What is the Gig Economy and why are so many people freelancers?

November 29, 2017

Here is a scenario with which we are already accustomed to and another one which has big chances to become our reality:

2017: ‘So…what do you want to be when you grow up?’

Pilot like my Daddy! Judge like the lady I’ve seen on the TV. Princess, just like Elsa! Architect, like my brother. Doctor like my Mommy.

2037: ‘So…what do you want to be when you grow up?’

Creative freelancer like Mommy! Independent worker like Daddy. Part time collaborator just like my sis! Zero hours contractor like the gentleman from the radio.

Sounds freaky? Well, the change of our professional dreams may be just one of the effects we have to think about when we preach the global implementation of the Gig Economy.

What is the Gig Economy, what is the connection between Facebook, Airbnb, Alibaba and Uber, why so many youngsters are flexi-workers, what are consequences of the freelancer careers on the society and why should you care? Read below to find out.

Gig, an English word predominantly used in showbiz, means a performance. For example, when a band organizes a show or when they are asked to play at an event, this is called a gig. So, generalizing, gigs refer to actions which happen just once and which, consequently, do not imply constance. So, the revenues of people who do gigs come fragmented and from more sources, usually via a digital request.

The origins of this way of working may be traced to the development of the Internet networks from the ’90s. All of the sudden, Internet connection was offering the world to its users, reducing the dependency on a fixed office. Moreover, at the same time with the euphoria of digital companies (The DotCom Revolution), increasingly more firms started to take advantage of the fact that they could externalize a considerable amount of work, which led to an increase in the number of requests for collaborators, freelancers and independent subcontractors. Soon, companies realized that the externalization of human resources leads to huge cost cuts since the respective workers are not considered contractual employees, which means they are offered less social benefits.

Before detailing the effects and the problems generated by this new way of working, it is essential to trace the extent to which two current trends in the economic system are complementing the directions in which the Gig Economy runs the society: the Sharing Economy and the Collaborative Economy.

To start with, the Sharing Economy is a term used to define an economic system in which goods or services are used by multiple people for free or for a fee paid to the owner or the service provider. For instance, Uber, the world’s biggest taxi company, is representative for such an economy because a driver is sharing his or hers own car with other people by driving them from place to place for a certain fee. The same goes for AirBnb, the biggest website for short-term renting, where users can list a spare room or an entire house for a price point they get to decide. Peerby, a Dutch start-up, allows users to borrow and lend household items, electronics, bikes and cars for a short period. Here it comes the notion of collaborative economy which entails that more people consume or use an object collaboratively, which reduces consumerism, diminishes personal investments (why buy a drill when you can borrow one?), optimizes resources usage, produces waste and some might say that it even improves interpersonal relationships between users, which may be neighbours or complete strangers.

The Gig Economy sums up those notions of consumption, collaboration and work, but it distorts them by considering that these activities can replace a full-time work contract. Let’s return to Uber and the fact that you can get extra money by using a good you already own. Sounds absolutely lovely, right? What could possibly be wrong with this? The issue is that the Uber driver, by driving his car for a client, works for a company and is not considered an employee, but an independent contractor. Which means that the Uber driver can set his or hers own working hours by being their own boss and can generate more money during days with special events or during peak times. However, advantages stop here because the Uber drivers, thousands of them, are not medically insured, are not having their car insured by the company, are not guaranteed a certain workload, are not promised a minimum monthly pay, are not offered paid vacation days, are obliged to contribute to the tax funds all by themselves and … the company does not contribute whatsoever to the pension funds of the drivers. Moreover, Uber may decide at any time to revoke the access of a driver, this happening to drivers who score 4.6 stars or lower (out of 5). However, Uber, Lyft and other transport companies are charging a commission from every ride, which can reach up to 25% of the whole value of the trip, which justifies the fact that in the absence of these platforms, drivers would not be able to find clients. The complaints and numerous protests of drivers have brought the attention on the fact that these companies are making profit on the backs of their drivers, without offering as much in return. And they are not the only ones to highlight this new way of management which seeks high and rapid profits and which ignores long-term consequences in the lives of the exact people who bring those revenues.

