The gig economy is a labour market comprising of freelance or part-time jobs as opposed to full-time, fixed contracts. Work is typically conducted on a short-term, per-project basis, rather than long-term employees of an organisation.
As a result of technological changes, such as the internet, gig workers are able to find work anywhere across the globe. As the gig economy has risen over the past decade, so have the online platforms, with the largest platforms operating in the UK being:
- Uber
- Deliveroo
- Amazon
- Airbnb
- Fiverr
- Just Eat
According to a 2019 report from the Centre for Research on Self-Employment, gig-based freelancers contribute approximately £20 billion to the British economy each year.
Furthermore, the number of active gig workers in the United Kingdom is expected to rise from 2.3 million in 2016 to 7.5 million in 2022.
Amid the COVID-19 pandemic, gig workers have provided necessary assistance during the nationwide lockdowns, from vital contactless food and medicine deliveries to online teaching services.
Furthermore, many UK workers have lost their jobs, with the ONS unemployment rate increasing to 5.1% in Q4 2020, compared with 4.1% in Q2 2020. Others have had their hours reduced, as shown by the ONS average working hours per week falling by 18.2% between Q1 2020 and Q2 2020. As a result, many have turned to the gig economy to quickly supplement lost income. Additionally, over the past year, the digitalisation and online consumption from businesses and people have reinforced the acceleration of the gig economy.
However, the pandemic has highlighted the precarious conditions of gig economy workers. Due to being deemed independent contractors, gig workers typically do not benefit from any sick pay, unemployment support and health insurance. The oversupply of labour in the gig economy provides little bargaining power for workers to negotiate working conditions.
This article will assess the most recent data and information with regards to the issues and the outlook of the gig economy.
Employment legislation
On 19 February 2021, the Supreme Court in London unanimously ruled that Uber drivers must be considered workers rather than being deemed self-employed.
This means that Uber drivers are workers entitled to the minimum wage and holiday pay, and that any time that a driver spends logged on to the app is considered working time and should be paid. While the ruling is specific to Uber, it has implications for the wider gig economy in the UK.
Workers within different sectors in the gig economy could file similar cases that could ultimately result in better pay and working conditions. Conversely, these cases might increase the difficulty to find work within the gig economy, as platforms could limit the number of drivers or riders logging on at the same time in order to limit money paid to people that are not carrying out a task.
Ultimately, the Supreme Court ruling could be the first stage of important protection for gig economy workers. This is because cases such as Uber’s may restrict companies from exploiting increases in the supply of people who are seeking working in the gig economy and unable to find traditional jobs.
Just Eat, which operates in the Online Food Ordering and Delivery Platforms industry, has already offered to move its couriers to zero-hours contracts, paying them an hourly wage, with entitlements to sick pay, holiday pay and parental leave. If Just Eat is able to recruit more couriers than other platforms as a result of this offering, other gig economy operators may be forced to follow suit.
Gig economy and COVID-19
The COVID-19 pandemic has affected the gig economy in a number of different ways, depending on the niche sector. For instance, delivery companies have received a significant boost in demand, as is exemplified by the number of orders made through Just Eat growing by 58% between Q4 2019 and Q4 2020, with the company announcing plans to hire 1,000 new couriers between December 2020 and March 2021. Similarly, Deliveroo expanded its restaurant offerings by 11,500 between March 2020 and September 2021 and announced that it had doubled its riders from 25,000 to 50,000 during 2020.
Another benefit for the gig economy during the pandemic was that its workers were less likely to suffer the loss of income than other self-employed workers.
A November 2020 report by the Centre for Economic Performance found that 28% of gig workers reported to having more work than usual.
Contrary to food delivery platforms, other gig economy roles have become scarcer. For example, booking for Uber rides in the UK were 73% lower in Q2 2020 than during Q2 2019. Despite this, a report by the Fairwork Foundation in September 2020 found evidence that competition for ‘gigs’ on some platforms had increased during the pandemic, as people who had lost other jobs turned to gig economy work.
Typically, gig economy workers are low paid, with the majority of workers unable to afford to stop working due to health concerns. The report by the Centre for Economic Performance, published in November 2020, found that 78% gig economy workers were concerned about health risks at work during the COVID-19 pandemic, compared with less than 25% of other self-employed workers. This is likely to be due to the type of jobs conducted within the gig economy. For example, the ONS stated that taxi drivers were within the highest rate of COVID-19 related deaths by occupation in 2020.
Gig economy workers have not been eligible for the furlough scheme or statutory sick pay. While there are some exceptions within the UK gig economy, any form of sick pay is generally limited. For instance, the Fairwork Foundation found that ride-hailing platform Bolt offered its drivers £100 a week sick pay, which is less than 66% of the minimum wage for a 40-hour working week.
Long-term outlook
There is little doubt that the COVID-19 pandemic has affected the demand for the gig economy in the UK. This trend is exemplified through the two-year deal made between supermarket Waitrose and Deliveroo, whereby Waitrose will expand its Deliveroo service from 40 to 150 shops across the UK by the end of the summer 2021, expecting to deliver food to approximately 13 million people.
This follows a surge in online grocery shopping during the pandemic with digital orders accounting for approximately 14% of the market in April 2021, which has doubled since the start of 2020. This is early evidence that consumers will continue to order food shopping online after the pandemic. As a result, IBISWorld expects there will be a long-term increase in the number of gig economy couriers.
According to the University of Oxford’s iLabour Project’s Online Labour Index (OLI), which provides an online gig economy equivalent of conventional labour market statistics, measuring the supply and demand of online freelance labour using the number of projects and tasks across platforms in real time, digital gig economy work increased during the three lockdowns across the UK
However, digital gig economy work fell during summer 2020 and early autumn 2020 when restrictions were eased. While at this stage it is difficult to determine a direct causality within the data, the rises amid the lockdowns could be because furloughed or unemployed workers operated within the gig economy, while the falls could be because these individuals had to return to their original jobs.
Conclusion
While the COVID-19 pandemic resulted in a number of issues for the gig economy and its workers, it also shone a light on the working conditions and its importance within the UK economy.
As furlough comes to an end in September 2021, there are contrasting views as to how this will affect the gig economy moving forward.
The general consensus is that laid-off workers will flee to join the gig economy as a means of income, creating more intense competition for the work available.
However, this is all dependent on the state of the economy amid the gradual easing of COVID-19 restrictions in the UK, which at this stage is difficult to project. Ultimately, it is still too early to determine the long-term effect of the pandemic on the gig economy and more detailed data is required.
One thing that is more certain is that despite the scrutiny and controversy, the gig economy, in one form or another, is here to stay and is growing at a significant pace. The primary issue moving forward is how it adapts to become more compatible with social equity and human rights.
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