The gig economy is a sizeable, and growing, sector of the job market. It refers to self-employed people who are paid for completing tasks or ‘gigs’ rather than a traditional annual or hourly salary. For example a delivery driver in the gig economy will not be paid an hourly rate but a fixed fee for every delivery that they make.
Global Gig Economy is expected to grow from $204 billion in 2018 to $455 billion in 2023,
a Compound Annual Growth Rate (CAGR) of 17.4%. Number of freelance workers is steadily increasing in the Western World. The number of freelancers in the UK currently stands at 4.7 million people.
The gig economy is very diversified in this country, but commonly includes:
- Car drivers carrying paying passengers via apps such as Uber
- Delivery drivers working for Amazon or parcel delivery companies
- Cyclists delivering food via Deliveroo and Just Eat
- Digital freelancers carrying out services such as web design or copywriting
- Manual workers providing labour
According to TUC research the gig economy workforce in England and Wales has almost tripled in 5 years. The research shows that three in 20 (14.7 per cent) working adults surveyed now work via gig economy platforms at least once a week, compared to around one in 20 (5.8 per cent) in 2016.
Most workers use freelance work to supplement other forms of income, showing that gig workers are increasingly likely to make a living from multiple different sources. This can result in very long working days.
Frances O’Grady, general secretary of the Trades Union Congress, said the huge growth of the gig economy showed that workers ran the risk of battling to make ends meet. “The world of work is changing fast and working people don’t have the protection they need. Huge numbers are being forced to take on casual and insecure platform work – often on top of other jobs. But as we’ve seen with Uber too often these workers are denied their rights and are treated like disposable labor.”
The advantages of freelance work include flexibility to work when it suits you and not being tied to a specific location for work. However freelancers lack the benefits received by full-time employees such as holiday and sickness pay, healthcare and pension. Companies such as Uber have been accused of exploiting freelance workers by not treating them as employees. A Supreme Court judgement last year found that Uber workers were in fact employees and should be entitled to the benefits employees receive.
The Effect of the Pandemic
Some sectors of the gig economy really benefited during the pandemic, for instance delivery drivers had more work than ever with people having to rely on on-line shopping. Other types of gig economy work, such as taxi rides, were heavily impacted. Uber recorded a 73% drop in the number of rides when compared with the same period last year before the pandemic had started.
Restaurants closing meant that food deliveries were in high demand. Orders via the takeaway platform Just Eat grew by 58% between the last quarter of 2019 and the last quarter of 2020.
The latest official figures released by the Office for National Statistics (ONS) show that between February 2020 and December 2020, the number of payroll employees fell by 828,000, based on HM Revenue & Customs (HMRC) PAYE real-time information (RTI) data (ONS, 2021). This decrease is in contrast to the growth in the gig economy, indicating that laid-off workers were turning to freelance roles.
There was speculation that the pandemic would cause businesses to turn to the gig economy more readily to fulfil roles rather than having the responsibility of taking on permanent staff. So far this doesn’t appear to have happened, in fact the number of full-time vacancies has increased in recent months. This may in part be the effect of Brexit and the loss of European workers.
The Future of the Gig Economy
So will this mark a reversal of the growth of the gig economy? With a buoyant jobs market, will gig workers begin to abandon the sector in favor of the security of a full-time role? Evidence shows that the gig economy grew during the 3 lockdowns but fell during the summer and early autumn of 2020 when restrictions were eased. This could be a seasonal variation, or it could be that furloughed and unemployed workers were abandoning the gig economy to return to full-time roles.
Following the Uber court case, food delivery firm Just Eat has offered to move freelance workers onto a zero hours contract. This entitles them to holiday and sick pay and parental leave. Whether others follow suit remains to be seen. If the change means they are able to recruit more workers, other companies may decide to do the same.
However many companies find it convenient and cost-effective to employ freelancers to fill certain roles and this is unlikely to change. Some, like exhibition stand contractor Quadrant2Design, use them to fill seasonal roles. At busy times the company needs a lot of stand installers, but this tails off at other times of the year. So using a pool of fully trained freelance installers makes sense, with many returning season after season.
Freelancers don’t need office space, corporate benefits or expense reimbursements so they are cheaper for companies to employ. Given the economic downturn, businesses will be looking to make cutbacks wherever they can, so freelancers are bound to be popular. The gig economy is likely to continue to grow because of this.