When the Covid-19 pandemic hit the world like a speeding bus, everyone was forced to adapt. With those hard times came an increase in flexibility, as the world continued to operate even with its workers stuck in their houses, improvising and working around their new conditions. It was this shift to fluid working conditions, along with the realization that it was not only possible, but sometimes even more effective to allow individuals to work whenever and wherever they choose to, that gave rise to today’s topic – the proliferation of gig economies. Is this a good thing? Well, it really depends.
What is a gig economy? Well, as the name suggests, the term refers to a labor market with a significant reliance on temporary workers, freelancers and independent contractors (like your basement dwelling unemployed friend named Steve) to fill up positions rather than the usual nine to five office workers that we have come to associate with work. Contrary to popular belief, workers in the gig economy still have some contractual relationship - albeit a different one that reduces the emphasis on the minimum number of hours committed. Case in point, while food delivery firms offer shift-based work, each shift also comes with a predetermined number of working hours (typically lasting between 2 to 3 hours each). Unnecessary idling during such shifts is obviously discouraged, and in certain instances even penalized.
Covid-19 shook the Earth to its very core, uprooting jobs and destabilizing lives that people had assumed would remain constant even in today’s increasingly tumultuous society. It became increasingly common for individuals to take on temporary jobs (such as being a delivery person) in order to make a quick buck while searching for the next opportunity before the current one ran its course.
With most trapped at home and (especially in the early days) places which could hold crowds locked down, food delivery services proliferated, quickly sliding along the scale from being a luxury to somewhat of a necessity, especially for those who were not able to get their groceries without incurring significant trouble for their efforts. Outside of necessity, the burgeoning upper middle class also naturally turned to delivery services, reasoning that the premiums incurred was justifiable as they theoretically were sheltered from the coronavirus in their homes.
As with basic economic theory, the increase in demand required a proportionate increase in the number of workers to deliver the goods. Was it then really a surprise that many people jumped at the chance for unskilled labor that paid decently? Amidst waves of layoffs and redundancies, it was a mutually beneficial relationship of the highest order; delivery firms could continue to rake in the big bucks and all their workers had to do for a relatively decent salary was to pedal (or drive) around a certain region.
Regardless of what you might be looking for in a job, the gig economy market appealed greatly to even the most rationalof human beings. In a world where the difference in pay between skilled and unskilled labor was normally like heaven and earth, anyone who was opportunistic enough quickly jumped onto the bandwagon, happy to try something new and keep up with everyone else (minus the billionaires, of course) during the chaotic Covid era. Of course, we cannot discount the hordes of unfortunate breadwinners who turned to gig jobs out of need.
Even amidst the receding waves of the pandemic, prominent examples of gig economies in operation are still in full view today. Of course, if you want a demonstration that hits closer to home, you only need to look around while you’re walking (and probably get out of the way of a speeding scooter while doing so). Speaking of which, the author almost collided with one such specimen who sped through the traffic junction recently, 3 full seconds after the traffic light turned red.
While gig economies are increasingly popular and profitable in these trying times, anyone who might want to participate needs to understand the costs of such fluidity. While gig workers are able to handle more flexible working hours along with the ability to quit your job for something better at any time without warning, the temporary nature of their jobs means a total absence of job security.
Without signing formal employment contracts with their employers, businesses are legally allowed to cut corners and save money as gig workers are assumed to be ineligible for the usual entitlements like insurance, pension contributions (depending on country) and paid vacation time. Furthermore, being an independent contractor means that at any moment, you could be abruptly dismissed if your employer pulls the plug on unprofitable operations (case in point: the recent collapse of Deliveroo in Australia leaves some 15000 workers high and dry).
The unpredictable nature of such an occupation might disrupt your plans at any moment. Something unexpected pops up such as a routine medical checkup or a friend’s sudden demise? Reschedule the event, or forgo your salary for a day or two. Well, that’s the risk you accept in exchange for your prized flexible working hours. Worse still, organizations rarely cover routine work-related expenses such as gas bills or vehicle repair costs simply because they are not legally obliged to do so.
However, change is now afoot, and some critics argue that it has been overdue for years. In September 2022, ride-hailing giant Uber had agreed to a US$8.4m settlement over a California class action lawsuit that accused it of misclassifying drivers as independent contractors, thereby denying them of employee benefits as mandated under state law, such as overtime and minimum wage. Similar groups of Uber drivers have also won landmark court rulings in the United Kingdom and New Zealand, potentially paving the way for millions in back pay over unpaid entitlements.
The US Department of Labor has also announced a 184-page prospective guidance intended to ward against employee misclassification, while several US states have legislated their own penalties against errant employers who attempt to circumvent mandatory employee benefits. Across the vast European Union, food delivery and ride-hailing workers are expected to become formal employees regardless of what roles their employment contracts may suggest. Such regulations aimed at shoring up the safety net for gig workers is expected to reduce the inequity that the platforms have often been accused of exacerbating, especially during the uncertainties at the height of the pandemic.
That’s not to say companies are solely reaping the benefits, of course. While a gig economy is far more cost-effective, the same uncertainty applies to businesses. With the need for a labor force, employers would have to be incredibly wary of their workers drifting to the next big gig due to the lack of loyalty that such an informal agreement entails. Firms that rely heavily on performance-based financial incentives alone will see workers flocking elsewhere the moment cash dries up.
Are gig economies sustainable? It is a rather tricky question. One could point to their proliferation during the Covid-19 pandemic as the obvious marker of success, but this could also demonstrate a requirement of specific conditions to be met (such as a drastic drop in job security) for gig economies to even have a chance at competing with regular businesses in the first place. Another key component of these labor markets is the incredibly flexible nature of their workforce. On one hand, this fluidity could result in that same workforce dispersing to chase something that pays better. On the other hand, society will never lack people desperate to make some money, and gig economies offer a simple, albeit temporary, source of salary for them.
Almost poetically, this question reflects gig economies perfectly. With so many situational factors at play, it is impossible to predict with certainty the future of these labor markets. Perhaps a constantly changing world requires an equally flexible approach to succeed. Who knows? Regardless, gig economies are just another job market. Whether it continues to succeed is up to chance, and whatever new crisis hits us in the coming year.
Citations
Bellan, R. (2022, October 25). New Zealand uber drivers win case declaring them employees. TechCrunch. Retrieved from https://techcrunch.com/2022/10/25/new-zealand-uber-drivers-win-case-declaring-them-employees/
Deutsch, J., & Levingston, I. (2021, December 9). Food Delivery Companies Stocks Drop after Eu proposes gig Economy Worker Rules. Bloomberg.com. Retrieved from https://www.bloomberg.com/news/articles/2021-12-09/gig-economy-workers-hail-landmark-push-to-make-them-employees
Shepherd, L. (2022, September 2). Uber signs $8.4 million settlement over driver misclassification. Society for Human Resource Management. Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/uber-settlement-california.aspx
Weber, H. (2022, October 11). Federal Gig Worker Proposal Tanks Uber, lyft and doordash stocks. TechCrunch. Retrieved from https://techcrunch.com/2022/10/11/uber-lyft-doordash-stock-tank-gig-worker-rules/
Comments