the gig economy what’s the true story?

A term that has become increasingly popular, particularly with millennials. But, what’s the truth about the gig economy? How are workers classified, does it offer more flexibility and is it, in reality, all about companies such as Uber and Deliveroo?

what is the gig economy?

Essentially, workers are paid for the ‘gigs’ they do which can be anything from delivering food to creative marketing tasks.

A labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs

definition given by the BBC

what is the sharing economy?

Some perceive the sharing economy - which gig falls under - as peer-to-peer (P2P) activity that involves providing a service or product to the user via an online platform for low pay, insecurity and poor working conditions. For others the gig economy provides much needed flexibility, freedom and control over work to allow for an improved work/life balance. Either way, the gig economy shows no signs of slowing down.

sharing economy on the rise.

Our August 2018 poll suggests that 70% of people would prefer the security of being a full-time employee over the flexibility of a gig contract. This is unsurprising as ‘gig’ work has only recently become mainstream and will require additional time to become ingrained within employment culture. Despite this fact, research from FullFact shows that there is a growing trend of self-employment in the UK.

The number of younger self-employed workers, aged 16 to 24, has nearly doubled since 2001 and numbers for those aged 65 and over have nearly tripled since the recession. Between 2010 and 2017 there has been an increase of around 800,000 self-employed workers compared to 3 million overall. Self-employed workers now account for roughly 15% of the entire UK working population.

We can’t assume that every self-employed worker falls into the gig category. However, a sizeable portion - around 18% - would consider carrying out work in the industry.

worker types.

Freelancers, contractors, employees and workers. These are some of the common distinctions between different types of workers that can work within any size organisation from small SMEs to large multinationals.

worker definitions.

freelancerA freelancer is a self-employed person who offers services to clients, often multiple clients at a time.
independent contractorAn independent contractor is contracted to perform work or provide services to another organisation as a non-employee.
employeeAn employee is an individual who works part-time or full-time under a contract of employment, whether oral or written, express or implied, and has recognised rights and duties.
workerA worker has a contract of employment and will generally need to carry out the work themself. However some workers may have a limited right to send someone else to carry out work, such as a sub-contractor.

HR and the gig economy.

Each type of worker will have different rights, duties and benefits in relation to payment, tax, NI, benefits and more. It will be either the HR Manager or Head of HR’s responsibility to make sure that workers' rights and benefits are legally fulfilled - this can also cover gig workers.

Don’t be fooled into thinking that gig workers only work for companies such as Uber, Deliveroo and TaskRabbit delivering food or couriering packages. A staggering 44% of gig workers have a University degree and 28% perform professional work (the largest percentage) such as accounting or providing legal advice, making it highly likely that at some point you’ll work with someone in the gig economy.

Currently classified as self-employed, gig workers are considered a worker or independent contractor who have far fewer employment rights. So you may ask, what’s the benefit of working in the gig economy?

the benefits of gig work.

work flexibility and controlGraduates, working parents or those that have external work commitments may find permanent full-time or even part-time employment too restrictive. Gigs can be selected at the worker's discretion giving them greater flexibility and control over working hours.
supplementary incomeOver half (62%) of gig workers are using it to create an additional income, helping to support their lifestyle and requirements.

contract and temp workers.

how do they fit in?

Contract and temp work offers increased flexibility over your work/life balance. A temporary worker may find employment through an agency, staffing firm or directly with a company and their employment contract will have a set end date. A contract worker is not employed by the company but will be hired for a fixed amount of time.

Both contract and temporary jobs offer a wide range of options such as IT contracts within organisations to temp positions across accounting and finance, education, construction, social care and much more. The choice is down to the employee which contract works better for their current and future commitments.

Lastly, zero-hour contracts are being used more frequently by employers. The main premise behind a zero-hours contract is that there is no guaranteed minimum number of hours that an employee will work leaving this completely up to the employer's discretion. Recent figures put the estimated number of people employed within zero-hour contracts at just over 900,000, which represents 2.8% of the total number of people in employment. Many people choose to enter into these contracts due to the flexibility and freedom that they offer.

so, what's the truth...

...about the gig economy?

The range of information around the gig economy can be overwhelming and somewhat skewed. Our infographic highlights five facts about the gig economy while also trying to debunk a few myths.

embed this graph

the future of gig.

The gig economy is transforming employment. The distinction between employee, contractor and self-employed are becoming increasingly blurred and the digitally-led shift is giving workers greater flexibility. Online platforms are helping to give workers more control, but one debate which still continues is centred around gig workers employment classification.

Recent cases such as UK Uber drivers being awarded worker status have ignited discussions around the status of workers and the Office of Tax Simplification wants gig platforms to offer to withhold tax on behalf of workers and transfer it directly to HMRC - easing the compliance burden for gig workers. This has all led to the Taylor Review.

This review on modern working practices aims to introduce a new employment status category called ‘dependant workers’. Dependant workers would have some, but not all, of the employment benefits that employees are awarded. This would go some way in helping to give additional security to many gig workers, an area which has been under much scrutiny.

There has been a sharp increase in the number of women taking on part-time self-employment, this rose from 439,000 to 812,000 between 2001 and 2016. The allure of increased flexibility and control over earnings, which can be particularly important after maternity leave with additional commitments, will likely see more women entering into gig work - helping to reduce the gender discrepancy.

But the rise won't be just women. According to Deloitte, by 2020 it's expected that up to a third of the UK workforce will be a part of the gig economy.

The world of office work is also set to change with the growth of the gig economy. Patrick Petitti, co-CEO of Catalant Technologies, who has worked with a large number of Fortune 100 companies, suggests that:

The gig economy will be mainstream in the office within the next five years and life for employees is set to "fundamentally change"

Patrick Petitti

shifting job market.

Catalant, a digital platform with similar functionality to Uber and TaskRabbit, matches candidates with jobs dependant on their skills and the company’s requirements using artificial intelligence and machine learning. This way of hiring staff, on a short term basis, may become more popular as companies seek to explore the benefits that on-demand talent can bring.

The gig economy looks set to stay, particularly with the younger generation of which 2.8 million have worked in the gig economy between February 2017-18. Future employment looks to be made up of a blend of full-time, part-time, contract, self-employed and possibly a range of other types of workers. This diversification adds complexity for HR professionals but also opens up a much wider pool of talent to source from. The future of gig and other worker economies is hopefully harmonious, where different types of workers are all moving towards a common goal.