Self-Employment
Several years ago, the Australian Institute of Management would hold regular one-day briefings on the economy and future trends. Many of us enjoyed contributions from what became a familiar trio, comprising Neville Norman, from the University of Melbourne, Alan Carroll, an international management consultant running his own business, and Phil Ruthven, the head of IBIS, a data analysis company. Each would contribute to painting a picture of the changes they could see. Neville Norman would examine the economy, and the various actions the government was pursuing or proposing to keep growth on track. It was always growth back then! Alan Carroll would then set this within an international context, his analysis always combining strategic insights with witty insights into and quick portraits of international leaders. Finally, Phil Ruthven would summarise the changing situation with a series of graphs and tables showing areas of growth and decline.
Could we have guessed back then how the apparent story of never-ending overall growth was heading for a shock? Ruthven’s charts showed us the patterns of change in the economy. His interest was in the longer trends the data revealed. However, none of the three could have predicted the emergence and impact of Covid. Years later, we can look back and check if any of the trends outlined have continued. In their day, Australian was described as “a quarry, a farm and a hotel’. Manufacturing was dying. Also experiencing a slow death, the media hung on, largely through overseas ownership and overseas content. The hope for the future was in innovation and entrepreneurship, especially in medical devices and products.
Little has changed. The quarry remains central, even if it is gas and some rare earth metals that now contribute as much as iron ore and coal once did. The farm has had a tough time in recent years, with restrictions on international trade, and spectacular growth in agricultural products from other parts of the world. The hotel is re-emerging after the Covid downturn, but some of the facilities look shabby today, and threats to such natural phenomena as the Great Barrier Reef have left the industry with a sense the best days are clearly over.
However, a focus on the big trends that Normal, Carroll and Ruthven documented might have taken attention away from some other changes. If, like me, you are older and a working hours walker, you will have been struck by the numbers of small businesspeople you see today: there are local builders, air-conditioning repairers, dog-washers, people contracted to mow lawns and clean up gardens, as well a plethora of delivery trucks, meal services, and so the list goes on. This is the ‘gig economy’ at work: and it seems self-employment is growing at the same time as larger companies are shrinking their employee numbers.
Who are these ‘gig workers’. They are self-employed, independent contractors, and contract firms with on-call teams and temps. Gig workers are the people who are employed through formal agreements with on-demand companies to provide services to the company’s clients. Are they employees? It’s a contested area. Companies prefer to classifying their gig workers as ‘independent contractors’, whereas workers’ advocates (unions and other membership organisations) push for them to be classified as ‘employees’, to pressure the companies to provide the same employee benefits their fulltime staff possess, like overtime, paid sick leave, employer-provided health care, bargaining rights, unemployment insurance, and more.
Gig work began to grow around the middle of the 20th Century. Back in 1952, Jack Kerouac was the first to use the term to describe a form of employment when writing about his time as a brakeman for a US railroad company. This was in his book On the Road, a novel, but perhaps better described as a ‘faction’, as it charts of evolving impact of the Baby Boomer generation on themselves and on others. Initially described as a book charting youthful exuberance, it has become seen as an account of “gloomy middle-aged disillusion” (as David Brooks was to describe in the New York Times, 2 October 2007). Brooks saw the emerging gig economy as possessing a reckless and youthful confidence that was to slowly decline as those same gig workers became more and more absorbed into the economic system. Of course, Kerouac wasn’t interested in analysing economic trends: his focus was on the characters in his novel, who sought to assert their independence, replace the traditional model of manhood with a model rooted celebrating conquest and self-discovery, affirming male brotherhood and the freedom of the road as primary measures of male identity.
