Gig Economy & the Future of Work

Lying on the couch, I’m working on my laptop. A few minutes later, I find myself scrolling through the infinite food options on Swiggy. You’ve probably used one of the many ‘food-tech’ apps either to search for a restaurant, make a reservation at your favourite bar. Restaurant picked, the discount code applied & order placed! The delivery guy soon arrives. He is the human link in a technology-driven industry of convenience. He has several counterparts — those who drive you back from a late night party to the ones who bring you groceries or those who lend you their home for your trip — living the courier lifestyle.

Welcome to the Gig Economy where an army of workers called “giggers” are creating their own destiny as companies like Uber, AirBnb, Ola, Zomato, Swiggy and others are using technology to disrupt industries. This shift claims to focus on the worker where one gets to choose his/her own work hours in a hi-tech frontier, departing from the usual 9 to 5 jobs!

The term “gig economy” was first coined by journalist Tina Brown in 2009. She wrote about the trend of workers pursuing “a bunch of free-floating projects, consultancies and part-time bits and pieces while they transacted in a digital marketplace.” To sum up, Gigs are either skill-based assignments or need-based tasks.

As they say, there’s nothing new under the Sun. The same holds true to the Gig Economy which perhaps existed from ancient days where a man decided to hunt and gather. And, the formula is similar: Go out, explore, learn more! Interestingly, the full-time employment culture, which has redefined what a traditional job looks like, is also a fairly recent phenomenon.

Where it all began?

Prior to the industrial revolution and until the Victorian era, people worked multiple jobs to piece together a decent living. The Gig Economy of unpredictable employment patterns sprang up when industrial jobs were seasonal. Historian (at Cornell University) Louis Hyman’s years of research revealed that companies like Manpower Inc. and Kelly Girl provided temporary labour (mostly women secretaries) to big corporations to bridge gaps in the workforce.

“The industrial revolution was preceded by the industrious revolution, a social reorganisation of people, which involved groups working together in small spaces, dividing up tasks so that each labourer didn’t have to be as skilled” Hyman explains.

As the noise for better employee welfare and benefits got shriller and louder from trade unions between the 1930 and 1950s, a tremendous shift in larger corporations’ attitude towards employees was evident. With legal systems in place following the labour movement, corporations began prioritising employee benefits such as social security, medical leaves and paid leaves, unemployment insurance, health insurance, pensions, life insurance, etc.

Economic downturns fuel Gigs

Piece-work has long been part of middle-income workers ever since the industrial revolution. Part-time work witnessed a spike world over from the 1980s when traditional organisations began moving away from full-time employment offers towards short-term, more flexible staffing opportunities. This was a result of lean revolution to cut costs and focus on short-term profits. In the following decade, agencies for temporary workers spouted where 85% of the companies began using temporary labour by decreasing employee benefits.

Gigs generally seem hot in a recession which was exactly what happened during the 1991 economic downturn. As a result of job losses, alternative work began gaining ground as a response to the weak labour market. A few years later, the Internet’s evolution in 1995 and the inception of Craigslist in the consecutive year — all seemed to work wonders in boosting the prospects of the alternative workforce.

Between 1995 and 2005, the number of workers with alternative employment arrangements for their main job went up from 12.1 million workers to 14.8 million in 2005 in the US, according to the Bureau of Labour Statistics.

The fad of fast-growing subset of gigs continued to awe people while Amazon became one of the first companies to jump onto the Gig Economy bandwagon in 2005. But the following years leading to the Great Recession in 2008 made life difficult as money was tight and jobs were scarce. People looked for ways to supplement their stagnant wages and dwindling savings. This pent-up demand was met with a new type of work that enabled the gig economy. Simultaneously, companies began shifting from antiquated full-time workforce model to contract-based (on-demand) workers.

Tech-driven industry of convenience

Interestingly, the period of recession saw giggers crowding the customer service segment of work. The inclusion of a flexible workforce eventually opened up organisations to the idea of being more agile and accommodative. What changed was that 70% of employers in the developed countries truly believed that giggers increased their profitability and efficiency.

On the other hand, the app-based economy has also made us (consumers) smarter, better connected and more demanding as we love the speed and convenience that the digital platforms offer. Not only has this enabled in consolidating remote and mobile workers by directly connecting service providers to customers but also made consumers’ voice more powerful.

Though there is no accurate estimate of their numbers, it is projected that this ‘flex’ or ‘mobile economy’ will comprise half the workforce by 2020, and as much as 80% by 2030. Gig Economy is symbolic of the kind of contract work expanding into every corner of the economy — more like the reincarnation of contract work.

