The light and dark sides of a gig economy

working at a start-up

The rise of the gig economy is giving organisations an opportunity to utilise non-permanent, on-demand talent to undertake work, tasks and services. The platforms that enable the buyer/seller marketplace come with a lot of benefits but raise many ethical questions on status, taxing and data security.

How does a gig economy work?

A gig economy is an employment market that is dominated by freelance, short-term work. Instead of following typical recruitment processes, wherein the hiring firm offers set working hours, a standardised wage and sick-pay, in return for the commitment of staff, a gig economy means that workers are classed as independent contractors.

Instead of a fixed wage, workers get paid for each job or 'gig' that they undertake. A delivery driver as an independent contractor, for example, would get paid for each delivery that is successfully recorded, rather than an hourly wage.

What are the benefits of a gig economy?

There are numerous benefits for both employees and employers who are operating within the confines of a gig economy.

In a gig economy, employees are not subject to the same restrictions that are associated with being hired through traditional recruitment processes. This means that the worker has a greater amount of flexibility in regard to their employment hours. To a certain extent, workers can choose how often they work, and can manage their workload around other commitments.

In the UK, freelance and short-term workers are on the rise. As detailed in a 2017 BBC News report, there is an 'estimated five million people employed in this type of capacity' in the UK.

Conversly, organisations can benefit from the gig economy. For example, a financial services organisation can outsource graphic design tasks to a pool of resources for ad-hoc presentations. They can feed out the work to a talent pool that will agree to carry out the task within a specific timeframe and budget. Having a fixed price effectively eliminates the ability for employees you are paying hourly or salaried to “waste time” managing tasks that are not in their skill set. 

Organisations can benefit from heightened levels of productivity because assigned projects are completed within certain timeframes. It is a cost effective and convenient way to engage talent “on demand” and use resources that can be flexed up and down depending on the scope.

Organisations can expect to see lower overheads (such as no desk space costs, which is a large concern in expensive cities, such as London) and feed the task via online platforms which incorporate profiles, ratings, and billing for the assignment. These platforms remove global boundaries, which can have an added cost-advantage to sourcing.

What are the challenges associated with a gig economy?

Contention surrounding the gig economy has been at the centre of various news titles in recent months, with established businesses such as Uber and Deliveroo becoming subject to court cases, strikes and legal action.

This is primarily surrounding the legal rights of these 'self-employed' workers. As employees are classed as independent contractors they are not entitled to national minimum wage or redundancy, holiday and sick pay. Workers also have zero protection in the case of unfair treatment or dismissal. A March 2017 Guardian article details the organised strike of Brighton based Deliveroo drivers, who demanded 'a higher pay-per-drop rate of £5' (to make their wage in line with the national minimum), 'a hiring freeze', to offer more work for current employees and 'no victimisation of trade union activists.' This suggests some of the issues that can arise for employees who are working within the gig economy.

Furthermore, another 2017 Guardian article concerning Matthew Taylor, who is leading the employment practices review for current Prime Minister, Theresa May, stated that his assessment would 'highlight the blurring of boundaries between people who are self-employed and therefore get few employment rights, and people who are classified as employees, eligible for full rights.'

To find out more about how crowdsourcing and the gig economy is impacting the recruitment landscape read our Recruitment Insights Report.

At Resource Solutions, we can take care of your recruitment outsourcing and become your hiring solution. If you would like us to assist you in recruiting and retaining the best possible talent for your business, contact us today.