Most of us know a little bit about the “gig economy”, but what exactly is it and what is its significance?
This business sector usually involves low-paid, flexible work such as delivery services, where people are offered one-off tasks through a website or an app.
The gig economy may be most obvious in big cities, but its presence is also on the rise throughout Scotland and the rest of the UK.
Despite the opportunities being created by gig work, much of the recent publicity surrounding this business sector has been negative.
At the end of last year, Uber lost a legal battle after a London tribunal upheld a ruling that the ride-hailing app must treat its drivers as “workers” entitled to the minimum wage and holiday pay.
Despite this setback, one thing is certain – the gig economy is here to stay.
Tens of millions of jobs are expected to be created worldwide in this business sector in the years ahead.
Today’s fast-moving employment world bears little resemblance to what was normal in past decades, where workers would frequently spend their whole career with just one company.
There are no exact figures available about how many Britons are working in the gig economy as self-employed independent contractors.
Estimates range from just over one million to five million.
Gig workers are said to value flexibility and control over their schedules, preferring this type of role to putting in regular hours as an employee.
But there has also been criticism of gig work in areas such as inadequate pay levels and workplace benefits as well as poor job security.
A report from the McKinsey Global Institute took an in-depth look at independent work.
It found that this type of work has three defining features – a high degree of autonomy; payment by task, assignment, or sales; and a short-term relationship between worker and client.
The institute’s research revealed that 20-30% of the working-age population in the US and the original 15 members of the EU – or a total of up to 162million individuals – engaged in independent work.
Four key segments of independent workers were identified:
- 30% are “free agents”, who actively choose independent work and derive their primary income from it.
- 40% are “casual earners”, who use independent work for supplemental income and do so by choice.
- 14% are “reluctants”, who make their primary living from independent work but would prefer traditional jobs.
- 16% are the “financially strapped”, who do supplemental independent work out of necessity.
The institute added that independent work could have economic benefits – cushioning unemployment, improving labour-force participation, stimulating demand, and raising productivity.
It went on: “Consumers and organisations could benefit from the greater availability of services and improved matching that better fulfils their needs. Workers who choose to be independent value the autonomy and flexibility.”
But the institute also said that, despite its benefits, independent work involved some trade-offs. It added that there was more to do on issues such as benefits, income security measures, access to credit, and training and credentials.
The UK Government has been keeping a close eye on the treatment of millions of flexible workers, including those in the gig economy. Just a few weeks ago, ministers promised an overhaul of employment rights to improve conditions.
Plans include:
- Enforcing vulnerable workers’ holiday and sick pay for the first time.
- A list of day-one rights including holiday and sick pay entitlements, and a new right to a payslip for all workers, including casual and zero-hour workers.
- A right for all workers, not just zero-hour and agency, to request a more stable contract, providing more financial security for those on flexible contracts.
The Government move came in response to the independent Taylor Review, which investigated what impact modern working practices were having on the world of work.
Business Secretary Greg Clark said: “The Taylor Review said that the current approach to employment is successful, but that we should build on that success, in preparing for future opportunities.
“We want to embrace new ways of working, and to do so we will be one of the first countries to prepare our employment rules to reflect the new challenges.”
Workers who choose to be independent value autonomy and flexibility