Kerouac was a novelist, but he was addressing something that was to grow in salience: being a worker, but not in the sense of not being the employee of a major company (a theme of many academic studies for the next few decades), but with ‘being your own boss’, free from managers and bureaucratic controls. Also, it offers a contrast with the traditional model, where employees seek an employer for the long term, to be paid by the hour, week or month, earning a wage or salary. Gig work tends to be temporary or project-based, often with the workers hired and paid to complete a specific task or for limited period of time. The lack of traditional benefits is balanced against the fact these workers have greater flexibility around their work hours.
In recent years, the growth of online work has taken this further, allowing some gig workers to become ‘digital nomads’. Digital nomads have acquired a mobile lifestyle, combining work and leisure though possessing transferable skills and equipment. For them, gig work offers flexible, location-independent opportunities that can be performed remotely, typically accessed through using digital platforms, allowing many of these people to live a lifestyle combining travel and work, all enabled by internet connectivity.
Reading various reports extolling these changes, you discover gig workers may have high levels of flexibility, autonomy, task variety, and complexity. However, the gig economy has also raised concerns. First, these jobs generally confer few employer-provided benefits and workplace protections. Second, technological developments occurring in the workplace have come to blur the arrangement between ‘employee’ and ‘employer’ to the extent these gig alternatives can result in low pay, social isolation, working unsocial and irregular hours, overwork, even sleep deprivation and exhaustion. The downsides are not trivial. A 2021 report by WHO and ILO suggests the expansion of the gig economy appears to have been a significant factor for the increase in early age deaths for gig workers. The study also suggests there’s evidence of gig workers experiencing relatively poor mental health outcomes.
Inevitably, national legislatures have proposed and often adopted regulations intended to protect gig economy workers. The overall approach tends to be one forcing employers to provide gig workers with some of the benefits previously reserved for traditional employees. Critics of such regulations have asserted that these obligations have negative consequences, with employers almost inevitably reducing wages to compensate for increasing benefits or even terminating employment when they have no leeway to reduce wages.
It’s not just pay. There are gender differences in participation in the gig economy. In the United States for example, female gig workers making up 55% of the gig work population, often earning at a rate less than their fulltime equivalents. The figure for Australia is around 43%. Gender differences are revealed in the ‘platform economy’, another aspect of gig work, segregating some areas of employment, and a way to allow women to participate in paid work without disrupting social hierarchies, as many are still being expected to manage household and childcare responsibilities. Well, perhaps that was concept, but it’s not the way many see it. It seems the advent of home service providers and beauticians within the gig economy has not so much been about ‘platforms’ as it has led to the formalising and feminization of casual labour, an area dubbed as “pink collar work”.
How does this look today? A 2023 McKell Institute study of worker perspectives on the gig economy, Tough Gig, found that “Workers face abuse, assaults and injuries. One in seven experienced sexual harassment, while over a third have been physically injured while working. While women only made up one in ten survey respondents, they experienced over twice the rate of sexual harassment as men – at 26 per cent compared to 12 per cent. 55 per cent of total respondents have experienced threatening or abusive behaviour, with 43 per cent noting the risk of being abused by a customer as a significant concern.”
Instant job loss through ‘deactivation’ is common. 79 per cent of respondents use ‘multiple apps’, 74 per cent of them doing so to receive adequate jobs and money, while a third said they use multiple apps for job security in case they are dropped by a business. More than a quarter have had their accounts deactivated or suspended, and half listed this ‘deactivation’ as one of their top three concerns. Low pay is a health and safety hazard. 51 per cent of all respondents have felt pressured to rush or take risks to make enough money or protect their job, which puts both worker safety and customer safety at risk. Over half of the respondents have experienced work-related stress, anxiety, and mental health issues.