Other examples of companies and initiatives based on transportation are Uber Eats, Foodora and Deliveroo, which attract bikers to provide food delivery services. Put simpler, if you are craving for a fast food in the middle of the night and your favourite restaurant is still open, you can have your food by your door in just few minutes thanks, in the majority of the time, to a student on a bike who wants to get extra money. And there is nothing wrong in this. However, if the biker gets sick or has an accident on his/her way towards a client, the company is not responsible and will not offer any kind of compensation, although it takes a commission from every successful delivery.

Postmates, an American company, boasts with the fact that it’s a logistics firm which offers on-demand services, which means their network of service providers receives tasks from groceries shopping to picking up clothes from the dry-cleaner. Users who register for platforms such as TaskRabbit and Fiverr, receive similar tasks, from participating in a video as an extra, verifying the spelling of a CV, offering foreign languages classes, assembling furniture, sorting letters and many other tasks which others either don’t know how to do, don’t have time to do them, don’t want to do them or need help. The difference between the two websites is that on Fiverr, all tasks are rewarded with 5 dollars, from which the platform will take for itself 25%. Completely unsurprising, these companies are not covering work-related accidents, free days or days in which a certain service provider does not manage to get tasks. So, working for these platforms is unstable and unsure, which represents one of the negative effects of the Gig Economy.

The first questions about the uncertain future of full-time Gig workers, which are those who do not have a job with conventional terms on the side, are headed towards the necessary arrangements for a life that can support the new work style and life. Such activities include: managing a private pension fund, declaring their revenues for taxation, possibly hiring an accountant, diversifying the type of gigs and platforms they are available  on so there are as few periods of inactivity as possible, analyzing the feasibility of maternal/paternal leave, incorporating rest vacations in the structure of the year so the remaining working days can sustain them and also, saving up money for likely future spendings (kids’ education, buying an apartment) and saving funds for urgencies like medical problems.

Furthermore, these administrative tasks are combined with negative social consequences of these platforms: the fact that people are treated like, yet not considered employees, but more like human assistants, easily-replaceable people who can be offered unqualified work which does not have many requirements. Moreover, these platforms exclude all types of motivation and stimulation, from good, stable pay to hierarchical advancements, the possibility to receive company stocks or to attend development trainings. Which leads to an increase of societal polarization, in which rich class continues to use the less-fortunate people, which live from month to month. This structure explains why so many young people work as freelancers: since the requirements for certain tasks are minimal, many youngsters see in this aspect an opportunity to generate their first income. And as most young people do not have time for full-time jobs due to their studies, yet they need the extra money, they have to start their careers with side jobs/gigs, which sometimes revolve around simple, unspecialized tasks for the entry-level. Again, nothing wrong here. But because this structure does not rely on progressively developing the complexity of the jobs, many young people remain entry-level workers for long periods of time, which later makes it harder for them to make ends meet.

However, there is another type of worker: professional freelancers, those who take on projects which require abilities and training in a certain domain, such as illustration, programming, copyright, publishing, photography and other markets which have accepted the fragmentation of work and the idea of collaboration between wider groups of people.

Gigantic companies such as Facebook, AirBnb, Uber, Alibaba and other smaller-sized competitors from almost all industries have come to revolutionize the way in which companies make profit and the way people work. How? They are all relying on the sharing and collaborative economy which include goods their users already have, services which they can provide and information that they can use commercially. This way, the contributions of these platforms are minimal, in the sense that they do not have journalists to create media content (Facebook), nor real estate (AirBnb), nor fleet (Uber) or product stock (Alibaba). Therefore, these companies take advantage of their positions as leaders in connecting the offer with the demand in order to generate high revenues with minimal investments.

So, it is possible that in the next years we will all become freelancers, contractors paid by the hour, independent subcontractors or micro-entrepreneurs.

But are these the profiles we want to pursue for our children?

This article originally appeared in ELLE Romania, November 2017 issue, number 240

Photo by Carl Heyerdahl on Unsplash

You Might Also Like

No Comments

Leave a Reply

%d bloggers like this: