The gig/ freelance economy and push for workers' rights
Last week the so-called gig/ freelance economy and implications for worker rights, were the focus of attention from both a group sponsored by the Organisation for Economic Cooperation and Development (OECD), and the International Labour Organisation (ILO). The Pew Research Center published survey results on Wednesday 18 May and a day later, Elizabeth Warren, the United States senator, gave a speech on the issue.
Finfacts last wrote on the gig economy in 2014.
Part-time work, fixed-term contracts, agency work, and in recent times with the large-scale adoption of smartphones, the so-called gig economy, have been part of a trend of casualisation of workforces in many countries.
Since 2005, the number of workers in what is termed alternative employment in the United Sates, has risen by more than half, to almost 16% of the workforce from 10% a decade ago, according to March 2016 published research by Alan Krueger of Princeton University and Lawrence Katz of Harvard University. However, the on-demand workforce or gig economy employs only about 600,000 people, or less than 0.5% of the workforce, the research found.
The economists said that workers in alternative arrangements often find themselves with erratic schedules, variable earnings and few benefits such as health insurance, Social Security or a retirement plan. Some arrangements, like subcontracting or independent contract work, raise questions about worker safety, employer liability and consumer protections.
Krueger and Katz said that all of the net employment growth in the United States between 2005 and the end of last year could be attributed to alternative work.
Prof Krueger, the chair of the White House's Council of Economic Advisers (CEA) in 2011-2013, told The Wall Street Journal that the sharp rise in these kinds of jobs highlight the need for measures to “help people smooth their incomes from up and down periods,” adding that it also left workers on the hook for their own social safety net.
However, some of the alternative workers prefer their work to employee positions.
The economists' paper notes that 84% of independent contractors prefer to work for themselves, which is remarkably consistent with the 83% who indicated the same thing in 2005 and 1995.
On the other hand, temp-agency workers are overwhelmingly dissatisfied: 77% would prefer a job that is permanent compared with 84% in 2005 and 83% in 1995.
A national Pew Research Center survey of 4,787 American adults — its first-ever comprehensive study of the scope and impact of the shared, collaborative and on-demand economy — finds that usage of these platforms varies widely across the population. In total, 72% of American adults have used at least one of 11 different shared and on-demand services. And some incorporate a relatively wide variety of these services into their daily lives: Around one-in-five Americans have used four or more of these services, and 7% have used six or more.
At the same time, around one-quarter of Americans (28%) say they have not used any major shared or on-demand platforms, and many are wholly unfamiliar with the tools and vocabulary of the new digital economy. For instance, 15% of Americans have used ride-hailing apps like Uber or Lyft, but twice as many have never heard of these apps before. Similarly, 11% of Americans have used home-sharing platforms like Airbnb or VRBO, but roughly half have never heard of home-sharing sites. In addition Pew found that:
61% of Americans have never heard of the term “crowdfunding;”
73% are not familiar with the term “sharing economy;”
89% are not familiar with the term “gig economy.”
Each of these individual platforms has its own unique user base. Still, exposure to these shared, collaborative and on-demand services at a broad level is heavily concentrated among certain demographic cohorts.
The ILO said that in a first study, it surveyed around 1,100 workers from two large crowd-working platforms to learn about their employment patterns, work histories and financial security.
Of these, nearly 40% listed crowd work as their main source of income. They generally appreciated the ability to work from home, with one in ten indicating that as their only option owing to care responsibilities or personal health issues. Nevertheless, these positive aspects contrasted with dissatisfaction over low pay, insufficient work and unresponsiveness from the platforms in the face of their concerns.
A second study showed that self-employed workers have difficulty forming trade unions and bargaining for better pay and working conditions. Under some jurisdictions, doing so as self-employed workers could be construed as forming a cartel, which violates anti-trust laws.
Another risk stems from the rating systems used to monitor them. How a worker is rated can affect their ability to continue working or to access better opportunities. But systems based on customer reviews can expose workers to discrimination, which they’re not always protected against.
The International Transport Forum at the OECD, an intergovernmental organisation with 57 member countries, published a report that outlined a number of policy suggestions for countries all over the world, the ITF addressed what it said had been weighing heavily on many member countries: How to regulate ride-hailing apps and taxis simultaneously?
