Is the gig economy really creating a permanent underclass? (1)

COVID-19 is putting the global economy in bad shape, but those working in the gig economy seem to get it worse.

In exchange for autonomy and flexibility few desk-bound employees enjoy, those working in the gig economy forgo benefits such as annual leave, medical insurance and other forms of employment protection afforded to full-time and part-time employees.

The result is a transfer of risk and cost from companies to individuals. With little financial stability and few social safety nets to catch them, gig workers are the likeliest to fall through the cracks.

In the words of Guy Standing, Professor of Economics at the School of Oriental and African Studies, the gig economy represents the emergence of the “precariat” – a global class bereft of financial security and career progression.

Or so the narrative goes.

As a freelance writer myself, I am personally invested in this investigation. Are we really watching a dystopian labor structure play out right here, right now? Do the numbers show us a different picture? What can we take away from features of the gig economy and those in it to determine if this outcome is invariably true?

Let’s begin by first understanding what is the gig economy, who is part of the gig economy and what the current figures look like.

What is the gig economy?

(image credit: Fabrik Brands)

Examining how “gig economy” may provide a clearer benchmark. According to the Oxford Dictionary, the gig economy refers to a “labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs”.

Workers in the gig economy largely fall into one or both of these categories:

  • web-based work, can be done remotely as long as there’s an internet connection. This would refer to freelance writers, web developers, consultants, digital marketers etc.
  • location-dependent work, assigned via marketplace apps. E-hailing drivers, delivery riders and grocery helpers fall under this category.

The notion of a new global underclass stems applies more to the location-dependent gig workers rather than the gig economy as a whole. This would refer to individuals working for online platforms like Uber, Grab, Instacart, TaskRabbit, Deliveroo … and so on.

Who exactly is in the gig economy?

In Singapore, gig workers are best identified as “own-account workers”. According to the Ministry of Manpower, this means they are individuals who operate their own business or trade without employing any paid employees.

In the US however, gig workers are often lumped together with terms like “freelancer” and “independent contractor”. Independent contractors, according to the US Internal Revenue Service, are generally individuals who have the right to control or direct only the result of the work and not what will be done and how it will be done”.

Do independent general practitioners and accountancy practices belong in the gig economy? Depends on which economy they’re in.

The Gig Economy in numbers

According to an assessment conducted by Mastercard, The global gig economy generated approximately 204 billion USD in gross volume in 2018. That sounds like an impressive figure, until one realises that just 0.3 to 0.5 percent of the world’s active labour force participates in the global gig economy. Out of this minority, just 10% of registered users on global freelancing platforms are active.

It’s unclear what “freelancing platforms” refer to here. Are marketplace apps considered freelancing platforms?

In another study conducted in 2019 by Statistics Canada, only one quarter of individuals in the country’s gig economy did gig work for 3 years or more. Interestingly, gig workers in the taxi industry accounted for just 3 percent of men working in the gig economy.

Back here in Singapore, the number of own-account workers who did own-account work as a regular form of employment stood at 223 500 in 2017. Expressed as a percentage of economically active population, that would be slightly below 10%. Most of Singapore’s gig workers are doing own-account work as their preferred choice, but there has been a notable increase in the number of gig workers engaging in own-account work as a non-preferred choice between 2016 to 2017.

In 2018 however, the number of own account workers in Singapore fell to 210 800, or approximately 9.3 percent of all employed residents. I don’t have figures for 2019, and this may not represent a downward trend since 2018 was when Uber, then a major ride-hailing company in Singapore, exited Southeast Asia.

Next Steps

There’s a lot of commentary on the gig economy and its potential implications. Here are a few that sparked my interest:

What I’ve gathered so far has been largely inconclusive. The theories speak for themselves, and I’d prefer to hear voices on the ground. Maybe I should do an interview with the delivery rider that gets me my next meal?

2 thoughts on “Is the gig economy really creating a permanent underclass? (1)

  1. I use the “gig” economy to supplement my income from my full time job, which I am currently not working due to the Coronavirus. I would never be able to support myself with the little income I make from this “job”. I consider this my “spending” money so that my paychecks from my full time job can go for all my bills.

    1. Sounds like you have it pretty tough on your end, take care! I’m in the gig economy myself and I certainly agree the the money earned isn’t enough for basic living. Relative to how much time you spend doing gigs, do you think it’s worthwhile to use the gig economy full-time, part-time, or not at all?

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