk and more vulnerable to health issues.?
In terms of earnings, the gig economy can have both positive and negative effects. While some workers report earning competitive rates, many gig workers experience fluctuating wages that often fall below a minimum expected wage. In the U.S. in 2022, approximately 14% of gig workers earned an hourly wage lower than the federal minimum wage. Additionally, about 29% earned less than the state minimum wage that would apply if they were employed as a W-2 service-sector worker(7). Thus, in many cases, the gig economy may not offer the financial stability needed to maintain a decent standard of living. Additionally, the algorithmic management where platforms control the availability and nature of work somewhat undermine the idea of gig work autonomy and freedom to be matched with a client. Companies like Uber and DoorDash use complex algorithms to determine which jobs are offered to workers, often favoring those who accept more assignments or work during peak hours. As a result, gig workers are sometimes compelled to work longer hours or in unfavorable conditions to maintain a steady income. This raises concerns about how gig platforms might not be as empowering to workers as they claim and instead might exploit them under the guise of flexibility.
Is Gig Work Sustainable for Workers Long-Term?
The expansion of the gig economy on a global scale has raised concerns about its sustainability and the long-term prospects for workers. Relying on gig work as a primary source of income for an extended period can result in financial insecurity, especially without employer-provided benefits. The cyclical nature of gig work, characterized by periods of high demand followed by sharp declines, leads to unpredictable income patterns. Also, the lack of upward mobility in most gig jobs is problematic for long-term career goals. And now that new technologies like automation and AI are growing, the future of the gig economy looks uncertain. Even delivery and ride-hailing gig work is at risk as we see an influx of self-driving vehicles. On the other hand, in industries that rely on human creativity and problem-solving, like design, writing, and consulting, gig work will continue to grow.
Empowerment or Exploitation?
The gig economy has many sides, good and bad, but we can say the same about the traditional employment economy. It provides flexibility and independence for gig workers, but could be at the expense of job security, benefits, and fair compensation. As the gig economy expands globally, the difference between empowering workers and exploiting their vulnerabilities will become more evident. In certain countries, the gig economy has facilitated the transition of workers in gig jobs that require creativity into more possible entrepreneurial goals. For example, in Saudi Arabia, the government has established routes for creative freelancers such as artisans, graphic designers, and marketers to become self-employed, offering them the legal system and aid to develop their skills into small or medium-sized enterprises. Similarly, programs like Startup SG in Singapore offer freelancers mentorship, funding, and resources to help advance their gig work into fully-fledged businesses.
Ultimately, whether the gig economy is perceived as empowerment or exploitation largely depends on the conditions under which workers operate. In regions with insufficient labor protections and low wages, gig workers may find themselves stuck in risky, unstable employment. In comparison, in countries where freelancers are supported in transitioning into entrepreneurship, the gig economy can serve as a powerful tool for achieving financial self sufficiency. For the gig economy to reach its true potential, a policy that promotes a balance between flexibility and worker protection is key. Only then can the gig economy provide both empowerment and long-term sustainability.
1 World Bank,?Online Gig Work Enabled by Digital Platforms, September 2023.?https://www.worldbank.org/en/topic/jobsanddevelopment/publication/online-gig-work-enabled-by-digital-platforms.
2 International Labour Organization,?The Role of Digital Labour Platforms in Transforming the World of Work, 2021?https://www.ilo.org/publications/flagship-reports/role-digital-labour-platforms-transforming-world-work.
3 European Commission,?Digital Labour Platforms in Europe: Numbers, Profiles, and Employment Status, JRC118570, 2020?https://publications.jrc.ec.europa.eu/repository/bitstream/JRC118570/jrc118570_jrc118570_final.pdf.?
4 World Bank,?Online Gig Work Enabled by Digital Platforms, September 2023.?https://www.worldbank.org/en/topic/jobsanddevelopment/publication/online-gig-work-enabled-by-digital-platforms.
5 Pew Research Center,?How Gig Platform Workers View Their Jobs, December 8, 2021,?https://www.pewresearch.org/internet/2021/12/08/how-gig-platform-workers-view-their-jobs/.
6 Expendable to Essential? Changing Perceptions of Gig Workers on Twitter in the Onset of COVID-19,?https://doi.org/10.1080/13527266.2021.1952929.
7 Economic Policy Institute,?Survey of Gig Workers and Their Benefits, June 2022,?https://www.epi.org/publication/gig-worker-survey/.