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Is the U.K. Gig Economy Over Hyped?

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There has been much hype about the growth of the gig economy in the U.K., but when you take a closer look, is it really anything new? And how is it likely to grow and change over the next few years?

According to the Chartered Institute of Personnel and Development (CIPD), March 2017, gig workers are defined as those workers who ‘trade their time and skills through the internet and online platforms’, providing a service to a third party as a form of paid employment. This definition suggests that a gig worker is simply anyone who uses tools and technology (websites, social media pages, freelancer or gig platforms) for self-promotion. But since websites and social media have already been around for at least a decade, this definition doesn’t help much. A gig is usually a single project or task (of short duration from a few hours to days) for which a worker is hired on demand: but haven’t freelance workers using the aforementioned tools and technology been doing this for years?

Of the 32m in work in the U.K. (ONS, July 2017), the CIPD estimates that there are ~ 1.3m people (4%) working in the gig economy. However, CIPD’s research suggests that 58% of gig economy workers (754k) are permanent employees engaging in gig economy activity on top of their more ‘traditional’ employment, indicating that this type of work is used to top-up income. Topping up income by having a second job is nothing new, though. That leaves 546k (1.6% of the working population) – maybe these are the real gig workers?

Is there any evidence of growth of the gig economy in the U.K.?

Paid employment (full- or part-time) remains by far the most dominant working model in the U.K., accounting for 81.9% of those in work (26.2 m). Paid employment has only dropped 1.6% (from 64.6%) in the last twenty years (most notably after the last recession), so this indicates that there is more appetite for secure work with regular income and employment rights. Zero-hours contracts (ZHCs), a form of paid employment with limited employment rights, are usually used for piece work or on-call work and represent the working model for 2.8% of those in work. The majority of ZHCs are for part-time work, with 20%-30% being either the 16-24 age group or in education, and are often taken as a life-style choice to fit around other commitments. ZHC work seems to bear the closest similarity to gig work (excluding the contractual benefits afforded under ZHC work), because of the element of choice in whether the job-holder accepts or rejects the work offered at any point in time.

In terms of the remaining working-age population, self-employment currently represents about 15%.  Self-employment was 12% at the start of the last recession, so has only grown by 3% over the past nine years. The rise in self-employment following the 2008 recession may be attributed to the higher unemployment rate which resulted in the years following. About 3% of the working-age population (~1.6 m) are agency temps (REC, 2017), this number increasing following periods of recession and falling when employment opportunities pick up – a pattern demonstrated since 1997. Potential evidence of gig work in this population may arise as workers initially embark on self-employment, when work is likely to be more sporadic.

18.1% of the working-age population are not employed, and this has changed very little as a proportion over the past ten to twenty years. Made up of a mix of students, stay-at-home carers, the long- and short-term sick, retirees, etc., ~76% do not want a job, but the rest would like to work. This 24% may represent another cluster who could embrace gig work.

In summary, the more traditional ways of working in the U.K. have changed very little since 1997, and where there is some evidence of gig work being undertaken, it seems like the majority has been to create secondary income, though there are smaller pockets of the population (ZHC workers, self-employment start-ups, etc.) who more closely match the common perception of gig workers.

Could the Taylor Review boost the gig economy by 2020?

The CIPD suggests that the gig economy will continue to grow, with 12% of U.K. working-age adults who have not participated in gig economy activity during 2016/17 saying they are thinking about doing so in 2017/18. Is this going to be more of what we have already witnessed, or will other factors come into play?

The aim of the Taylor Review, published July 2017, was to make recommendations to the U.K. Government on how current working practices should change to give workers greater flexibility, rights and protections. If the changes are embraced, the U.K. may see growth in the gig economy. The review’s specific recommendations include:

  • Redefining ‘workers’ as ‘dependent contractors’ and giving them maximum flexibility about how they go about work, whilst being afforded baseline rights (such as having a written statement as a dependent contractor, receiving the National Minimum Wage, following piece rates legislation, etc.)
  • Alignment of employment status and tax law
  • Incentivizing employers to rely less on last-minute scheduling of ZHC workers/agency temps by getting employers to offer certainty of hours/income, so ensuring flexibility can benefit both parties
  • Extending the pay reference period for calculating baseline benefits and rights from 12 to 52 weeks for calculating holiday entitlement for those on ZHCs
  • Increasing the permissible break in employment to be one month, not one week, for those on ZHCs for determining continuous employment
  • In employment tribunals, the burden of proof should be on the employer to prove that the employee is not entitled to the relevant employment rights, rather than the employee having to prove a right to receive them.

Whilst the Taylor Review made other recommendations affecting the future of work, if the recommendations listed above are actioned by the U.K. Government, then increasing proportions of the U.K. workforce may take up the gauntlet as ‘dependent contractors’ and enter the gig economy.

I have doubts as to whether the recommendations will be actioned quickly, and don’t expect that by 2020 there will be much difference in the proportion of the U.K. workforce engaged in the gig economy.  If employment status/employment models changed by only a few percentage points in the last twenty years, it’s certainly questionable whether there will be much change in the next two and a half years.

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