What is the gig economy? A new era of work
The Covid-19 pandemic has certainly had a profound impact on the private and professional lives of many of us. While many businesses are working hard to reach international customers, we as consumers have also become more aware of local businesses near us.
The gig economy
Whenever I walk around my hometown of Uppsala these days, I am always amazed at the number of food delivery people buzzing the streets and how the pandemic seems to have boosted these types of delivery jobs. . Over the past 18 months, we have been encouraged to use food delivery apps as an alternative to in-person visits to restaurants, or to use e-commerce instead of physical retail purchases. As a result, the gig economy received a boost. In fact, a study by Upwork found that 12% of the American workforce started freelancing in 2020.
The term “gig” is a slang word for a time-limited work assignment. While temporary work roles previously existed in the form of freelancers, independent contractors and project-based workers, for example, the digital platform has enabled on-demand workers to transition temporary work to a new level. Even though gig labor and digital platform-based labor are two separate things, digital platforms have become the driving force behind the evolution of the gig labor market by bringing together labor supply and demand. work in a single, often global platform.
Interestingly, and what may not be as well-known, is the quiet evolution of gig work among white-collar workers, with platforms such as Amazon mTurk and Fiverr attracting freelancers from around the world. . This is part of a general upward trend – in fact, the International Labor Organization (ILO) estimates that the number of digital work platforms has increased fivefold over the past decade. Another example is LinkedIn, which is entering the scene by offering a global gig platform for freelancers.
One possible reason for the recent adoption of on-demand jobs is that people are spending more time online. Additionally, many of us now prefer to avoid physical contact in stores and restaurants, as highlighted in Ericsson’s ConsumerLab report, The Future Urban Reality. It reveals that consumers expect to have increased the time they spend online by 10 hours per week compared to their pre-pandemic habits.
It also raises questions about what technology, and 5G in particular, can do for the future labor market and internationalization. This prompted us at Ericsson IndustryLab to search for answers. The result was the report “The Paperless Path to Profitability and Sustainability”.
Growth of the international labor market
Despite global trade disputes and the pandemic, our research data shows that companies plan to continue to expand internationally. In fact, six in 10 current domestic companies expect to have an international customer base by 2030. This will also impact the labor market and four in 10 companies agreed that the ability to hire employees globally will be essential by 2030. The need for qualified personnel and the internationalization of companies as such are the main drivers of this development.
The role of technology
Traditionally, it has been quite difficult for companies to expand their business internationally, as establishing local overseas branches for local markets is fraught with legal and practical pitfalls. Technologies such as cloud and mobile connectivity, however, have proven to be game changers for internationalization, enabling white-collar workers to work anywhere outside the office and enabling the establishment of e-commerce services based on the cloud or even remote operation of equipment. and installations via a secure connection.
Our research also confirms the important role of technology for international companies. Cloud, 5G, VR/AR and IoT technologies are being adopted by enterprises and are considered by more than two-thirds of decision makers surveyed to contribute to internationalization. This internationalization, however, requires ICT solutions, such as IoT, cloud and mobile connectivity, which are independent of geographical boundaries and borders.
This development allows companies to establish an international presence without the need to establish a branch office or a local workforce.
The changing work situation
This development calls for a change in the organization of work in the future. Clearly, jobs and location are decoupled, meaning white-collar workers can choose from temporary jobs and projects around the world, while employers can select the best individuals for specific projects from around the world. a pool larger than what is available in a given area. Our recent study shows that by 2030, two in three decision makers believe that hiring employees worldwide, regardless of national borders, will be essential.
Temporary jobs are generally on the increase. According to the OECD, they have already increased by 8% over the past 20 years. In our study, six in 10 decision makers believe that the share of those who are temporarily employed will increase significantly by 2030.
The move towards more temporary jobs suggests a trend towards a more task-based structure rather than the current job-based structure. Our report reveals that 2 in 3 believe the workforce will be structured around projects rather than fixed functions by 2030.
This development certainly comes with downsides, especially in areas such as corporate culture and skills. As employment becomes more flexible, but also insecure, companies could also experience a less loyal workforce, as well as a loss of social cohesion within the workforce.
Additionally, 44% of white-collar workers think replacing long-term roles with short-term assignments and project-based jobs will make life harder. The new Urban Reality Report highlights that more than three in five believe the majority will juggle multiple jobs to maintain a decent income.
Lack of financial stability and uncertainty about the availability of paid work are therefore major challenges for future workers, as they may struggle to make ends meet or obtain (and pay) mortgages and loans. To make matters worse, today’s self-employed normally lack pension plans, sick pay, vacations, and parental leave.
As ILO research has pointed out, the flexibility that accompanies more task-oriented work is also a challenge for gender equality. Research has found that women undertake three times more care and domestic work than their male partner. This has increased further during the Covid-19 pandemic, despite the increased time spent on care and domestic work in general for both men and women. The move towards gig work or more home-based work may therefore reinforce some of this skewed division of labor and pose a risk to the progress already made in gender equality.
The call for regulation and organization
It is clear that the move towards more temporary and international jobs is not without its challenges. Another controversial and persistent issue is the employment status of platform workers. Until now, the conditions of employment of construction workers have often been unfavorable or unclear, they are not unionized or represented, and they do not enjoy the benefits normally enjoyed by employees, such as unemployment insurance, pensions and health care. However, in October 2020, a UK court ruled that two Uber drivers should be considered workers and not independent contractors, meaning they were entitled to minimum wages and paid holidays. This has set vital precedents for other gig businesses in other countries where policies are scrutinized and studied closely.
Another topic of debate is worker representation in the gig economy. The fact that gig workers are self-employed means that it is often difficult to carry out workers’ rights programs collectively, for example by forming unions. However, digital platforms can also be used to enable the opposite. For example, by finding and developing a transnational network of resistance on forums, group discussions and video calls.
In response to growing criticism of workers’ rights and lack of representation, a group of gig workers have developed a third-party platform called Turkopticon that allows workers to provide feedback on their employers, allowing other users to avoid potentially unfavorable jobs and recommend employers. Another service called Dynamo was created to allow workers to raise funds anonymously to organize campaigns aimed at creating a better working environment.
All of this requires a strengthening of international policies and transnational trade union and professional organizations. One example is when construction workers from more than two dozen countries met in person to form the International Alliance of App-Based Transport Workers (IAATW) towards the end of 2019.
Technology has been used to shape a new labor market based on more temporary international jobs, but it has also been used to provide new ways for workers to organize and cooperate for better working conditions.
In summary, we can see that Covid-19 has been an additional driver of an already existing upward trend in the labor market, such as the increase in freelance and on-demand jobs, as well as the increasing amount of work at distance and the internationalization of work, all of this has been fueled by technological development.
Going back to my experience in my hometown – going forward, I expect to continue to see even more gig workers all over downtown, as well as a lot of people working from home, at least part of the time, while visiting their local restaurants and cafes during their breaks!
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