Gig economy challenges for the next few years will remain more or less the same. This is despite continued growth of this significant economic sector.
This post is a bit of stocktake of the gig economy when it first exploded 16 years ago in 2009. And the hurdles it had to clear and yet to clear.
The gig economy is a paradigm shift. The media covered it in the early years as a topic of much interest. Lots of excitement from people who were keen to be part of it. And at that time, not everyone was sure if it would take off. Take off it did.
The media high profile of the gig economy of the previous decade has since subsided. Growth projections however from industry analysts’ remain firm and optimistic. Any apprehension that it is a passing phase has faded. Yet some of the gig economy challenges remain.
The gig economy is a distinct economic model with clear identifiable elements. Not conceived or planned from the ground up. It was largely accidental.
Two people visiting Paris in 2008 decided there should be a better way of getting a taxi. They not only built a booking app, they developed an entirely new operating model. From recruiting drivers, to working hours, to payments and terms of engagement. No longer a booking app.
At the core of this new model is the nature of employment and its enabling technology. Both key planks. One cannot exist without the other. Both are wrapped up in a package that is often referred to loosely as a platform.
Examples are Uber and Bolt, both ride-hailing platforms. Then there is DoorDash and Deliveroo which are food delivery platforms. For freelance work, you have Upwork and Fiverr platforms. Platforms covering other genres continue to grow.
Gig hustle example
Here is a post on the essence of the gig economy. It’s about food delivery in Adelaide. This YTuber has signed onto 2 platforms, DoorDash and Menulog for food delivery. She picks the time to turn on the app to show her availability and decides which jobs to pick. It is great example someone who had free time outside her work to do couple of gigs on 2 platforms that brought in income.
The apps from Uber to DoorDash are the bedrock of the technology that drives this model. It has become the game changer. It so much easier to order a ride or food with simple clicks.
Though for platforms like Upwork and Fiverr online portal is key and that too is impressive UI and UX features that make it so much easier to operate in the gig economy.
The single biggest unexpected outcome however is a dramatic lifestyle change. This is seems odd but there is more to it. If you have moved from the conventional form of employment to the gig model , you will recognise it.
I have done a series of posts on the gig economy some generic, some employment focused, some on technology and also on platforms. You can see these in this link.
Challenges for the year and onwards
Ride hailing continues to grow the World over. From Tourism soaked Bali to the Bishkek in the heart of Central Asia close to the fabled Silk Road.
According to Mastercard in 2024, ride hailing and related transportation related services around the World contributed 58% of the gig economy revenue. Which shows that others sectors within the gig economy are still lagging.
The ride hailing sector opportunities are still immense hence its stronger growth but the size of their pie is a reflection that other sectors have not caught up with possible opportunities. Looks like we need more bold visionaries as venture capital is well established and looking to invest.
On an individual level there are also similar concerns.
So what are the main challenges?
Mindset
Apprehension of crossing over to the gig economy. The desire to secure a conventional employment contract or remain as an employee is understandable. Forgoing security of tenure and income stability are probably the biggest barriers.
Even a highly skilled based person who could easily operate in the gig economy with good income might not take the plunge. A valid reason as there is the risk of uncertainty.
Running on your own also means marketing one’s services and carrying out all the administration tasks yourself. Not appealing. So a software engineer or a graphic designer prefers to remain an employee focusing only on their subject domain.
The entrepreneurial bent is not for everyone. There is also lack of wider industry exposure to improve one’s domain knowledge and skills if they leave employment with a large company.
Employment regulations
Protection of workers rights and benefits continue to be biggest challenge. Are they employees or independent contractors? Are companies exploiting labour by calling them independent service providers?
I have covered employment classification issues over a series of posts. The UK Supreme Court in 2021 ruled against Uber in the first such case over classification of its drivers.
In February 2024, the Australian Federal Government passed legislation over treatment of such workers and setting a framework that is considered fair to employers and workers.
In March 2024, Uber settled on the first day of its trial in Melbourne involving 8,000 drivers in a class action suit covering 4 Australian states. Not just on employment but on a number of other issues.
This challenge continues to be in state of flux as Governments and labour advocates with on-going litigation and regulatory reviews in many countries.
However there is progress. Better regulations are emerging to accomodate the gig economy. Stakeholders are seeing more certainty.
Awareness of available technology
The success of ride hailing and food delivery is heavily due to well designed apps in smartphones.
Customers and those providing the service such as drivers and riders for food delivery took to it easily. I can say with high confidence without these enablers this sector would not have emerged and flourished.
What about other sectors?
Not many people are aware of online job platform such as Upwork and Fiverr and what they offer. I have heard so many times that it is considered a IT hub. Not for the common man.
Even those who are aware that it essentially a platform for paid work opportunities that can go to few thousand dollars per gig, it’s other appealing features are less known.
Secure payment, contract management and dispute management are integral. Those seeking services and those providing services gain comfort and security which means demand for services increases.
I initially thought these were just a job portals. They are much more. A proof reader working in a publishing firm could move to the gig economy, work from home, pick the hours to work. And with a suitable a protective framework to ensure payment on agreed terms and conditions. I have done a post on platform work here.
It looks like it will take a while for people to become aware of such technologies.
Lack of institutional support
I have yet to see a country come out to encourage or promote the gig economy. Many government treat it as incidental.
There is also no educational curriculum that I am aware of for those keen to enter the gig economy and be prepared for it. There is also no attempt to encourage the insurance industry to provide gig specific coverage for loss of income and legal protection. I am sure those in the gig economy are prepared to pay for these coverages.
It will be good to have state sponsored seminars and forums to better educate society on the benefits of the gig economy, various platforms and technology available for the cause. Such events can showcase success stories and opportunities. It will also allow people to make a more informed decision on participating in the gig economy.
Compliance and control
Corporations and companies keen to optimise their resources have expressed their interest to tap gig economy workers in the early years. To operate with a lean workforce and tap the gig economy workers to cover peak periods and unexpected demand. Not just for ordinary skills but also for high specialised technical talent. That interest in the 2010 decade has since waned somewhat. Why?
More stringent regulations over data privacy, system access and contractual obligations are all adding up. Can you give a gig economy worker the same rights and access as a contracted employee.
A gig economy worker has not undergone the same standard of background checks, signed an employment contract or gone through probation to assess character and skills suitability. So there are clear risks and accompanying liabilities. The possible catchment to tap is now shrunk. In the end it might cheaper and less risky to retain permanent staff.
Using gig economy resources however is not equivalent to outsourcing. The latter requires building a controlled environment with limited access mainly for operational tasks. The labour arbitrage savings pays for the initial high capital cost for the setup and control. There is also the legal comprehensive contract with outsourcing service providers with financial guarantees. This again where governmental engagement, direction and support is necessary.
In essence not all vocations originally though to be part of the gig economy are indeed suitable. So we all have to tamper our expectations. But we also need government and corporate bodies to identify and size opportunities. I am still optimistic that other lagging sectors will catch up.