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A New World of Work, Part II: The Gig Economy Explained

28 Jun 12:00 by Matt Walters

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The staffing industry is in a constant state of evolution, where any semblance of a traditional model of recruitment now seems short-lived at best. Over recent years the ubiquity of reliable technology and connectivity, paired with a generation of digital natives with an expectation of instant availability, have led to a new world of work: the gig economy. In this article we will review some of the key characteristics of the gig economy and explore the advantages it presents to staffing firms and their clients.

In recent years the concept of ‘gig’ work has gathered considerable pace as businesses come to fully embrace the notion of a flexible workforce. The gig economy is a marketplace in which businesses engage with workers for short-term engagements, or gigs. The significance of this emerging economy is enormous, as workers, clients and staffing companies realise that vital experience, contacts and perspective can be gained without resorting to traditional hiring practices. However this method of engagement continues to raise questions in terms of compliance and management that need careful consideration.

Last year, presidential hopeful Hilary Clinton addressed the trend, stating in one of her early campaign speeches: “This on-demand, or so-called gig, economy is creating exciting economies and unleashing innovation. But it is also raising hard questions about workplace protections and what a good job will look like in the future.” And as an increasing number of workers are choosing to work gigs rather than entering into full-time employment, it is critical that businesses fully understand the landscape of the gig economy and the implications of engaging with these workers.

Firstly, it is important to address the unparalleled opportunities that can arise from the gig economy. Gigs allow businesses to access a wide talent pool of flexible workers, and with the rise of on-demand talent marketplaces such as Upwork, there is now far greater access to gig workers than ever before. It has helped to negate skills shortages, reduce overhead costs and, in the US in particular, has contributed a great deal to the growth of the careers landscape as a whole.

This heightened level of flexibility and access to talented workers is certainly one of the fundamental reasons for so many businesses to engage with gig workers. The CEO of on-demand talent marketplace MBA&Company summarised the trend well, stating, “You can now get whoever you want, whenever you want, exactly how you want it.” The statement goes on to add that because gig workers are “not employees”, organisations do not “have to deal with employment hassles and regulations”.

Indeed one of the most pressing questions surrounding such gigs is that of worker misclassification or deemed employment. If a worker is generating a majority of their income from an engagement with a company, should that company not be deemed to be socially responsible for that worker? In other words, is the worker not just, in effect, an employee? It seems clear that if a worker is simply translating a single document there is little chance of an employment relationship being construed, yet if that same client uses the same method to ask the same worker to provide translation services on an ongoing basis things can become considerably less clear, particularly if the worker is based in a country that the client doesn’t fully understand.

True, the new era of gig workers does remove certain obligations, however in order for this structure of engagement to continue working effectively it is critical that organisations are engaging compliantly with their gig workers. For some gigs this can mean hiring via a platform such as MBA&Company or Upwork who offer protection against employment claims as part of their standard terms. For others such platforms will be too costly (Upwork charges between five and 20 per cent) and other engagement types such as contracting, freelancing, outsourced employment and others, will prove more apt. It’s up to clients and staffing companies to recognise the different types of gigs and plan their engagement strategy accordingly.

Soon, the gig economy will become a dominant player in the staffing landscape, and we can expect that, before too long rules and regulations will be introduced to ensure that businesses know how to operate compliantly. Companies such as Uber are blazing a trail in this area by pushing countries and local authorities to clearly define when a user of a sharing app becomes an employee of the company. This precedent being set by the sharing economy (a subset in its own right of the gig economy) will allow companies in the wider gig economy to thrive in comparative safety.

The gig economy is here to stay, and as the trend continues to expand it is critical that businesses consider how they engage with their gig workers. Staying informed and understanding the law is key in order to make the most of this new era of both flexible and talented gig workers.

In part three of the New World of Work series, we will look at millennials; who they are and what they want from work compared to the previous generation. We will also look at the pros and cons of engaging with the millennial contingent workforce, and how this new working generation fits into the gig economy model. Throughout the series I am keen to hear about your experiences as a user or a provider of contingent work in this context, so do please leave a comment below.