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The past, present and future of the gig economy

For a long time, salaried employment has been seen as superior to freelance work. Job security, regular income and the attached benefits trumped pay and time flexibility.

But the ‘gig economy’ has turned this hierarchy on its head, as online platforms made access to this work and this workforce easier and cheaper. Now freelancers and contractors are more in-demand than ever.


And it’s worldwide. In the UK, an estimated 5 million people are now self-employed, with tech unicorns like Uber and Deliveroo employing large numbers of contractors. On the far side of the world in Indonesia, drivers for Gojek and Grab have had the same effect.

A robust gig economy sounds like good news for developing economies. But it has its critics.

To better understand its potential and problems, we must examine what the gig economy is and how it grew to be such a vital cog in the global economic system.

 

Gig roots

The modern definition of the gig economy means the allocation of short-term jobs to flexible, multi-skilled workers via online platforms. And it’s likely that when you hear the term, you think of Amazon (delivery drivers), Uber (taxi drivers) or Deliveroo/Postmates (food delivery drivers).

These companies have used ‘gigging’ to rapidly scale flexible workforces. It has been one of their key strengths and a crucial driver of growth. But the gig economy itself is not a recent innovation. Its roots are bigger than Silicon Valley and older than the last decade.

In fact, the term can be traced back to the Industrial Revolution when workers, who were flexible, multi-skilled and unrepresented by unions, completed a selection of manual tasks – collecting crops, milking cows, labouring – for a variety of masters. In the wake of World War II, this multi-skilled section of the workforce grew again, as work was found for returning veterans. To offer employment to as many as possible, short term and flexible hours contracts increased. 

As ever, technology facilitated

More recently, tech has facilitated employees’ search for work and employers’ search for workers. Smartphones match buyers of labour with people selling their time and skills. The simplest (and cheapest) way for employers to transact is to offer short-term contracts, hourly wages and flexible working hours but no pension, social or job security.

Uber has used this tech-led model to contract millions of drivers worldwide. Anyone can become a driver and, as a result, the coverage, service and product improved, business boomed and Uber is now IPO-ing for $100bn. Its rise is the perfect case study for how technology plus the gig economy can drive down unemployment and answer surging consumer demand.

 

The downside of the gig

To its proponents, gigging aligns with a modern desire for flexibility and a reluctance to conform to traditional work hours. The advantages for consumers are clear too, with prices low for products that can be created and delivered at any time. One swipe gets your dog walked or your dinner delivered.

But many consider the gig economy to be representative of how modern capitalism is failing. Rather than turning the workforce hierarchy on its head, critics claim it has created a new bottom rung of the ladder as growth-oriented companies rid themselves of employees and replace them with cheap, unrepresented contractors.

In austere times, desperate workers must provide pensions, health care and sufficient income for themselves often by working multiple jobs and punishingly long hours. Technology is turbocharging this insecurity, driving down wages and eroding workers’ rights quicker than ever.

 

The future of the gig

The gig economy has provided immense employment opportunities for the underemployed worldwide, offering forward-thinking companies the chance to gain access to a new tranche of technologically-engaged and flexible workers. It’s been one of the defining movements of this era. However, there are cons for workers and some that could be catastrophic for companies who choose to grow their workforce in this way.

The key point is whether companies like Uber could change the way they contract their workforce. Could they survive if they offered more protection and rights?

In an age when companies need to grow between funding rounds, meeting milestones and keeping as far ahead of the competition as possible, don’t expect that to change soon. The gig economy has grown up in this era of growth-focused, technology-led capitalism. And until we lose faith in that system, the gig economy will remain a central part of it.

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