Looking at the data, the major factor cited in workers’ concerns was income: low pay, followed by no income while sick or injured, unpaid time waiting for jobs and uncertainty of income. 45 per cent of gig workers have struggled to afford everyday items like groceries and household bills, with the same proportion reporting earning less than minimum wage. If this finding is reflected across the gig economy, it would mean 90-112,000 Australian workers are earning less than minimum wage. Drivers working longer hours are worse off. Of those working over 40 hours a week, at least two thirds earn less than minimum wage. Food delivery workers were the most likely to report earning less than minimum wage. Delivery workers must work long hours to make enough money. 81% of respondents depend on the money they earn from rideshare, food delivery, or parcel delivery to pay bills and survive, and 41% of workers reported working overtime (gig workers don’t earn overtime rates). Overall, 74% of workers reported working long hours to make enough.
The gig economy is ostensibly less gender-segregated worldwide than the traditional labour market. However, women across the world continue to protest against gender gaps such as lower wages and working hours and the lack of flexibility. Gig workers want reform, and almost all responding to the McKell survey supported government regulation of the sector. The COVID-19 pandemic highlighted the need for worker protections for women who work in the gig economy for supplemental income. The platform economy has attracted female service providers due to the flexibility it offers. 80% of women on one food delivery service said that flexibility is the main reason they pursue gig work, (Axios, 26 August 2021), mainly many women need to balance work with familial responsibilities (surprise!!) and are therefore more likely than men to participate in gig work due to scheduling reasons.
Given this, there has been a recent rise in women joining the platform economy as gig workers. Women now make up just under half of the delivery people on Uber Eats. There are other issues aside from the flexibility. Women tend to prefer delivery work to ride-sharing work because of safety concerns if you are a female driver offering ride-sharing services. There have been proportionately more sexual harassment claims filed by female Uber drivers.
These issues with gig work lead to an obvious question: how big has been the impact of the gig economy? The Australian Bureau of Statistics (ABS), like most national statistical organisations, has begun working to expand its statistics on relatively new and emerging forms of employment, including digital platform workers. It has developed measures of this area of activity, with an initial survey module of digital platform workers collected through the agency’s Multi-Purpose Household Survey during the 2022-23 financial year. That first survey revealed the proportion of people who reported undertaking digital platform work (in the last 4 weeks) was relatively small, at just under 1% (0.96%), of the employed population, (these results are similar to those seen in other OECD countries).
In the ABS data, not all digital platform workers considered themselves employed. Only 87% of digital platform workers reported their Labour Force Status as employed, with the remainder reporting they were either ‘Not In The Labour Force’ (10%) or ‘Unemployed’ (3%). This reveals some see this work as a ‘side hustle’, rather than a ‘job’. This has also been found in other countries, such as Finland, where surveys have found under-reporting of multiple jobholding by employed people. However, as digital platform workers are a very small proportion of the employed population, it’s been challenging to obtain detailed data.
What did this initial survey tell us? For those undertaking digital platform work:
- the majority were male (66%), representing a higher proportion of males than in the total employed population (52%)
- the average age was 38 years for males, compared to 36 years for females
- there was a large proportion of people between the ages of 25 to 34 years (30% compared to 23% in the total employed population).
In 2022-23, the most popular digital platform tasks undertaken included:
- food delivery (35%)
- personal transport (27%).
Of all digital platform workers, males were more likely to undertake transport and goods delivery tasks (46%) and females were more likely to undertake food delivery and other work (18%): ‘other work’ includes a broad range of tasks beyond delivery and transport, such as conducting voluntary surveys and market research.
For those undertaking digital platform work:
- 53% undertook this work in addition to their main job, though only 11% reported that they were multiple job holders in the Labour Force Survey
- that proportion of multiple job holders is higher than the multiple jobholding rate reported by respondents in the employed population.
It seems to me Phil Ruthven had it right. Labour force changes take place slowly, and, despite all the hype, gig work and the platform economy remain a small part of the overall picture. It may grow, but articles about ‘new ways of working’ are largely imaginative projections. I think I am observing a very different and new economy on my morning walks, but I’m wrong. Little has changed; for most people, there’s nothing new: Same old jobs, same old employers, same old worries about keeping a job, and not earning enough. What’s that phrase again: plus ça change …
