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Future of Work: The Gig Economy

It seems almost a lifetime ago that Dan Pink predicted that we’d all be independent workers in his best selling book Free Agent Nation, but in the 19 years since its publication, the gig economy has emerged as a society-changing force,with platforms ranging from Uber to UpWork, Etsy to Airbnb, offering people the ability to trade their skills or resources online as independent workers.

By: Adi Gaskell, Katerva’s Futurist 

Are we truly living in a ‘free agent nation’, or is the gig economy more hype than substance?  Perhaps the first thing to remember is that the concept of contingent labor has a long and storied history, with Manpower pioneering the model as early as 1948.  The internet has undoubtedly changed the game however, as its made it possible for buyer and seller to liaise seamlessly with one another.

The scale of the industry is open to some conjecture, however, as while industry players, such as UpWork, put the number of workers in the United States at 57 million, official government data puts the figure at roughly ¼ of that.  Indeed, an analysis by the Center for Economic and Policy Research and the Economic Policy Institute suggests that little has really changed in the proportion of the workforce who are ‘gigging’ since Free Agent Nation was published.  They argue that the gig economy represents just 1% of the total workforce, with even those working in nonstandard work arrangements falling slightly over the past 15 years.

Who are gig workers?

So, if gig workers aren’t quite as populous as we are led to believe, who exactly are gig workers?  A recent report from the Centre for Research on Self-Employment (CRSE) suggests that for all the attention given to relatively low-skilled Uber drivers, many contingent workers are in fact very highly skilled.

They explore the self-employed workforce in the United Kingdom, and reveal that of the 4.8 million people who operate in this way, those in traditional gig economy roles are a small proportion of the total freelance workforce.  Instead, the most prevalent form of independent worker is something the researchers refer to as ‘project workers’, who are highly skilled individuals who work on a project-by-project basis. They argue that this group is roughly 5x the size of the gig economy.

“The project-based freelancers account for 73 percent or £104bn of the £140-145bn economic output that SOC1-3 freelancers contribute to the UK economy,” the report says. “The freelance gig economy accounts for just 14 per cent or £20 billion. Portfolio and other freelancers make up the balance.”

Given the high-skilled nature of this work, it’s perhaps no surprise that this group were also high earners, with the report stating that the 2.1 million project workers typically earned twice the average UK salary.

The demographics of gig work

This kind of analysis is vital to accurately understand just who gig workers are.  Equally important research into the sector was performed recently by financial services company Prudential, who set out to understand the demographic breakdown of gig workers, and what characteristics typified workers at different stages of their life.

The study reminded us that people operate in the gig economy in very different ways in different stages of their life.  For instance, they found that millennials were most likely to actively move into gig work, with many citing the flexibility of the work as important to enable them to fit work around their lifestyles.  By contrast, gig workers from Gen X and the Baby Boomer generations were more likely to turn to gig work out of necessity as external factors force their hand. As a result, gig workers in this generation were more likely to be unhappy with their lot and pined for a return to a full-time job.

This has clear implications for their financial wellbeing, with the report highlighting that 63% of Gen X gig workers were concerned about their financial health, with many saying that the unpredictable nature of the work made it difficult to budget, especially for expensive items such as a house or a family.  The report also suggests that this demographic typically earned several thousand dollars less per year than Baby Boomer workers, despite seemingly working longer hours.

Being in control

This sense of control over one’s life is also reflected in research into the overall wellbeing of gig workers.  For instance, research from Villanova University found that gig workers were happier than salaried employees, while similar work from INSEAD found that gig workers  reported having better mental health, higher confidence, lower stress and generally healthier lifestyles than their peers in full-time work.

What is central to both findings, however, is that workers needed to be in control of their destinies.  Research from the University of Stirling found that when gig workers were largely operating at the whim of others, their mental health suffered, both from the uncertain nature of the work, and also the lack of work they had.  

The essence seems to be that when people have both the kind and the volume of work they desire, then the gig economy is a fantastic outlet of their talents, but when that isn’t the case, then the lack of the social safety net that underpins traditional work causes considerable stress and unease.

It’s prompted the likes of the Royal Society for the encouragement of Arts, Manufactures and Commerce to issue guidance to try and ensure that gig workers can continue to enjoy the flexibility and autonomy afforded by gig work, while some of the insecurity that so worries them is reduced via policies such as income insurance and statutory holiday and sickness protections. 

It’s important that we view the gig economy in the appropriate perspective to ensure that its impact on individuals and society more broadly are understood properly, as whilst it’s fair to say that it hasn’t had quite the transformational impact many suggest (yet), it is nonetheless an important part of the labor market that demands policies that are suited specifically to it so that workers are afforded the appropriate protections.  Hopefully the growing body of research into the sector helps to provide such an evidence base from which to start building those policies.

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