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Employment Today, HR Solutions - Thomson Reuters

Employment Today, HR Solutions - Thomson Reuters

The way of the future?

Gig work has been hailed as the way of the future, but Dr Jarrod Haar is not convinced. He told the recent Law@Work conference that although the model offers flexibility, it also has some inherent disadvantages—and the gig performer can become the in-house guitarist. Jackie Brown-Haysom reports.

Don’t be fooled by the sexy name—the gig economy has some attractions, but also some very real drawbacks. That was the message from Dr Jarrod Haar, professor of HR management and deputy director of the NZ Work Research Institute at AUT University, speaking to the recent Law@Work conference in Auckland.

With the rapid rise of organisations like Uber and Airbnb, gig work—short-term contracts which use digital technology to connect those offering work with those willing to do it—has come in for a lot of attention. Its no-strings approach and instant accessibility have seen it hailed by some as the way of the future, but Haar is less than convinced, pointing out that, although the model offers flexibility, it also has some inherent disadvantages—for both parties.

“If you have no encumbrances the gig economy might sound pretty cool,” he acknowledged. “If you’re a professional, the option of doing freelance work on a laptop in a cafe—or even from somewhere like Mexico, where the living costs are low—might appeal, but not all gig jobs are equal. There’s a big difference between working on a laptop in Mexico and riding a bike with a chilly bin to deliver food for Uber Eats.”

Yet despite the obvious differences between the freelance lawyer, the on-call cleaner or home handyman, and the ubiquitous Uber driver, all gig workers have some things in common, he said. Because there are no long-term contracts, workers have the flexibility to work when and where they choose, but—even if they make themselves available to work on a regular basis—they receive no pay unless they can secure a job, and have no control over work availability.

“For someone doing food deliveries, for instance, they might have the pressure of three or four trips an hour for part of the day, and none at all the rest of the time.”

For those offering work, this arrangement can provide significant financial benefits, he said. Not only do they not have to pay for downtime, but there is no holiday or sick pay either, and with a contract price usually agreed for the whole job, the cost of any delays or difficulties will be carried by the worker. However, without the security of an ongoing employment relationship, there is no guarantee that an employer’s preferred gig worker—or indeed any worker at all—will be available when needed.

Despite these drawbacks the gig economy has become very big business, with a large number and variety of gig roles now available. A wide range of professionals have started using online platforms to offer and bid for one-off contracts, and posts on Australian website Airtasker—which claims to have 1.3 million people ready to offer work—include everything from blog writing, researching and logo designing, to furniture moving, catering and dog walking.

Of course casual, short-term work in many of these areas is nothing new, but the key feature that makes gig work different is the involvement of digital technology—usually a mobile phone app provided by a third party—as the point of contact between worker and prospective employer. And it is the presence of this intermediary that is blurring, and potentially circumventing, traditional employment relationships in ways that have not yet been clearly defined.

“Uber claims it is neither an employer nor a principal—merely a technological platform on which others provide services,” said Haar. “It’s just a competitor to taxi drivers, and yet through its use of technology it’s managed to make the relationships quite grey. In effect it has a business model with no employees, other than its technological staff.”

Last year, however, after hearing evidence from two British drivers, the UK Employment Tribunal firmly rejected Uber’s claim that they, like all its drivers, were independent contractors, and thus ineligible for the minimum wage and other employment benefits. Uber appealed the decision, but last month the Appeal Tribunal confirmed that Uber drivers—in Britain at least—are legally employees. The cost to the company in wages, benefits and VAT payments will be colossal.

This, Haar said, will impact on the company’s business model, which has relied on progressively cutting fares—and with it, driver incomes—to grow its market share.

“Uber is worth US$40 billion, but it hasn’t yet made a cent. Its strategy is to drive its competitors—the taxi companies—out of business and dominate the market. Then it will be able to put its prices up and make some profit.”

Based on the Uber experience, he urged his audience to think carefully about the nature of the employment relationships if they were making regular, or repeated, use of the same gig workers.

