The gig economy: what needs to change?

Steve Mosser, CEO, Sensée writes for Work Wise Week

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Hardly a day goes by without an article on the gig-economy appearing in the media. And from high-profile court cases brought by workers that object to the lack of employment rights and benefits, to stories of individuals who are living happier, more fulfilling lives because of it, the gig economy is sure to provoke strong – often polarised – points of view.

According to the CIPD, 4% of working adults aged between 18 and 70 are working in the gig economy, with approximately 1.3 million people now working two jobs or more. Often referred to as “slashies” – think waiter/delivery driver, make-up artist/blogger and gardener/Uber driver – many choose to work this way, enjoying the freedom, variety and flexibility that this way of working brings. But others do it out of necessity when, for instance, they cannot secure a full-time job with a sufficient income (and benefits) to support a family.

Consulting firm McKinsey estimates that 20-30% of the working age population in the EU-15 engage in independent work, and has come up with a great way of categorising worker motivations, which essentially boil down to choice and necessity. 30% of gig economy workers are ‘free agents’ who actively choose independent work and derive their primary income from it. Approximately 40% are ‘casual earners,’ who use independent work for supplemental income and do so by choice. ‘Reluctants,’ who make their primary living from independent work but would prefer traditional jobs, make up 14%. And the ‘financially strapped’ who do supplemental work out of necessity, account for 16%.

This ‘gig’ way of working is set to increase rapidly as digital platforms increasingly connect supply with demand. And clearly, this, and other external factors: consumer preference, particularly as millennials enter the workplace, as well as economic factors, will all impact the ‘choice vs. necessity’ split.

I recognise that many people choose to work this way, and that they are happy with what they ‘get out of it’. I also recognise that organisations need innovation and agility to compete effectively. However, I am concerned for those that work this way out of necessity; often people in low paid and unrewarding jobs, taking on risk through disguised self-employment. And I’m also concerned that the UK economy is missing out on the income that it genuinely needs to provide protection and opportunity for an expanding population.

Many contractors working gig-economy–type jobs lack healthcare and retirement benefits, are at the mercy of their employers’ scheduling needs and, despite being promised flexible hours, find themselves little more than glorified service workers. As it stands today, some people are being pushed into jobs that neither offer fair pay and protection nor dependable hours – in fact, some workers are faced with an employment outlook that is more precarious than it’s been in decades. Has the gig economy created an employment model that robs workers of the rights they’ve earned over more than a century of fighting?

Furthermore, while some organisations undeniably benefit from this economic model, others find it harder to compete, as they choose to employ people, and this comes at a price in terms of NI contributions and other onerous operating costs.

We need to seriously examine how the gig economy is regulated. The courts have gone some way, as shown in the recent Uber and Deliveroo cases, and it’s been helpful that we’ve seen some decisions, but what we need is a better clarification from the government around what constitutes employment, worker and self-employed status; first then, can we start to change things for the better.

Technology and new business models are creating opportunities, but also challenges for UK employment legislation. There is a strong case for Government to act to both proactively help organisations adapt their working practices and to clarify employment status, so that workers get the benefits they are entitled to and that the correct national insurance and taxation contributions are paid. This may well mean a brand new classification, alongside employed and self-employed statuses, as this would better represent the way the world is moving.

Only then can we embrace this inevitable disruption, and ensure that the gig economy can deliver innovation and flexibility to employers, fair working rights and protection to individuals, and economic benefits to the United Kingdom. After all, the gig-economy isn’t going anywhere so it all boils down to making it fairer for all concerned.