The gig economy offers a contemporary twist on some age-old problems

The “gig economy” may be the second most misunderstood phrase in modern use, after Brexit.

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The “gig economy” may be the second most misunderstood phrase in modern use, after Brexit. And it also seems to mean whatever you want it to mean. It’s hard to think beyond ride-sharing apps and someone with your takeaway on the back of a push bike, but it also includes a host of online platforms connecting buyers and sellers for all kinds of work, from “clickwork”, micro-tasks you can do on your phone while waiting for the bus, to all kinds of bespoke specialist work. The common feature seems to be a platform that allows people wanting something doing to connect with people willing to do it.

There’s been a lot of concern about employment rights in the gig economy, and it’s a sector Matthew Taylor is looking at. The brou-ha-ha over National Insurance Contributions for the self-employed hasn’t helped.

But how big is the gig economy and who’s working in it? What’s their experience? To find out, we commissioned YouGov to survey over 5,000 adults and interviewed in more depth some gig economy workers. This is similar in intent to our research on zero-hours contracts where we found a lot more of them than expected, but that some of them had a rather different account of their working lives than you’d get from the newspapers.

Most people (80%) hadn’t heard of the term “gig economy”; don’t worry, the figures are similar in the USA, but it’s a reminder that we’re more likely to go online as a consumer (to order a ride) or to buy and sell items than we are to go looking for work. Although the online labour market is growing fast, just 4% of our sample had participated in the gig economy to do work in the last 12 months. Six in ten gig economy workers also had a permanent employee job.

But although the gig economy is relatively new – the market-leading ridesharing app came to the UK in 2012 – the study highlighted several long-standing issues, by no means unique.

1: Low pay

People aren’t in the gig economy to get rich. Median earnings per hour in gig economy workers was between £6 and £8, depending on the type of work done. But only a quarter of gig economy participants say that the gig economy work they do is their main job. Most gig economy workers have a regular income or there’s someone in the household with a regular source of income. Gig economy income was a top-up or for extras.  Half of gig economy workers said they were comfortably off or doing alright. The novelty of the gig economy means we couldn’t tell how many, and who, gets stuck earning little in the long-term.

2: Insecurity

We could as easily use the words “flexibility” and “uncertainty”. The contingent nature of the work means it can be difficult to plan how much work you’re going to do. People who’d stuck with their gig economy work, and spent more hours doing it, said they didn’t feel they got enough work. Some concern was expressed at how they were treated by the platforms, being encouraged to be frequently available for work (and disciplined if they weren’t available). Like zero-hours contract workers, discipline is exerted by not getting a call and it’s not clear if discipline is any easier to stomach if done by an algorithm or online rating than by a human being.

3: The legal position is a mess

Gig economy workers are regarded as self-employed. This in a way is a default position because no-one wants the cost and risk of being their employer. This can suit the gig economy worker doing this “on the side” – but some platforms appear to be seeking a degree of control not usually associated with self-employment. Almost half of gig economy workers didn’t feel like they were their own boss.

There are cases going through the courts seeking to rebadge some gig economy participants as “workers”, meaning they are eligible for minimum wages and benefits like holiday pay. It would be great if Matthew Taylor can devise a way to simplify the law, but others have tried before, and this an area where unintended consequences, especially surrounding taxation, can be large.

The law can’t solve every problem so we also need to improve gig economy participants’ knowledge and awareness of employment rights. They don’t have an employer or HR Department to discuss a problem with when or before it arises. The most commonly cited source of advice was a Citizens Advice Bureau.

4: Preparing for the future

Gig economy participants were aware of the difficulties they faced in putting money aside for their future or in updating their skills. Some wanted help, from their platform/employer or the government. However, “regular” employers are cutting back their spending on training and career pathways. Perhaps gig economy workers will be in the vanguard of developing new approaches to lifelong learning, taking advantage of the funding pilots announced in the Budget. Is the app already in development?

Many gig economy workers are content with their working lives. Few (just 14%) do this work because they can’t find an alternative. But all these issues apply (at least) as much to many “regular” jobs in Britain, and perhaps that is where we should start in improving working lives?

Mark Beatson is Chief Economist at the Chartered Institute of Personnel and Development