A McKinsey study estimates that 20–30% of the workforce in developed countries already engages in some form of independent work. Adding to this,India is home to the second largest market of freelance professionals (about 15 million), standing next only to the US (nearly 53 million). Most of them have full-time roles but also work side-hustles which they earn from. These 15 million Indian freelancers contribute to about 40% of total freelance jobs offered worldwide, a report by ICRIER states.

The proliferation of apps such as Uber, Lyft, AirBnB, TaskRabbit and others have defined the direction of today’s global economy by disrupting sclerotic industries which do not adapt easily. However, all is not hunky dory in this fluid workforce.

It’s not all sunshine & rainbows in Gig Life

The Gig life comes with many riders. In fact, several companies supporting the Gig Economy have been blatantly accused of exploiting their workers as there is no safety net for giggers who are part of the ecosystem. In the process, their rights and pay is compromised. Gig life also means that there are no standard benefits such as pensions, hikes, sick pay, leaves or holiday entitlement.

Since most of the low-skilled gig workers are poorly paid and earn only based on the number of working hours clocked, financial insecurity also looms large. With this impending threat, they often give up their social life to overwork and make ends meet.

With payouts not guaranteed and gig work not being long-term, they find it difficult to get a bank loan or mortgage. Apart from this, they also have to pay taxes and file returns, irrespective of their wages. Some gigs, specifically, require licenses and permissions, depending on the region they are operating in, making it even more difficult and less reliable in the long-term.

For instance: Uber drivers can’t really decide where they work. They are constantly nudged towards locations where the app wants them to be. And, if they want to make more money, they cannot be choosy about their working hours. The idea of this new boss — an algorithm — is different and more complex in the Gig Economy as we have traded human bosses to AI.

Meanwhile, workers also need to find their own gigs which can be a cumbersome process as it isn’t easy unless you have an established relationship with a client. With no benchmarking system for freelance work, a gigger is often accused of overpricing projects or succumbs to ridiculous price bargains. Geographic flexibility in the gig economy also means more competition which in turn means lower bids for the same work. As a gig becomes popular, earning potential will always decrease. And, as earnings decrease, workers are forced to adjust their schedules to maximize their income.

Though the gig economy has helped workers leverage their skills, knowledge, and networks, it has shrunk the corporate resource pool by creating higher attrition rates among organisations. It also calls for the regular implementation of new technology platforms to manage churn faster. This can be very time consuming and costly.

But there are advantages to being a Gigger

Companies supporting the sharing economy have helped create a novel form of business model where workers have a chance to earn money on their own schedules either through in-app payments and ratings-based marketplace ecosystem or by showcasing their expertise on tech platforms like UpWork, Fiver, PeoplePerHour, etc. They can either be freelancers or full-time workers with side-hustles or those on temporary contracts.

According to a report by Noble House titled, “The Future of Work is Anywhere — Gig Workforce”, 70% of the Indian Corporates have used gig workers at least once for major organisational issues in 2018. Further, the report said, nearly 45% of the human resource heads surveyed want to hire gig workers so that they can supplement the skills of the existing workforce and 39% would do this to reduce the cost and 10% for filling temporary vacancies in their teams.

As bigger corporations are willing to experiment with temporary workers, they can save costs as employee training and employee protection expenditure go down drastically and scale up quickly. In this model, gig workers get personal time as they choose their own work hours which allows them to network and improve productivity.

The free will also helps them decide the price on their projects and, at a time and place of their choice. They also have the advantage of finding a variety of jobs and being at their creative best as every project could be different. Obtaining higher education or learning new skills is possible for gig workers, given the flexibility of time and work. Sometimes, gig workers earn more than full-time employees as pay varies from client to client.

In fact, several studies show that people with more control over their schedules and flexibility in choosing their work are significantly more satisfied with their work than their peers who hold regular salaried jobs, despite losing out on benefits and security. For a clear majority, it is a conscious decision to embrace the gig economy.

Companies Supporting Mobile Economy

The companies enabling the gig economy are essentially replacing contracting companies. For instance: If there’s a wedding and I’m looking for manpower, there an app for supplying the manpower. Similarly, if I’m making an ad film and am looking for background actors, I could as well use an app to hire them than to approach a talent agency. More importantly, these platforms are powerful enough to serve your demand real-time. I don’t need to book a ticket in advance nor do I need to book a cab hours before my schedule anymore. Everything’s available on my fingertips!

