The age of freelancers is upon us and if our society is not prepared people are going to be left behind.
A new economy has emerged out of the embryonic fluid of the digital age.
The gig economy, a love child of the internet and globalisation, is transforming how we work to the extent that independent contractors or “freelancers” are becoming the norm.
The “gig economy” is the name given to a phenomenon in global labour markets where temporary positions, short-term contracts, freelance jobs, or “gigs” are on the rise and regular employment is waning. Think UBER, Airbnb and Lyft; companies where people can make a buck by providing a service that is facilitated by a third party without being employed – and without the protections that come with employment.
Globalisation and digital technologies mean that workers are increasingly mobile. Work can be done from almost anywhere if you have a digital device like a smart phone or laptop and an internet connection. Jobs and the traditional “workplace” have been decoupled and people are more accessible to companies no matter where in the world they might be.
Like anything there are pros and cons to operating in this economy as a worker, or perhaps more appropriately, as an individual. You get to be your own boss, have better flexibility around when you work, are in a better position to pursue that elusive work-life-balance, and can focus on projects that inspire you.
Or maybe you get none of those things. Maybe you are forced into being an actor in the gig economy because it’s extremely difficult to find employment in today’s labour market. Maybe you don’t get to control your hours because the times when your service is in demand is dictated by consumers. Maybe the income you receive is low and intermittent so you have to take whatever you can get. Maybe the third party company your working alongside holds all the cards and none of the risk.
For companies the gig economy is enormously attractive. Businesses save money because they have no obligation to provide any of the usual benefits and protections legally required of them if they employ someone. No paid holidays, no sick leave, no time and half on public holidays, no pensions. They don’t have to provide a work space for employees to perform their tasks or fund training to give them the skills they need. Gig workers are expected to come with all the expertise they need to fulfil the project. So the company assumes none of the risk and gets all the rewards. If something happens on the job you assume all the liability and the company doesn’t have to take any responsibility.
You also have the scenario where a company like UBER has classified their workers as independents but places on their drivers similar expectations to those they would impose on employees. So through a sleight of hand they are wriggling out of standard legal obligations to provide employment protections, including at least a minimum wage, to their drivers.
If it sounds like I’m overtly critical of this brave new economy then I should state that I’m not fundamentally opposed to it and here’s why:
For starters it’s not going away. The genie is out of the bottle and it’s pretty hard to stuff that pixie back in there once it’s tasted freedom.
To an extent we need to embrace the gig economy and the opportunities it presents. The pursuit of work-life-balance is an important destination and I think we should be doing everything we can to arrive there. Having the ability to manoeuvre across different career options with agility and ease can only help people to grow as individuals and contributors to society.
Ideally a gig economy is powered by independent workers with the power to choose where, when and how they work rather than a being subject to a market force that necessitates they pick up temporary gigs because they can’t get employment. I think both scenarios are occurring.
As is typical, labour laws are notoriously slow to catch up to technological change and the gig economy is challenging policy makers everywhere. This issue is going to become increasingly prevalent and I foresee the number of gig workers increasingly exponentially over the coming decades. The proliferation of temp work has not been anticipated and our government has a lot of work to do to ensure people are not exploited.
Right off the bat, legislators need to ensure independent contractors don’t fall prey to restraint of trade scenarios. The gig worker relies on being able to move efficiently from gig to gig and companies who restrict their ability to be agile are depriving them of the benefits of working in this economy. The government needs to seriously think about access to training and education for a rapidly growing demographic of workers who operate in an environment where companies expect people to take responsibility for their own professional development.
The IRD needs to give serious thought to how they are going manage taxes for hundreds of thousands of independents or there’s going to be less in the coffers for important state institutions like education and health.
Perhaps most importantly, gig workers need a mechanism for collective representation to protect themselves from exploitation. As individuals they have no bargaining power and without support can be isolated, but collectively they could take actions to improve their conditions. Unions are the traditional labour market apparatus for building workers’ collective power, but they have been unhelpfully quiet on the issue of the gig economy.
The gig economy is here to stay and we’ve got to make sure it works for everyone and not just companies who are looking to shave expenses.