Work­ing in the
Gig Eco­nomy
Dave Howell Editorial

Dave How­ell
Busi­ness for Begin­ners

Res­ults from the latest Zurich SME Risk Index have revealed that more than a quarter (26%) of small and medi­um-sized enter­prises in the UK have employed at least one gig eco­nomy work­er – a work­er with one or more short term con­tracts or doing freel­ance work – in the last 12 months.
I have been work­ing in the gig eco­nomy for over 20 years and didn’t really know it. The freel­ance writ­ing busi­ness I have been devel­op­ing has been giv­en many titles over the year. I’m a freel­an­cer, con­tract­or, cre­at­ive spe­cial­ist, con­tent pro­du­cer etc.

Only recently have we been hear­ing the term ‘gig eco­nomy’ when in fact, its ori­gins go back to the fin­an­cial crash of 2008, when many work­ers found they needed an addi­tion­al income, so begun doing ‘gigs’ or part-time work to make ends meet. The term ‘gig’ is musician’s slang for an engage­ment to play, with the earli­est use of the term in 1950’s Amer­ica.

Today of course, the term is an umbrella for the legions (around 6 mil­lion now work in the gig eco­nomy) of freel­an­cers and micro busi­ness own­ers that have chosen to go it alone and take more con­trol of their work/life bal­ance.

Com­pan­ies such as Deliv­eroo and of course Uber have moved the gig eco­nomy into the lime­light. People have always con­tac­ted their labour to busi­nesses, but today, the whole busi­ness mod­el of some com­pan­ies relies upon a flex­ible work­force.

The research from Zurich is the latest to look closely at how the gig eco­nomy has rap­idly developed over the last few years, and how it’s set to massively expand, as work­ers look for more flex­ible employ­ment.

Of those decision makers that have employed gig eco­nomy work­ers in the last 12 months, many attest to the import­ance of flex­ible work­ers to their busi­ness, with more than two thirds (70%) agree­ing that gig eco­nomy work­ers are import­ant to their company’s prof­it­ab­il­ity. One in ten of these decision makers (10%) repor­ted that gig eco­nomy work­ers make up 90% of their work­force or more, while more than two in five (41%­) report that gig eco­nomy work­ers make up at least a quarter of the work­force.

When asked to describe gig eco­nomy work­ing prac­tices from the per­spect­ive of a work­er, almost three in five (58%) stated that they believed the gig eco­nomy provided “flex­ib­il­ity for work­ers”, while more than a third (34%) said that gig eco­nomy work provided “new oppor­tun­it­ies” for work­ers and was “time effi­cient” (28%).

Yet, the sur­vey demon­strates that SME decision makers are also con­scious of the risks for gig eco­nomy work­ers, as well as the bene­fits. When asked to select as many responses as was appro­pri­ate, more than half (52%) agreed that gig eco­nomy work “lacks secur­ity”, while more than a quarter (27%) agree it can be “exploit­at­ive” and a fifth (20%) are of the opin­ion that the arrange­ment can be “unfair” on work­ers.

There are poten­tial neg­at­ive impacts for busi­nesses too, and a sig­ni­fic­ant num­ber of decision makers agree that gig eco­nomy work can res­ult in a lack of secur­ity for their own busi­ness. Two in five (40%) repor­ted con­cerns that gig eco­nomy work can cre­ate a less ded­ic­ated work­force and almost a third (30%) agreed that it can cre­ate a less motiv­ated work­force.

Non­ethe­less, Zurich’s stat­ist­ics sug­gest that, over­all, SMEs are embra­cing the oppor­tun­it­ies the gig eco­nomy has to offer. Almost three in five (57%) agree that gig eco­nomy work was “flex­ible for busi­nesses”, and nearly two in five (38%) thought it cre­ated great­er oppor­tun­ity to “bet­ter man­age work­force capa­city”.

Paul Tombs, Head of SME Pro­pos­i­tion at Zurich, com­ments: “With so many UK SMEs employ­ing gig eco­nomy work­ers, it would be a mis­take to char­ac­ter­ise the entire gig eco­nomy as an exploit­at­ive tool that only bene­fits employ­ers. Self-employ­ment is on the rise and demon­strates an increas­ing demand for flex­ible work which is begin­ning to shape the way that busi­nesses think about work­force man­age­ment.

