With the growth of app-based companies like Uber has come the rise of the gig-economy, bringing with it a sundry of concerns and challenges. However, despite public perception, it need not be wholly problematic for nations. Adjustments to the new labor market will smoothen transitional challenges and allow growth to be manageable.
Gig economies typically refer to the online marketplace for individuals to undertake short-term tasks for pay. From delivery services to house cleaning, freelance services are now easily and cheaply available. However, these services are not restricted to just manual tasks like driving or building furniture, they can also be provided with the internet such as creating PowerPoints or editing reports. This creates hurdles for countries that want to keep labor within its borders. The rise of the global online marketplace makes it difficult to monitor, prevent or regulate, creating concerns about taxation and fair pay.
There are fears from society at large about the gig economy overtaking traditional employment. However, these fears are overblown as the Gig Economy Data Hub – a joint project of Cornell University’s Institute of Labor Relations and the Aspen Institute – has shown that only about 10 percent of workers rely on the gig economy for their full-time employment. In addition, companies continue to value their top talent and attributes like loyalty and expertise, making it unlikely that they will lean away from full-time hiring practices.
Proponents of the gig economy point to the idea of leveraging the best human talent across the world. Tapping into global demand prevents local restrictions and also allows the convenience of working from home. Individuals are able to supplement their incomes with relative ease. With a wide array of marketplaces, individuals can use the ones that best fit their specific skillsets. It also enables older people to reenter the workforce on their own terms. Start-ups who need to keep their costs low benefit from giving work to freelancers instead of hiring full-time staff for work that may not be long-term in nature.
Critics of the sharing economy have also been vocal about the dangers involved. The first is for the freelancers themselves who face longer hours since global clients come from different time zones. Additionally, the disparity in incomes across the world makes it easier for freelancers in developing countries to undercut the pay offered to those in higher-income countries. Secondly, they also do not receive employment benefits or protections, making it harder for countries to tax them as well. Thirdly, companies offering gig opportunities face significant backlash and hostility from local service providers, as in the case of local taxi companies against Uber in various regions in the worlds. Finally, it is not just start-ups that seek lower employment costs as bigger corporations see the gig economy as a way to replace full-time employees with cheap freelancers. This subsequently forces laid-off employees to then seek income from the gig economy, making it a vicious circle.
Policy makers worldwide are exploring various ways to tackle the challenges with the gig economy, both for individuals and the nation as a whole. The growing push to create tax and employment legislation that will better address the needs of the sharing economy indicates the rising dissatisfaction with the lack of regulation in the freelance market. Disgruntled workers in the gig economy have no avenue for recourse. Countries also need to ramp up their efforts to monitor the gig economy, which will automatically ensure that a greater number of companies are treating their freelance workers more fairly.
A lot of the pressure to supplement income with a side job through the gig economy comes from rising health insurance costs, stagnating incomes from traditional employment and slowing infrastructure development. Addressing these macroeconomic challenges will help minimize the demand for gig economy opportunities, restricting it to those who want the flexibility of the freelance world. Economic security would ensure that those who prefer traditional employment have the option to stick with jobs of their choosing. Big companies are already recognizing this as Amazon announced a significant bump to its minimum wage.
As individuals, companies and governments evaluate the future of the gig economy, making sure all their voices are heard in reaching a suitable agreement is necessary. Countries can learn from each other as most countries face similar issues. Companies can preemptively start implementing fairer labor practices before regulations or waning demand from freelancers adversely affect their business model. Finally, individuals can come together and be more organized in their demands, giving them greater protections and ensuring a stronger bargaining position. The gig economy is unlikely to continue in its existing form, making it essential for stakeholders to evaluate their interests while analyzing future trends.