“If I’m advertising on an app, getting multiple applications and selecting one to do the job, that’s a contractor relationship.

“But things get sloppy when the worker starts coming into the workplace regularly and gets more work without bidding for it. In that situation it can roll over into a traditional employee relationship—the gig performer has become the in-house guitarist—and there are penalties for getting it wrong.”

Taking a different HR perspective, Haar pointed out that gig workers can offer a flexible alternative to the 90-day rule, allowing an employer to engage someone for a single contract, possibly of very short duration, and terminate the relationship without repercussions once work is complete.

“If the work is terrible that’s the end of them. But if you think about it from the contractor’s perspective, they’re likely to be doing their damnedest to impress because they want to get more work. So there is potential for organisations to benefit from the gig economy, if they use its shorter timeframes as a trial.”

The unstructured nature of gig work means that much of the data about its prevalence and impact is, at best, sketchy. Haar cited statistics from both Australia and the US, which claim to have 3.7 million and 55 million “freelance” workers respectively. He noted, however, that this category is likely to include not only gig workers, but also those contracting to do other types of casual or part-time work. British figures, however, focus more specifically on gig workers, putting their numbers at 1.1million, which Haar said was more likely to be accurate.

Some 40 percent of those included in the UK statistics are under 30, and a significant proportion has at least some college education, and possibly a bachelor’s degree.

“While this economy does attract a multitude of workers, few roles seem to pan out as fulltime jobs. It could be that, for most, the gig economy is more a means to an end than something that will be a long-term career.”

While research on the topic is limited, most studies assume that the number of gig workers will continue to swell in years to come, and this may, over time, redefine the concept of worker success, as people seek to optimise its “you-name-it-and-you-can-rent-it” ethos, to counteract the expected disappearance of many more permanent roles in the so-called fourth industrial revolution.

Haar, however, was less certain that gigging will become the mainstay of a new economic model.

“There are predictions that online talent platforms could add as much as US$2.7 trillion—or two percent of global GDP—to the world economy. But they’re looking to 2025, so they’re talking about things that we can’t really know about.”

Enthusiasts say the gig model will provide new opportunities, may shorten the amount of time people spend unemployed, and will increase transparency. Haar, however, expressed concern that for some at least, including skilled professionals, it could mean a life of “always hungrily looking for work” in a precarious market, potentially competing against people from around the world and with pay rates falling as workers try to undercut one another.

“If, as an employer, I’m outsourcing my work around the globe, the fact that someone in Russia or China will do it for half the price of a New Zealand worker will give me an advantage.”

Employers will not have it all their own way, however, as in a global market the best people will be in high demand, meaning that would-be employers may sometimes struggle to engage competent contractors. In such circumstances, he said, work would become less secure, and the quality of work on offer was likely to decline.

“I don’t know what quality of work we will get from employees if we are trying to screw them for a low wage,” said Haar. “[The inevitable result will be] lack of dedication, and a lack of commitment, to both the work and the organisation.”

Despite his concern that a gig-based economy has the potential to impact negatively on both motivation and performance, Haar reassured his audience that recent data suggests such a scenario is still some way off.

“According to the Wall St Journal, US workers are now less likely to be self-employed, or to hold multiple jobs, than they were a decade ago—even in industries like transportation, where you might expect to see the Uber effect.”

Between 1994 and 2014 the percentage of self-employed workers in America fell from nine percent to just over six percent he said. “The gig economy is real, but is it growing and expanding? It appears not—but that doesn’t mean it won’t grow.

“If organisations like Uber show the world that it’s more profitable to use workers on a contract basis rather than hire them as full employees with all the benefits and protections that that entails, other businesses are going to imitate them. If this does happen it’s likely that good HR, good legal advice, and good monitoring, will make things better, and I think this is going to be important.”

JACKIE BROWN-HAYSOM is an Auckland-based freelance journalist and former editor of Safeguard magazine.

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