2 August 2019

The gig economy is working

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The gig economy has elevated itself from a buzzword to a fluent characterisation of our current labour market, with 4.7m people now involved in it. Out with the 9 to 5, in with digital platforms enabling us to work where, when, and however we want.

Whether this is a force for good depends on who you ask. Are critics too deafened by the sound of their own outrage (see the parallels they draw to “slavery”) to acknowledge the positives? Are those who unconditionally support it blind to the unscrupulousness of some employers?

Certainly, there are legitimate concerns about the gig economy. Cases such as Gary Smith’s against Pimlico Plumbers have highlighted issues around workers’ rights and the precarious, casualised nature of gig work.

But it brings many advantages. One of the gig economy’s great contributions to society, for example, is how it enables individuals – especially mothers – to seamlessly transition into the formal workplace. It was also recently found that older workers were using gigging to ease themselves into retirement.

This year’s Global Entrepreneurship Monitor has further burnished the gig economy’s reputation.

Workers in the gig economy are increasingly seeing their “side hustle” as a launchpad into entrepreneurship. These individuals – who are themselves benefiting from the innovations of other founders – are twice as likely as the wider population to be planning to start a business or be early-stage entrepreneurs.

It’s a rosy narrative across much of the GEM report. As co-author Professor Mark Hart points out, over the last two decades the UK has separated itself from its European competitors and now sits somewhere mid-Atlantic for entrepreneurial activity. If gigging is on the rise, and the UK maintains its liberal stance, we can expect to widen our lead.

The link between the gig economy and entrepreneurship is not new. Freelancers and founders share a desire to control their own destinies and favour flexibility over traditional employee perks. Given many lean startups prefer specialised temporary staff to full-time employees – initially, at least – these gig workers may even be getting the experience they need to later strike out alone. They can then use gig work to earn a wage while getting their business off the ground at the same time.

And in further evidence that the two are becoming increasingly intertwined, look no further than Uber’s partnership with some of Europe’s top VC firms for UberPitch – an elevator pitch but, you guessed it, in an Uber car.

There have been calls to reevaluate the term “worker” and address how we determine employment status. Matthew Taylor – author of the “Good Work” review into modern working practices – is right to point out that regardless of how people are employed they need clarity on what rights they have.

But Taylor also posits that encouraging flexible work is good for everyone and has been shown to have a positive impact on productivity, the quality of work and worker retention. A recent Oxford University survey revealed most Uber drivers had moved to the platform from a permanent role, attracted by the flexibility it offered. Half increased their earnings in doing so.

And, if a report this week from the Chartered Institute of Personnel and Development is to be believed, progress is not coming at the expense of stability. It suggests that most people in “atypical” employment choose to work this way and are broadly satisfied. It reported no long-term increase in the under-employment rate of workers who want more hours.

All this is not to say that criticism of the gig economy is unfounded. Our current employment law framework is unsuitable for modern working practices and it is troubling that gig workers are increasingly clubbing together to demand certain rights through the courts. In-work poverty and the exploitation of workers are unacceptable in modern-day Britain. But the UK Government must be wary of introducing regulation if it comes at the expense of innovation or economic opportunities for the marginalised.

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Annabel Denham is an Associate Director of The Entrepreneurs Network