Work­ing in the
Gig Eco­nomy

Dave Howell Editorial

Dave How­ell
The Micro Busi­ness Hand­book

22 June 2017

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.

Gig eco­nomy
work­ers are now the norm in many busi­nesses

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.

David Howell

David Howell

Journalist, Writer, Micro Publisher at Nexus Publishing
Dave Howell is Nexus Publishing. I have been working as a freelance writer, journalist and publisher for the last 20 years. I specialise in technology and business subjects. My work has appeared in the national press and many of the leading technology and business magazines.
David Howell

Latest posts by David Howell (see all)