The rise of the gig economy
The rapid growth of the so-called gig economy in the UK suggests that it may be shaping the future of work reinforcing the idea that, as a nation, we love working for ourselves. Many are drawn by the flexibility, enabling us to multi-task, juggling other priorities and passions. We love the idea that we are taking charge of our lives, are in control of our own time, but we also know that nothing comes for free. The question therefore is, is it worth it?
What is the gig economy?
- Short-term contracted or freelance work rather than a permanent job.
- Instead of a regular wage, workers get paid for the gigs they do, e.g. a food delivery or a taxi journey.
- At its core are app-based platforms that dish out the ‘gigs’. Think Uber and Deliveroo.
It is estimated that 1.3 million people work in the UK’s gig economy. What has caused it to grow?
- It is the result of companies trying to cut or limit their staffing costs. Employers are only paid when work is available, and therefore there are no ongoing overheads to the business when demand is not there.
- Workers are happy to trade flexibility and freedom with a lack of job security, lower pay and fewer employee benefits.
- It suits younger people who are willing to take on projects without security. It also suits many professionals, not just couriers and taxi drivers; gig workers are highly likely to work in professional, e.g. accounting or legal advice or in creative jobs, such as writing or graphic design.
- For those with other commitments –children, elderly relatives, or students funding their studies it gives flexibility.
Is it the same as a zero-hours contract?
- No, but they are similar. Like gig workers, zero-hours contractors don't get guaranteed hours or much job security from their employer.
- But people on zero-hours contracts are seen as employees in some sense, as they are entitled to holiday pay. But, like gig workers, they are not entitled to sick pay.
- Gig workers are normally paid per piece or ‘gig’, while zero-hours contracts are paid hourly, but with no set minimum.
The rise of self-employed workers
Over the last ten years, and even before the use of digital apps for contract work, self-employed numbers have been steadily increasing. Around 15% of workers (5 million) are currently self-employed in the UK. If those who are employers themselves are excluded, this figure is still around 13%. Interestingly, a major feature of the gig economy is the growth of owner-managed companies, usually with no employees except the owners themselves.
The “sharing” economy, pioneered by the likes of Uber and Airbnb, has opened up a whole range of new opportunities for working for yourself. So has improved broadband around the country, and the rise of start-ups. These new businesses prefer to use freelancers, paying gig by gig. Companies also have the freedom to employ an individual with specific talents for a particular project on a short-term basis.
Many thought the rise of self-employment in the UK was because the recession of 2008/9 forced many workers to freelance but it’s now obvious that more and more people are opting for self-employment voluntarily.
What are the pitfalls?
Workers in the gig economy are classed as independent contractors or self-employed.
- No protection against unfair dismissal
- No right to redundancy payments
- No right to receive the national minimum wage
- No paid holiday
- No sickness pay
- No workplace pension
- No guarantee of work
- Working alone can be isolating with no-one to share ideas with or chat through problems.
- Fewer opportunities to develop or improve skills.
- As a one-man-band, you need to do everything, and that includes marketing, accounts and customer service.
- It’s hard to enjoy time off when you’re not sure when the next gig is coming in.
What are the benefits?
- Choose when you work, where you work, who you work for and what you work on
- Freedom and flexibility. Take long breaks or work odd hours
- Work can be more varied and interesting
- You are attractive to employers as they don’t have to pay you any employee benefits
- You can work from home, fitting in other priorities around work
- No commute; saving time and money
What skills does a gig worker need?
- Resilience - able to deal with the ups and downs
- Good time management – able to work to deadlines
- Multi-tasker – able to deal with all sides of the business
- Good knowledge of your business area
- Good interpersonal skills – able to negotiate prices or cope with any problems
- Good networking skills
- Able to take risks
- Happy to work alone
Which jobs suit a gig worker?
- Lawyer, accountant, bookkeeper, business consultant
- Writer, developer, designer, video producer, photographer
- Couriers, taxi drivers
- Personal trainer
- Hairdresser, beautician
- Dog walker
- Tutor, Child-minder
- Handy man