The report says:
The markets for taxis and other for-hire vehicles have historically been subject to imperfections that regulators have tried to correct or at least attenuate. The current regulatory frameworks surrounding for hire transport reflects this history. But the arrival of innovative app-based ride services, generically referred to as Commercial Transport Apps (CTAs), in this report, challenges established rules. The growing popularity of these services has caught authorities off-guard, as CTAs typically do not fall under established regulatory structures. Moreover, the uptake of similar technologies amongst traditional for-hire operators blurs the line between existing regulatory categories, and in some cases obviates it.
In response, regulators have typically sought to block CTAs from entering the market or adapted existing regulations to address the specificities of CTAs - with more or less success and often under the influence of existing service providers. How this regulatory challenge will be met in the face of fast-growing CTAs and strong resistance from traditional for-hire passenger transport providers, is still an open question.
The report adds:
Ride-hailing apps are popular because they often provide better consumer value than most existing services. For those able to access them, the service platforms deployed by CTAs — and increasingly by established providers — cut transaction costs, improve the allocation of available capacity and reduce information asymmetries between drivers, fleet operators and passengers. Consumers value them for providing an easy, consistent and universally available service. They also provide value to drivers through uniquely flexible work opportunities.
For consumers, there is little difference in the transport service provided by taxis and CTAs, as long as the trip is carried out satisfactorily and in a timely manner. Overall, there is convergence among services provided by taxis, private-hire vehicles and CTAs as they increasingly adopt similar technology. Regulatory distinctions amongst different forms of for-hire transport are thus becoming less relevant, although street hailing retains certain characteristics that currently warrant special regulatory treatment. How to book a ride matters a lot to many consumers, and app-based services provide greater transparency, certainty and accountability than traditional modes of access such as street hailing or radio-dispatched taxis.
We have seen first hand how smartphone apps have given some consumers the capacity to negate the endemic gouging by taxi drivers in for example Kuala Lumpur's downtown area in particular where the drivers typically refused to use the meters in their vehicles.
Senator Elizabeth Warren spoke last week of the protections that were introduced in the decades following the rapid industrialisation of the US economy, including child labour laws, safety, health, social security, working hours and so on.
She said in a speech:
I believe we start with one simple principle: all workers — no matter when they work, where they work, who they work for, whether they pick tomatoes or build rocket ships — all workers should have some basic protections and be able to build some economic security for themselves and their families. No worker should fall through the cracks. Here are some ideas about how to rethink and strengthen the workers’ bargain.
CNN reported this week that in April, Uber's $100n settlement of a major class action lawsuit on the rights of drivers in California and Massachusetts sparked a lot of headlines.
Earlier in May Uber recognised a new worker association called the Independent Drivers Guild, recently formed by the International Association of Machinists and Aerospace Workers, the New York labour union representing black car drivers in New York.
CNN said this contemporary spin on an 11th century guild structure has the potential to be a critical step toward a 21st century safety net for American workers' real lives today, because it could very well lead to a workable model to provide portable benefits to gig economy workers.
It could also be a model taht would work elsewhere in the world.
In 1969, Dean Morse, the American labour economist, wrote in 'The Peripheral Worker':
To some extent peripheral work experience is unquestionably a manifestation of increasing options available to many individuals. To the extent that it does represent an enlargement of the area of choice of work experience, it is a positive. On the other hand, to the extent that the peripheral worker is treated as if he were a second-class worker, peripheral work experience cannot but lead to waste, frustration, and angry despair.
Trends in mainly advanced countries
The OECD said in a report published in May 2015 that temporary and part-time work and self-employment now account for about a third of total employment in OECD countries. Since the mid-1990s, more than half of all job creation was in the form of non-standard work. Many non-standard workers are worse off in many aspects of job quality, such as earnings, job security or access to training.
The think-tank for 34 mainly advanced countries including Ireland, said that in particular, low-skilled temporary workers face substantial wage penalties, earnings instability and slower wage growth. Households that are heavily dependent on earnings from non-standard work have much higher income poverty rates (22% on average), and the increase in the number of such households in OECD countries has contributed to higher overall inequality. Non-standard work can be a “stepping stone” to more stable employment — but it depends on the type of work and the characteristics of workers and labour market institutions. In many countries, younger workers, especially those with only temporary work contracts have a lower chance of moving on to a more stable, career job.