A gig economy refers to a free market system in which employment is typically temporary and employers contract with independent workers for short-term engagements. Although a “gig” is typically used with reference to musicians, the modern use of “gig employees” refers to freelancers, independent contractors and project-based workers. Think Grab drivers, FoodPanda food delivery staff and Fiverr. The latter describes itself as a freelance services marketplace for businesses and anyone can hire a freelancer to design a company logo, design a deck of Powerpoint slides, etc.
In the digital age, the trend towards a gig economy dovetails with the rise in short-term jobs. With smartphones, the workforce is more mobile than ever before and work can be done from anywhere. This has made it easier for freelancers to select among temporary projects from around the world, while employers are able to select the best candidates for any given project from a much larger pool by outsourcing than if they were to rely solely on their employees.
Furthermore, app-based technology platforms like Uber, Grab and Etsy have emerged to replace people or SMEs (small-medium enterprises) as the middlemen to connect consumers and producers quickly and easily. With the support of new technologies that enable transactions between providers and consumers, individuals are able to perform a variety of tasks for complete strangers based on real-time demand.
Finally, this non-traditional sector of employment afforded by the gig economy allows for individuals to either supplement their current income or to offer income opportunities for those who cannot find traditional, salaried employment. It is understandable, then, that the rise of the gig economy coincided with the financial crisis. With so many facing unemployment or underemployment, workers chose to pick up temporary engagements whenever they could while others needed to work towards having a sustainable income by working multiple gigs at once.
Watch this YouTube video that asks the question: Are the benefits of the gig economy worth the drawbacks?
Downsides to the Gig Economy
The gig economy transfers the risk away from organisations onto the gig workers. While the organisation benefits from cost-cutting, outsourcing and salary-pruning, the average person’s economic security is eroded. Instead of depending on a monthly salary, the gig worker must develop his or her own brand and bid for work. Bidding ensures that organisations capture the greatest value and talents, while individuals face a downward pressure on how much fees to charge.
Besides the financial risks, independent contractors like gig workers also do not enjoy the same workers’ benefits afforded by traditional employment. Gig workers are required to find their own medical insurance and contribute to their own CPF accounts. If they do fall ill, they do not receive income for the time that they stay away from work instead of being able to rely on sick leave provided by the organisation.
In a typical employment arrangement, an employee works for a human boss. However, under the current gig economy, gig workers work for a faceless app. Working becomes more depersonalised than traditional working arrangements and for the most part, there is no sense of collegiality or camaraderie due to the absence of colleagues.
Rise of the ‘Shut-In’ Economy
These on-demand production and consumption systems have been driven by what has been called a ‘shut-in economy’. A shut-in refers to someone who rarely leaves their home offices and can have the world brought to them: clothes via Asos, meals via FoodPanda, groceries via Redmart and more. It is an economy driven by personalised services, online shopping and home delivery services. Time is perceived at being at such a premium that we are willing to pay others to have our chores done for us.
If we continue the trend demonstrated by the shut-in economy particularly given the increasing reliance on technology, we might eventually end up walling ourselves off within our urban centres. Isolation and alienation rise as we interact less with one another and spend most of our time living off the Internet.
It is a painful paradox that these social technology were designed for us to have more time for the things that we care about. In theory, if a freelancer helped free up our time that we would have spent queuing to collect our food or washing our laundry, then we could spend this time connecting with our friends and family. However, some food delivery services also acknowledge that they advertise their platforms on the basis that we no longer have to speak to another human again, if we don’t want to. Case in point: DoorDash’s slogan reads: “NEVER LEAVE HOME AGAIN.”.
Questions for further personal evaluation:
- What can the government do to protect the vulnerable workers within the gig economy?
- What are the pros and cons of being a gig worker over traditional employment? Is this something that you would consider? Why or why not?
Useful vocabulary:
- ‘dovetail’: to fit together with; to fit skillfully to form a whole
- ‘bombastic’: referring to speech or writing that is given exaggerated importance by artificial or empty means; overblown, pompous
Here are more related articles for further reading:
- Project Syndicate: Protecting gig workers from economic insecurity
“The distinction between an employee and a gig worker is not inconsequential. Under current laws, employees have rights and access to significant protections and benefits not provided to gig workers. A critical question now confronting policymakers is whether gig workers should be classified as independent contractors or as employees of the platform companies with which they have employment contracts and for whose customers they provide services.
California, a US state with more than two million independent contractors, has attempted to resolve this question with a new law, California Assembly Bill 5, which codifies the legal criteria for determining how to categorize workers. Applying the three-part “ABC test” that many states already use to determine whether a worker is eligible for unemployment insurance, AB5 makes it considerably harder for businesses to classify their workers as independent contractors rather than employees.
To win political support for AB5’s passage, lawmakers exempted many types of independent contractors – such as doctors, dentists, and real-estate agents – on the grounds that they set their own compensation rates, communicate directly with their customers, and earn at least twice the minimum wage. But AB5 does cover the more than 400,000 workers who drive for platform companies like the ride-sharing services Uber and Lyft and the food-delivery firm DoorDash.
Enforcement of AB5 means that these companies will have to start providing their drivers with benefits like minimum wages, overtime pay, sick leave, unemployment insurance, and employer contributions to Medicare and Social Security. Moreover, companies employing gig workers may have to bargain with unions, which their workers will now have the right to form. National unions, such as the Transport Workers and the Teamsters, and newer groups, like Rideshare Drivers United, are already reaching out to organize such workers.”
- The New Straits Times: Malaysian government seeks to safeguard gig workers’ welfare
“Malaysia’s gig economy will be regulated to ensure that the welfare of workers is protected.
Prime Minister Tun Dr Mahathir Mohamad said those who were currently employed in the gig economy were not able to enjoy benefits such as those who were in permanent positions and were at risk of being mistreated by their employers.
“The government is concerned about those working in the gig economy.
“Usually, for permanent workers, there are rules and regulations pertaining to their savings and pensions, including the Employees Provident Fund (EPF).
“But, there are no such regulations yet in the gig economy.
“It is the government’s responsibility to put in place provisions and regulations to ensure everyone is protected.
“We will come up with provisions where if employers break the rules, then action will be taken against them.
“At the moment, there’s no such rules and regulations,” he said in the Dewan Rakyat during the Ministers Question Time.”