THE GIG ECONOMY – A blessing or a curse?

In last month’s magazine, we wrote about the silent revolution that is already transforming the tourism industry worldwide – the “sharing” or “collaborative” economy. With summer in Gibraltar in full swing, many students and other people often use the summer time to find casual, seasonal jobs. While in the past people used to put messages on neighbourhood notice boards announcing their availability, or send countless emails to potential employers, in today’s “on-demand” economy, people offer their services through online Apps and other online platforms. They can now find themselves offering their services to people on the other side of the world, with work being sourced at the click of a button.

The “on-demand economy” or “gig economy” has followed in the footsteps of the sharing economy, providing opportunities for industry-specific workers to find tasks suitable to their schedules, abilities and other needs. Such sites as Fiverr and Freelancer.com are favoured by freelance professionals and companies in need of good work with a fast turnover rate across a range of fields, including, but not limited to digital marketing, graphic design, coding and more. These platforms centralise work opportunities instead of disrupting existing options for sourcing gigs (e.g. walk-ins, cold calls and emails), freeing the worker from the stress of finding gigs and thereby allowing them to focus on doing their best on the job(s) they take on.

The on-demand economy is still nascent and its long-term trajectory is far from clear. But there is an expectation that it will grow as technology improves and customers find its convenience more and more attractive. Workers in the “gig economy” share three defining characteristics: they have a high degree of autonomy; they get paid by task, assignment, or sales; and they have short-term commitments to their clients or customers.

Independent workers provide labour, sell goods and rent assets, and they include sellers on digital platforms like eBay and Etsy, micro-landlords who rent rooms on Airbnb, drivers on Uber, and delivery couriers on Deliveroo. Platform-based work includes ‘crowdwork’ and ‘work-on-demand via apps’. In crowdwork, workers complete small jobs or tasks through online platforms, such as Amazon Mechanical Turk, Crowdflower, and Clickworker. In ‘work-on-demand via apps,’ workers perform duties such as providing transport, cleaning, home repairs, or running errands, but the workers learn about these jobs through mobile apps, from companies such as Taskrabbit, and Handy. The jobs are performed locally.

The Gig Economy – Leading Platforms:

Lack of Regulation means no Worker Protection

Depicting work in the platform economy as a mere ‘sharing of favours’ conveys an image of the gig economy as a sort of parallel dimension, where chores are amateurishly carried out as a form of leisure, with no relation to ‘work’. The reality, however, is different. For most workers, platform-based work is an essential source of income.

Although it would seem straightforward that the laws protecting workers should also apply to workers in what is described as the ‘gig economy’ or ‘platform-based work’, there is much debate – and confusion – on this issue. This lack of clarity stems in part from the novelty of platform-based work and from the practice common to many platforms of classifying their workers as independent contractors.

Platforms mediate extensively the transactions they have with their workers, and also between the customers and the workers. Platforms often fix the price of the service as well as define the terms and conditions of the service, or they allow the clients to define the terms (but not the worker). The platform may define the schedule or the details of the work, including instructing workers to wear uniforms, to use specific tools, or to treat customers in a particular way.

Many platforms have performance review systems that allow customers to rate the workers and they use these ratings to limit the ability of lower-rated workers to access jobs, including by excluding workers from their system. The amount of direction and discipline that clients and platforms impose on workers, in many instances amounts to the degree of control that is normally reserved to employers and is normally accompanied by labour protections such as the minimum wage, limits on working time, and contributions to social security.

It is therefore argued that the lack of protections for workers, the casual nature of the work and the elements of direction and control exerted by the platforms all point to a need to regulate the gig economy. Self-regulation by the platforms, as is currently the case, cannot ensure better working conditions and can jeopardise the sustainability of well-intended platforms in what is a global race to the bottom. Moreover, unless authorities step in and recognise that workers should not be denied protection just because they work for platforms, platforms will continue to have an advantage over traditional industries, risking a deterioration of working conditions that extends beyond platform-based work.

While the gig economy gives independent workers the ability to reach out to potential clients worldwide and enjoy making some extra money whilst working whenever they want, completely relying on these online platforms as a sole source of income, has the danger of depriving workers of some basic employee rights.

Previous articleTHE TIN SECRET – Banking in the new era of transparency
Next articleIBUY.GI STARTUP – Founders’ Diary
Ayelet Mamo Shay & Eran Shay
Eran Shay Managing Director, Benefit Business Solutions Ltd. With over 20 years’ experience in the world of Finance, Eran specialises in helping companies grow in innovative ways. Eran has ample experience in the fields of Corporate Finance, Regulatory Advisory, Business & Strategic Planning, Valuations and Transaction Support and his focus on technology means he keeps in touch with innovative companies in a variety of sectors. Ayelet Mamo Shay Co-Founder & Business Development Director, Benefit Business Solutions Ltd. Ayelet specialises in online and offline marketing, sales, and PR. She is the author of the successful novel “Relocation Darling, Relocation!” and provides relocation consulting and personal coaching. A busy entrepreneur, Ayelet also serves as Chairwoman of the Gibraltar-Israel Chamber of Commerce.