For years now, talk of the gig economy has fueled the future-of-work debate, with many proclaiming that the gig economy will erode – and in some instances completely replace – our traditional work ecosystems. Undoubtedly, the gig economy is fueling a new breed (often in the millennial generation) of sometimes well-paid, empowered workers. In the U.S., a joint study between Harvard and Princeton indicated that between 2005 and 2015, over 90% of net employment growth in the U.S. was through the gig economy.
Across the pond, a similar story is unfolding, with a recent McKinsey report indicating that as much as 20% to 30% of the EU-15 labor force is now made up of independent workers. But is this growth sustainable, especially in the increasingly left-leaning climates of Europe?
Vital Protections Missing
For all its positive impacts, such as freely available, on-demand labor and working freedom, the gig economy is failing in two vital aspects: job security and workers’ rights. Even now, the seeds of counter-revolution are beginning to spread in the gig economy. Recent protests in London by Uber drivers over platform overcrowding and below-minimum-wage remuneration have brought the city to a standstill. Since these protests, London has chosen not to renew Uber’s license to practice in the UK capital, due to a lack of corporate responsibility. One might argue that Uber’s mismanagement is to blame, but similar protests from gig workers at Deliveroo and concerns over gig workers’ rights at UK Express serve to further highlight the issue.
With many major organizations, including Microsoft and Amazon, underpinning core elements of their strategies on gig work, a drastic realignment of this type of work is needed to protect future earnings from this sector of the economy.
Keeping Gigs Alive
The obvious means for addressing the above-mentioned concerns of gig work lies in introducing regulations to provide gig workers with basic working rights, such as sick leave and guaranteed minimum wage. This can happen in one of two ways: either by introducing a tax on gig transactions through which workers’ rights would be fulfilled by governments, or by instituting regulations through which gig workers are viewed as employees (with the implied benefits of such an employee).
On the face of it, these regulatory measures seem like logical steps, although they could also prove to be the proverbial straw that breaks the camel’s back, as many of these pure gig-based organizations have precarious balance sheets, to say the least.
So what does this all mean? Well, workers’ rights regulation in the gig economy will happen, and with it will come a rise in the price of gig transactions. Therefore, organizations’ margin projections on gig work will have to shift, and end consumers of gig work will have to realign to increased price points.
Ultimately, however, the gig economy will continue to prosper, with a realignment of its current operating model.
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