Thought leadership from our experts

Five Things you need to know about the gig economy

The gig economy has been in recent headlines as a number of individuals have successfully claimed employment or workers' rights. Here we take a brief look at the gig economy and what it means for employment law in general and how it affects women in a few particular areas.

It's not monolithic

The gig economy goes by many names: the sharing economy, the "just in time" economy, and the "crowd-sourced economy" are just a few. The term is used to describe short working arrangements where an individual provides services to any number of recipients rather than one single employer. Often this is arranged online via a website or app, but not always. In some areas where individuals have less access to technology, gig workers are recruited in face to face meetings, and then they connect via SMS for specific jobs. Usually the individual providing the services is characterized as an independent contractor or "entrepreneur" as opposed to an employee.

Motivations for joining the gig economy vary. A McKinsey Global Institute report released in October 2016 identified four main segments of independent workers:

  • free agents, who choose to work independently and derive their primary income from it;
  • "reluctants", who derive their primary income from gig work but who want traditional jobs;
  • casual earners, who supplement their income with gig work; and
  • the financially strapped, who supplement their income with gig work out of necessity.

If we further slice these groups by age, sex, geographic location and other demographics, it becomes apparent that it is difficult to adopt a single policy that comprehensively addresses gig work. It is also apparent that existing laws are not keeping pace with how we work.

That said, it's important to note that this isn't a new type of work; there have always been independent contractors, day labourers, people with more than one job, and temporary workers. What is changing is the technology that allows individuals and end users to find each other directly instead of going through an agency or finding each other through traditional advertisements. As this segment of the economy moves online, it becomes more visible, accessible to more people, and is therefore growing fast.

Legal classifications: square pegs in round holes

Since 2015, there have been several high profile cases in the US and the UK where individuals claimed benefits and rights that belong to employees and workers under legislation. These rights include paid holidays, sick days and the right to work fixed hours. In many jurisdictions, there is a black and white choice: individuals are either employees or independent contractors who are deemed to be operating their own businesses. In some jurisdictions, there are intermediate statuses, such as "workers" or "dependent contractors".

This legal status has an impact across many areas for both the individual and for policy makers, cutting across questions on tax, healthcare, pension benefits, quality of life, fair wages, and more.

There are numerous proposals to address these issues, such as creating new classifications, crafting a benefit portfolio for gig workers that is portable and doesn't depend on having one employer, providing a universal basic income, and amending existing employment laws to specifically carve out gig workers and address them specifically. There is little agreement as to the best way to deal with this, as seen by the very mixed reviews with which the UK's Taylor Review was greeted in the summer of 2017 in the UK.

It's not just about flexibility

One of the biggest benefits gig work offers to individuals is flexibility. Individuals can choose their own hours, decide when to be available, and when to quit. Gig work does not require you to work from 9-5. This is seen as particularly attractive to women, who frequently cite inflexible working hours as an impediment in their working lives.

We should look at this carefully, however. Citing part time and flexible work as a benefit assumes that women need not work full time (or at least that they don't need the income that full time work has traditionally afforded).

Although part time work is disproportionately female, that is not necessarily by choice, and many women would in fact prefer to have more stable full time jobs. In most societies, it falls on women to deal with the unexpected and unpredictable (sick children, a broken pipe that requires someone to wait for the plumber, etc). In March 2017, a UN report (E/CN.6/2017/1.) noted:

[w]orking part-time is often described as a choice women make to spend time on domestic and care responsibilities. However, social norms, cultural constraints and the extent of public support for care and income security for children determine the degree to which women choose part-time work and reduced earnings. Occupational segregation, including stereotyping of part-time jobs as "women's work", means that some women who want to work full-time may obtain only part-time jobs.

Flexibility's value as a benefit increases for women due to unequal caring responsibilities. If we take away these responsibilities, however, then flexibility is equally valuable for women and men – or anyone who does not want a full time position with one employer. Gig work might be a convenient remedy for a symptom but we shouldn't depend on it as a cure for an underlying problem.

Show me the money

Citing flexibility to work part time as the main benefit assumes that the individual either doesn't need a full time income, or is able to earn a full time income through gig work. Such assumptions can be accurate on a case by case basis, but are dangerous when applied to all as a matter of policy.

Most people are working because they need to pay the bills; see the McKinsey breakdown above. Gig work may or may not be the best way to achieve that, in particular if an individual relies solely on gig work for primary income. Significant disparities in the experience and financial rewards of gig workers caution a single, uniform approach to policy.

On the one hand, a person who is highly skilled and in demand and who has access to the right technology could have the opportunity for more high-paying work, such as by doing consultations across the world by video. This doesn't hold true for less-skilled individuals at the other side of the economy who are working retail and are at the mercy of scheduling software.

The result is that paradoxically, individuals who need a full time income may need to work longer hours at gig work just to make ends meet.

This divide isn't attributable only to an individual's skill set; the gap can widen depending on access to technology. For example, those in urban areas are more likely to have access to high speed internet. More than 3 billion people in the world don't have a mobile phone (and more than half of them are women).

Plus ça change….

One of the potential downsides to the gig economy for individuals is the erosion of employment rights, in particular the right to organize and protection from discrimination. We should avoid providing benefits to the end user or purchaser of services at a cost to the individual service provider. For example, platforms that allow selection based on characteristics other than skill or qualifications, including race, gender and age, serve to erode hard-won legal protections against discrimination.

In particular, work that is disproportionately done by women has in some places only recently been recognized as "real" work and afforded legislative protection. Moving those jobs into an on-demand platform could eat away at these rights. The United Nations Secretary General's report "Women's economic empowerment in the changing world of work" notes:

The challenges women face in the formal economy are mirrored in the informal economy: occupational segregation, gender wage gaps, unequal access to resources and social protection, disproportionate burdens of unpaid care and domestic work, violence and harassment and even greater barriers to organizing and mobilizing. Paid domestic work, home-based work, street vending and waste picking are all sectors dominated by women, and they also tend to be the most vulnerable and precarious forms of informal employment.

From a societal policy perspective, it is therefore critical to ensure that policies and laws address the situation faced by individuals providing services in informal and previously unregulated work. We cannot draft employment laws – even laws specifically with the gig economy in mind – on the assumption that one size fits all.