Upwork is another platform that offers gigs from low to high level skill set, seeks to connect businesses to a reliable and larger pool of quality talent, while workers simultaneously can enjoy freedom and flexibility to find jobs online. Another example is that of ‘Flexing It.’ It has a network of over 50,000 freelancers and 19,000 clients and it aims to create a market for specialised, experienced independent consultants in India. So, if you are looking for highly skilled consultants ranging from senior associates to experienced directors and strategy consultants, then this is the place to be!

Similarly, Uber’s disruption of the taxicab industry, based largely on identifying opportunities for innovation in transporting people, has democratised workspace globally. And, now product companies such as Zomato, Swiggy, Food Panda, UberEats, UrbanClap, HouseJoy have all followed the same model, contributing to the Gig Economy.

Growing pangs of unrest

Despite the convenience of being able to open an app, book a cab and jump into it, the global expansion of gig work has caused friction and controversy. In November 2018, Uber and Ola drivers went on a strike to protest against the fall in their earnings and a similar strike was carried out by Swiggy delivery executives in December 2018. These workers are not represented by any trade unions and are generally considered to be self-employed. Going by that logic, some platforms like Swiggy, Zomato and Uber Eats which claim to be neutral, mandate their delivery executives to wear a uniform, indicating how their workers must do their duty of acting like employees.

With app-based tech aggregators facing such repeated challenges over the demands of employee benefits from gig workers, the threat of automation always plagues them as it is seen as the future of businesses. Moreover, autonomous vehicles or driverless cars are likely to prove much safer than conventional ones, they believe. Similarly, e-commerce giants are experimenting with drone delivery which eliminates the hassles of navigating through traffic snarls or relying heavily on human resources.

A dire need for regulation

Even as a sizeable chunk of workers remain outside the traditional employment structure, there is a dire need for regulations or policies which create a safety net for workers in the sharing economy. When it comes to managing the on-demand workforce, many organizations suffer from fragmented governance models and manual processes.

Currently, one proposal being floated is to create a third category of worker, sitting somewhere between self-employed and employed — the independent worker. This classification bridges the gap between traditional employees and contractors, acknowledging the unique characteristics of independent workers and giving them the right to bargain for protection from employment discrimination.

Europe and Britain already have introduced legislation which gives more leverage and power to gig workers in choosing predictable hours of work along with benefits of leaves to put an end to “abusive practices” around casual contracts.

In India, the gig economy is at a nascent stage but is growing rapidly. According to a Millennial Survey by Deloitte, 16.8% of millennials evaluate career opportunities by good work-life balance, followed by 13.4% who look for opportunities to progress, and 11% who seek flexibility. This is one of the main reasons why millennials are attracted to the gig economy.

Not falling behind, the Indian Government in 2015 introduced a freelance scheme under its Digital India platform. While it has recognised gig workers and entrepreneurs, the rules are still fuzzy. Since there is no proposal for a regulation protecting gig workers in India, benefits such as overtime pay, paid or sick leave, health or medical allowance, protection from harassment or discrimination among gig workers are still not recognised.

However, the Indian government could model a policy for gig economy around innovations such as Australia’s GigSuper, a fund which makes it easier for gig workers to save for a pension. Given that workers in the gig economy are vital to the ever-changing landscape of the corporate world, insisting that these gig platforms follow the rules laid by the government would give workers greater protection while ensuring that the gig economy lives up to its enormous promise.

A full-time reality

As the current workforce’s obsession with freedom intensifies, the gig economy will continue to grow and disrupt businesses. The Gig Economy’s digital platforms consistently deliver choice, control and options for people who choose to build portfolio careers. Those who are not reliant on gig work, use it for supplemental income while those who are charmed by its flexibility and pay are seeing it as the best overall option.

Within the next five years, it is predicted that the global workforce will comprise nearly 50% independent contractors. This is both a blessing and disguise, especially for younger people entering the workforce. In the past, even those without a career path would end up falling into a nice profession by simply following a standard track. But faced with the ever-changing face of work in a tech-driven world, one needs to be more skill-oriented and driven at least to make it to the first of the many professional ladders. So, we need to make investments in our infrastructure and make changes to the way we take care of workers.

Additionally, app-based businesses will become an important part of the world’s economy, compelling traditional ones to adapt an app-based labour market in ways we cannot yet anticipate. Maybe, your job of the future will be a gig and you may be getting more freedom from your employer through an app, a technology or a robot! But for now, the Gig Economy is here to stay and has a long way to go before side hustles become a full-time reality!

How do you think Gig economy would unfold?

Reposted from aditya-gupta.co