Burgeoning numbers of gig economy workers suggest there are clear benefits to taking up contract work, but experts are also highlighting the potential health risks facing members of the gig economy workforce. Employers can play a key role in helping independent workers to thrive, while also experiencing the benefits gig workers can bring to their business.
Understanding the gig economy
In the gig economy (sometimes known as the freelance economy or sharing economy), companies tend to hire independent contractors and freelancers rather than full- or part-time employees.
The gig economy is powered by a workforce in which people work a variable schedule, driven by day-to-day demand. The top controllable cost of the gig economy is labour. Due to the daily must-have needs of companies relying on gig economy workers (think of an event, like a concert, that must be staffed for one day only, or the fluctuating needs of an aged care facility which relies on a mix of contract workers and permanent workers), operational/employee demands are quite different to traditional desk-bound workplaces, which will often consist of only full-time employees.
In recent years, a growing number of people are working in ‘demand-driven’ positions. As demands change and new business models emerge, entire industries are being thrown into upheaval. So, people no longer work for the same employer for decades. That is unrealistic when certain market sectors suddenly surge (e.g. home healthcare, events, hospitality) and others decline (e.g. bricks-and-mortar retail, etc.).
The gig economy has significantly disrupted labour markets globally, and further growth is expected. Mastercard research forecasts global gig economy transactions will swell to approximately $455 billion by 2023.
Criticisms of the gig economy
For many people, the benefits of gig work outweigh the encumbrances of traditional jobs. Research conducted by McKinsey & Company indicates that 30% of independent workers prefer this option, while another 40% use gig work to supplement their income. The other 30% work as independent contractors by necessity.
Despite benefits such as freedom from nine-to-five shackles and great flexibility, there are some downsides to the gig economy.
Unlike traditional employees, gig economy workers are classified as independent contractors and therefore don’t enjoy employee benefits such as:
- Paid holidays, sick leave and workers compensation entitlements
- Minimum wage requirements
- Career development opportunities
- Unfair dismissal protection
- Health insurance
Furthermore, some independent workers find working in the gig economy hampers their work-life balance, as they need to be available whenever gigs crop up.
In addition to lacking the security of traditional employment, gig economy workers may end up worse off financially. An Actuaries Institute study found that only 1.5% of gig workers in Australia make personal superannuation contributions, and that workers spending five to ten years working full time in the gig economy could be between $40,000 to $100,000 worse off in accumulated superannuation at retirement than a minimum wage earner.
Benefits of gig workers
For employers, the advantages of having a gig workforce include:
- The ability to meet fluctuating staff requirements
- The ability to cope with absences and other unforeseen events
- Reduced cost of providing employee benefits
- Lower business space costs (rent etc.)
Another benefit of independent contractors is that they can be hired on a zero-hour contract, which means you’re not obliged to provide regular work. This allows you to cut costs and can be cheaper than paying fees to agencies to source additional staff.
Difference from temporary workers
Gig economy workers are different to temporary employees, who are engaged for a set time period via a fixed-term contract or to help with a project that has an end date. Temporary employees are entitled to the same benefits as their full-time, part-time or casual counterparts.
Misclassifying employees as independent contractors
It’s important to note that independent contractors are different to employees and failure to classify your gig workers correctly could land you before a workplace tribunal.
Independent contracting arrangements are common in the gig economy, but gig economy platforms such as Uber can be at risk of engaging people as independent contractors when they should be classed as employees.
If you’re an employer, it’s against the law to tell people they’re an independent contractor when the situation indicates they’re engaged as an employee. For example, workers who are obliged to accept work, wear a company uniform, or work set shifts are probably employees, not independent contractors.
If this happens, you may have to back pay all entitlements the worker should have received, and you may be penalised under the relevant legislation in your country (such as the Fair Work Act in Australia).
If you’re unsure about your gig economy workers’ employment status, check out Australia’s Fair Work Ombudsman’s website, the Employment Relations Authority website in New Zealand, or this site from the UK government outlining contract types. Always seek professional legal advice if unsure of worker classification in your organisation.
How to better support gig economy workers
As noted, hiring gig economy workers can help you meet fluctuating workforce demands while keeping costs down. You can also contribute to helping them thrive doing independent contractor work.
According to research reported in Harvard Business Review, four key strategies can help gig workers to flourish.
Defining a physical workspace
Being deskless and disconnected from a traditional workplace, gig workers need defined, distraction-free places to retreat and do work-related tasks. These spaces provide ready access to all the tools needed for work. For example, hospitality or care workers might have a dedicated desk where they do their bookwork, or a defined space in the care facility where they can have a coffee before a shift or relax afterwards.
Encourage your gig workers to create a workspace that suits their needs and reflects their personality. Give your workers the tools they need to do their jobs effectively, such as user-friendly digital platforms, Humanforce, for example, allows workers to select shifts and apply for leave from the convenience of a desktop or mobile device.
With a growing body of research suggesting that routines help people to perform at their best, encouraging your gig workers to form habits or schedules can assist them to maintain focus and stay on track with work.
You may be wondering how deskless, gig-based workers can follow routines, but they don’t have to involve a regular work schedule. Other ways include following a to-do list, accomplishing the most difficult tasks first, dressing for work, and establishing healthy sleep, eating and physical activity routines. For example, a healthcare or childcare worker might start each shift by making a list of priorities for that shift. Other examples of routines for deskless workers include preparing healthy snacks on days off to take to work each shift, going to the gym three times a week, and catching up with a co-worker or mentor once per week or fortnight.
The research showed successful gig workers had a higher purpose. Ask your staff why they’ve chosen this pathway. Aside from earning a living, they may be supporting their family, serving others, saving for something special like a holiday, or working while studying.
Connecting with your workers this way shows them you value them as people, which can boost morale and employee engagement, helping your business to thrive as well as your workers.
As social beings, humans are wired for connection. However, gig economy workers typically don’t have a corporate office or staffroom where they can meet up.
Contemporary workforce management technology can bridge this gap by connecting teams working across different locations and times. Humanforce’s digital platform is custom-built to empower team-wide communication. Our mobile app has a chat function that enables managers to stay in touch with their teams and individual workers to interact with each other. A notification function enables managers or administrative staff to broadcast important information to a larger group of people.
Other ways you can help your gig workers thrive include:
- Encouraging them to organise their finances – by putting money aside for tax time or seeking advice from a finance professional, for example
- Facilitating their time management – such as by giving them the digital tools to manage their shifts
- Encouraging them to build and diversify their skills – for instance, you could offer on-the-job training or subsidise attendance at professional development courses
Thriving workers support booming business
Helping your gig workers to thrive is more than a nice thing to do, with new research showing high-performing teams have found subtle ways of leveraging social connections to fuel their success. Giving your independent workers the tools they need to do their jobs and stay in touch can go a long way to establishing a successful business.
How Humanforce can help
Humanforce is a leading provider of shift-based workforce management solutions that simplifies onboarding, scheduling, time and attendance, employee engagement, and communication. Customers in more than 23 countries use Humanforce to optimise costs, realise compliance confidence, empower their team, and drive growth. Humanforce was founded in Sydney in 2002, and today has offices across Australia, New Zealand, Singapore, and the UK. www.humanforce.com