The 'feast or famine' lifestyle of giggers in gig economy

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)

"One result of the pandemic may be that even though we will undoubtedly lose many in-person businesses, we may have a more robust on-and off-line landscape of experiences and businesses available after the pandemic," shares a University of Illinois-based research.

The Gig economy, whose projected growth is around $2.7 trillion by 2025, has clearly 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 emergence of peer-to-peer business models has empowered countless individuals across the globe to earn money through sharing their under-utilised assets. The Gig or Sharing economy initially claimed to be able to redefine white-collar jobs and transformed the way we perceive the very existence of professional service firms. For example, why would you need to outsource a data analytics firm for a project when you have an easy and quick access to experts, connected by a digital platform with global reach.

The terms that are often synonymously used in the context are 'sharing economy' or 'collaborative consumption' or 'freelancer economy' or simply 'gig economy'. 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 a website or app to help them find or organize their gig work, others may connect more with word-of-mouth in this business of reputation. 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."

With the increased use and expansion of the internet, the emergence of 'mediator' or the connecting platforms made things easier than the conventional 'word of mouth' recommendation-based gig work for freelancers. There has been tremendous growth in the gig economy, but most of it can be attributed to unskilled work such as driving (e.g., Uber, Ola), delivering (e.g., food, parcels, etc. through Zomato, Swiggy, Deliveroo, or Amazon delivery riders), and doing simple errands (TaskRabbit, Just Dial).

Clearly, the utilitarian and 'instant gratification' nature and motivation of many users, a major benefit for consumers in the sharing economy is the provision of A) Broader options and B) Lower prices. A recent Eurobarometer study evidences that the benefits of sharing are largely monetary or related to convenience, while a Deloitte study on the sharing economy in Switzerland found that 65% of respondents considered lower cost to be a key benefit of sharing services.

Gig worker or Giggers can range from traditional independent contractors to freelancers and temporary staffing firm employees who work for selected hours in a week. Self-organization and self-motivation are two given requirements for one who is entrepreneurial enough to take on a diverse range of gig work, create a solid reputation, ensure continuity of orders and therefore maintain flow of work.

Some may use gig work to supplement the income they receive from a traditional job. So, the core motivation lies in additional income generation, flexibility, and autonomy. In the US, research shows that at least one-third of the total workforce rely on gig economy work as their primary source of income. The risks that gig workers take not only relate to their labour but also to their own capital (e.g., Uber drivers own their vehicles). Risk mitigation counts when continued ownership of the assets used in work are dependent on a set of circumstances outside the control of the worker. For example, platforms dismissing giggers for low ratings or a surge in availability of cheaper giggers.

It can be also argued that there is too much focus on external moderation and review process, the power lies exclusively in the hands of 'users' or 'customers' and leaving very little room for error and inability to secure a 'higher rating' by the gig worker. The success of platform-based gig work is after all based on user 'ratings' and 'comments', in other words virtual or 'digital reputation'.

'Frequently even the most basic information becomes available only after the provider has accepted the request and thus commits to taking on the gig'. 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) or a residential host (Airbnb), than in traditional business-models. However, research showsthat sharing economy platforms are not only perpetuating information asymmetries, but encouraging them for their own benefit. Most platforms, in fact, restrict access to information which 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.

On the contrary, while looking at skilled gig workers, the stability in the gig economy for knowledge workers in particular, e.g., engineers, consultants, management executives – has not been experienced yet. While knowledge economy-based gig workers have promoted themselves as providing flexible work that can be lifelines to institutions during economic downturns - a research that studied 43 business analysts and lawyers in Canada and the United States over the past 3 months shows that has not been the case.

Research shows that the range of diversity which is visible in the nature of gig work and those enrolled with it poses a challenge for measuring and understanding the experiences of the gig workers. New interfaces are also created between traditional employment practices and the gig economy, debates on precariousness of gig work that aims at 'perform or perish', while arguments are also in favour of flexibility and lifestyle freedoms for some. In other words, the debates around 'feast or famine' lifestyle choice of certain groups of freelancers are not exclusive anymore.

Since March 2020, steps have been taken to address the well-being of giggers, some of the leading global corporations such as Google, UBER, and Facebook are beginning to recognise the gig workers as their 'employees'. Gig economy work, with all its pros, cons and debates – is exponentially growing everywhere, largely in the BRICs. However, the tact with which emerging economies manage this trend should carefully curb the balance of externalities on the gig workers and platform providers.

Since the pandemic started last March, 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?

At the same time, rising unemployment meant more skilled workers were seeking contract work, i.e., demand for labour, will source from organizations aiming to add new skill sets and capacity while surviving during turbulent business times. The Supply of labour, on the other hand will come from individuals who increasingly need new sources of income.

In order to build some level of immunity against such crisis to affect the gig workers, policies need to support businesses, employment and income; provision of essential healthcare benefits, stimulating the economy and jobs, upholding workers' rights at workplace; and equally importantly, using social dialogue between government, workers and employers to find solutions. The right measures could make the difference between survival and collapse.