Dr B K Mukhopadhyay
(The author is a Professor of
Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)
Dr. Boidurjo Rick Mukhopadhyay
(The author, international award-winning development and management economist, formerly a Gold Medalist in Economics at Gauhati University)
A 'gig worker' is someone who is employed on a freelance basis, carrying out short-term jobs or contracts, to one or more employers. Some of them may rely on 1) a website or app to help them find or organize their gig work, while others may 2) connect more with word-of-mouth in this business of reputation. The terms that are often synonymously used in the context are 'sharing economy' or 'collaborative consumption' or 'freelancer economy' or simply 'gig economy. Some may use gig work to supplement the income they receive from a traditional job. The gig or sharing economy's projected growth is around $2.7 trillion by 2025 and has facilitated the expansion of micro-entrepreneurship opportunities since sharing platforms contribute to the overall economy as a new source of employment while opening up previously un-tapped sources of income. The primary motivation of gig workers typically sources from the following - flexibility, additional income, freedom and other forms of job revolvement and job rotation opportunities.
Skilled gig workers or knowledge workers could be defined as someone who could pursue "a bunch of free-floating projects, consultancies, and part-time bits and pieces while they transacted in a digital marketplace." Broadly, there are two categories of gig work; 1) those who offer their services as freelancers or independent contractors – individuals who consider themselves as self-employed and their ' boss', and 2) who work as contingent workers and are under certain obligations with a company, a bit similar to full-time 'workers' minus the rights, job security and usual benefits. Researchers have also classified the above two categories into two further classes, gig works in the 'web-based platforms' (e.g., software developers, sales and marketing support) and those who are 'location-based' (e.g., Airbnb, Uber). In both the classes, however, the service provider invests their resources and users pay the fee while the company earns a commission from each transaction.
Digital labour platforms are defined as digital networks that coordinate labour service transactions in an algorithmic way. Another key implication of digital labour platforms for work and employment is that it lowers the entry barriers to the labour market, facilitate work participation through better matching procedures and facilitate flexibility of specific groups (e.g., workers seeking a better work-family life balance, people with disabilities or health conditions, older workers, long-term unemployed). Almost all gig economy business platforms that are B2C are smartphone application-based. Therefore, digital competencies are becoming a significant resource and precondition for employment. So, it is now quite a common practice that companies like Ola, Uber, and food delivery services promote and train digital entrepreneurial skills. This is easier said than done, particularly for specific age groups where the time and learning ability required to pick up a new set of digital skills is slower than the pace of change taking place frequently. Similarly, the rural-urban migration of workers who seek gig work, e.g., ride-hailing services being most popular, takes them longer to assimilate with new practices and technology adoption.
McKinsey estimates that 540 million people could be seeking work through 'online talent platforms' by 2025, with a prediction that up to 230 million would find work. In 2017, a study estimates that around seventy million people have found work via an online platform. One-third of all work is estimated to be mediated via digital platforms. Across the countries in Europe, 9% of people in the UK had carried out paid work via platforms, with 9% in the Netherlands, 10% in Sweden, 12% in Germany, and 19% in Austria.
There is an argument that the gig economy platforms reduce information asymmetries by providing more information about a provider, such as a taxi driver (for Uber, say) or a residential host (Airbnb), than in traditional business models. However, research shows that sharing economy platforms are not only perpetuating information asymmetries but encouraging them for their benefit. Most platforms restrict access to information that would enable providers to assess the profitability of certain transactions, e.g., ride-hailing platforms do not permit providers to set preferences for either consumers or rides. Such asymmetries, it could be argued, are in place to prevent profit-based selection.
Since the pandemic started, the gig workers' earnings have plummeted and many have become disgruntled about their lack of health care in particular apart from reduced work allocation by the partnering online platforms. Many others are also feeling economic pain from the outbreak — layoffs have hit workers in retailing, airlines, hotels, restaurants and gyms — but even as public health agencies have recommended social isolation to insulate people from the virus, gig workers must continue interacting with others to pay their bills. Will the current crisis propel a response from stakeholder groups (e.g., gig-based work platforms, governments, individuals, trade unions etc.) to steer the course away from plummeting income and job offers in the gig economy?
In Singapore, the Tripartite Alliance for Fair and Progressive Employment Practices guidelines for certain employment benefits available to term contract employees thereby ensuring employees are sufficiently protected under existing employment law. Similarly in 2020, the Senate Bill 1469 in The Philippines or the National Digital Careers Act established a legal framework for the gig economy that will map out strategies to promote and strengthen digital careers and institutionalize employment standards for digital career workers.
The emergence of peer-to-peer business models has empowered countless individuals across the globe to earn money through sharing their under-utilized assets. There has been tremendous growth in the sharing economy, but most of it can be attributed to unskilled work such as driving (e.g., Uber, Ola), delivering (Swiggy, Deliveroo, or Amazon delivery riders), and doing simple errands (TaskRabbit, Just Dial). Besides the 'instant gratification aspect, the major value for customers in the sharing economy comes from 1) Broader options and 2) Lower prices. A Deloitte study on the sharing economy in Switzerland found that 65% of respondents considered the lower cost to be a key benefit of sharing services.
From the user's perspective, we practice 'Collaborative consumption' which is based on sharing, swapping, trading or renting products and services enabling access over ownership. Other terms associated with this practice are access-based consumption, access-based service, non-ownership services, and more. In this context, the concept of 'exchange' is particularly important and over the years, we used the concept synonymously with sharing, bartering, and trading. An exchange is typically considered a dyadic process occurring between two parties. Collaborative consumption relies heavily on customers who are self-seeking while at the same time about the product or service that offers several 1) Community, 2) Financial, and 3) Environment-based benefits also. Socially collaborative consumption increases individuals' interaction with each other as a result of people meeting each other.
On a final note, however, it remains rather intriguing to learn more about how firms engaged in collaborative consumption do better and succeed more than others. The rivalry is as intense as one would expect in any other industry. For the technology-based sharing platforms, they connect the demand for and supply of service and one of the success factors for them is to balance out the requirements on both sides. This includes retaining the peer-to-peer service providers as well as managing the demand and supply. Understanding both the growth and change dynamic of the successful platforms is important, particularly for new firms who aim to enter this market.
For the platform provider, maintaining differentiation in product or service offering is as important as ensuring a constant quality level. Differentiating themselves from what competitors are available on similar platforms would help sustain businesses that wish to stay in the game. In the end, the success and future of these sharing platforms and gig workers depend heavily on 'digital reputation', which is in the hands of 'users', and this raises questions on employee rights and entitlements who are engaged in the sharing economy. The digital platforms offer to pool together millions of service providers at a negligible cost, albeit including offshoring and outsourcing of tasks, but at the same time, it results in even further task specialization which might intensify a new form of competition for the giggers today and tomorrow.