The rise of the independent worker in the 'new' economy
I regularly use UBER, Hardly Ever Worn IT, Airbnb, and less frequently private doctors…all part of the gig economy.
Mention the ‘gig economy' today and you are likely to get wildly different reactions. Sceptics see it as sharp workforce practice, while those on the other side of the debate believe it is a large and growing force that could change how we earn a living. These opposing views are not helped by official statistics that are typically out of date, and fail to capture economic shifts that are currently underway. To make matters worse, the lack of reliable data has led to heated arguments about whether the gig economy is the solution to widespread economic insecurity, or the cause.
It's important to recognise that independent workers share three defining characteristics: they have a high degree of autonomy; they get paid by task, assignment, or sales; and they have short-term commitments to their clients or customers. Based on this definition, the independent workforce is likely to be considerably larger than government statistics indicate. McKinsey Global research states that 20-30 per cent of the working age population have spent time as independent workers. Extrapolating this to the US and 15 core EU countries, that's as many as 162 million people. In contrast the report found that Government statistics are roughly half that, putting the independent workforce at a mere 11 per cent of the working age population in the US and 14 per cent in the EU-15. The difference primarily comes from the fact that more than half of this non-traditional workforce is engaged in independent work only part of the time and are therefore not included in government statistics but as the number of people who partake in the gig economy continues to grow it is important that government statistics reflect the sector's growing influence.
With General Motors, Deliveroo and TaskRabbit all announcing expanded operations in their own industries and growth in the gig economy expected to double according to the US based, Intuit and Emergent Research Institute the exponential growth of the sector is going to continue. This new style of work and economy is growing and its fast-paced changeable landscape, reflects the needs not only of a changing workplace but also of a changing workforce.
The vast majority of independent workers involved in the gig economy, about 70 per cent, say they engage in independent work by choice, preferring greater autonomy and flexibility than traditional jobs typically offer. Many within this group are casual earners: using independent work to supplement other sources of income and typically include students, retirees and caregivers who combine gig economy work with other responsibilities and activities. Others are those in long standing jobs that want to supplement their ‘traditional' income.
The report also claims people who choose to work independently report higher levels of satisfaction, and not only because of greater work flexibility. These people are more engaged in their work when compared to traditional job holders, relish being their own boss and enjoy greater creativity than typical nine-to-five workers. Overall they are happier with their level of income and report being just as satisfied as traditional workers on issues like income security and benefits.
There are also independent workers who have no choice but to work independently. They tend to be more typically associated with the independent workforce: couriers, delivery personnel, etc. This group can be split into two categories – those who derive their primary income from independent work, but would prefer a traditional job and the financially strapped who would prefer not to conduct work on the side, but are forced in order to make ends meet.
This means there are significant implications for policymakers and companies to address. Pressure will continue to grow to rectify the gaps in worker protection, benefits and minimum income security. Today, it is no longer sufficient for policymakers to focus on workers in traditional jobs. The independent workforce has become too big to ignore. Second, policymakers need to do a better job of tracking the independent workforce by collecting comprehensive data. Third, policymakers must expand job opportunities for independent workers who prefer traditional employment.
Companies within the gig economy are facing considerable pressures to develop systems and processes to effectively manage a blend of traditional employees and independent workers. And the race will be on for technologists to innovate, finding new ways to connect individuals to paid work. People will also face pressure to adapt, navigating the risks and challenges of non-traditional employment, particularly during periods of income uncertainty.
The government commissioned the recently published Taylor Report (2017) to investigate this ‘new' economy and found in favour of adding further employment rights and a national minimum wage to workers involved in the gig economy but admitted that any change “must strike the right balance between security, flexibility and innovation.” Those involved in the industry welcomed the increased clarity whilst warning against stringent regulation. Deliveroo said that the government needs to ensure any new measures are pro-growth so companies can continue to expand and create well paid opportunities for people in the UK and they fired a warning shot across the government's bow saying it ‘should be under no illusions that any moves to restrict flexibility could undermine the very thing that attracts people to work in this sector.'
Regardless of opinion on this new economy its continued expansion is coming just as day follows night. With that in mind, consensus must be reached between the two sides in order to best support its growth and to ensure that the global, national and local economy remains attentive to its workforce and remains competitive to the world.
By tackling some of the challenges of a changing workforce, we could create a happier, more satisfied, and more efficient workforce overall. Nelson Mandella's approach to change seems very apt here, ‘May your choices reflect your hopes not your fears'. That's something well worth working towards.
Claire Aiken is managing director of public relations and public affairs company Aiken.
Next week: Brendan Mulgrew