While politi­cians and the media voice con­cerns that gig eco­nomy work is about max­im­ising profits and manip­u­lat­ing staff, when we speak to busi­ness own­ers, it is clear that the major­ity are asso­ci­ate it with flex­ib­il­ity and oppor­tun­ity. If the gig eco­nomy has sprung up as an imper­fect solu­tion to the increas­ing demand for flex­ible work, then a review of the sys­tem should focus on reforms that max­im­ise the bene­fits for all parties rather than des­cend­ing into a blame game.”

“With so many UK SMEs employ­ing gig eco­nomy work­ers, it would be a mis­take to char­ac­ter­ise the entire gig eco­nomy as an exploit­at­ive tool that only bene­fits employ­ers.”
New rights

As a gig eco­nomy work­er, I am in con­trol of the work I do and the busi­nesses I work for. Some enter­prises that use gig work­ers as the basis of their busi­nesses will find that legis­la­tion and reg­u­la­tion is com­ing. As the gig eco­nomy expands, gov­ern­ments will increas­ingly pay atten­tion to this grow­ing group of work­ers.

For freel­an­cers like me, more social secur­ity would be wel­come, and could be paid for with a dif­fer­ent tax struc­ture. The risk is that gov­ern­ment attempts to bring freel­an­cers and those across the gig eco­nomy into the employed work­force, which in many ways is try­ing to square a circle, and is a mis­un­der­stand­ing of why people enter the gig eco­nomy in the first place.

New research pub­lished by CIPD shows 4% of UK work­ing adults aged between 18 and 70 are work­ing in the ‘gig eco­nomy’, and nearly two-thirds of them (63%) believe the Gov­ern­ment should reg­u­late to guar­an­tee them basic employ­ment rights and bene­fits such as hol­i­day pay.

The research also found that, con­trary to much of the rhet­or­ic, just 14% of respond­ents said they did gig work because they could not find altern­at­ive employ­ment. The most com­mon reas­on for tak­ing on gig work was to boost income (32%). Over­all, gig eco­nomy work­ers are also about as likely to be sat­is­fied with their work (46%) as oth­er work­ers in more tra­di­tion­al employ­ment are with their jobs (48%).

The Gig Economy
Con­trol and bet­ter work/life bal­ance are key to gig eco­nomy work­ers.
How­ever, there were con­cerns raised by some work­ers inter­viewed for the report about the level of con­trol exer­ted over them by the busi­nesses they worked for, des­pite them being clas­si­fied as self-employed. This is sup­por­ted by the data, as just four in ten (38%) gig eco­nomy work­ers say that they feel like their own boss, which raises the ques­tion of wheth­er some are entitled to more employ­ment rights.

Peter Cheese, Chief Exec­ut­ive of the CIPD, the pro­fes­sion­al body for HR and people devel­op­ment, said: “This research shows the grey area that exists over people’s employ­ment status in the gig eco­nomy. It is often assumed that the nature of gig work is well-suited to self-employ­ment and in many cases this is true. How­ever, our research also shows many gig eco­nomy work­ers are per­man­ent employ­ees, stu­dents, or even the unem­ployed who choose to work in the gig eco­nomy to boost their over­all income.

Our research sug­gests that some gig eco­nomy busi­nesses may be seek­ing to have their cake and eat it by using self-employed con­tract­ors to cut costs, while at the same time, try­ing to main­tain a level of con­trol over people that is more appro­pri­ate for a more tra­di­tion­al employ­ment rela­tion­ship. Many people in the gig eco­nomy may already be eli­gible for basic employ­ment rights, but are con­fused by the issue of their employ­ment status.

It is cru­cial that the gov­ern­ment deals with the issue of employ­ment status before attempt­ing to make sweep­ing changes, else they risk build­ing found­a­tion­al changes on shift­ing sands. We wel­come the Chancellor’s decision to wait for the Taylor Review before look­ing at mak­ing any changes in tax levels. We would like to see a full con­sulta­tion on the com­plex issue of employ­ment status, which explores wheth­er it is pos­sible to have great­er clar­ity and con­sist­ency on this issue across employ­ment, tax and bene­fits.”

All eyes are now on the Taylor Review that should report at the end of the sum­mer 2017 with recom­mend­a­tions to the gov­ern­ment for how the gig eco­nomy and tra­di­tion­al employ­ment can be integ­rated. Read this as how the gig eco­nomy can be fur­ther taxed, which is fine as long as the high­er tax bur­den also has all the rights and bene­fits that employ­ees now enjoy. Watch this space for more news.