We’d better get to know the growing gig economy

Gig workers are often perceived as having autonomy and flexibility. But their choices are constrained. (File photo: Lucian Alexe/Unsplash)

The number of people doing “gig work” has been rising for decades, and the precarity of gig workers has been underscored by the pandemic. Gig workers have been on the front lines, delivering food and products, and getting people to their destinations while putting their own lives in danger as a result. Social distancing has exacerbated particular vulnerabilities for those with limited access to benefits or job security. And while most gig workers are Canadian-born, racialized Canadians and new immigrants are over-represented in the most precarious and least well-paid gig work jobs.

Now, with many Canadians suddenly unemployed and landmark rates of business closings, how well do we understand gig work?

First and foremost, it is not new. Piecework is much older than the Industrial Revolution. The term “gig” was popularized by musicians at the turn of 20^th century in reference to short, paid performances. Today, contract-based self-employment known as gig work is strongly associated with the use of digital platforms that connect people with skills and assets, and task requesters looking for temporary labour. Some gig workers are pushed into gig work because they are excluded from other employment opportunities. Others are drawn by the promise of flexibility and control over their work. For some it is their principal source of income, but for most it is a supplementary side hustle.

Gig workers are unincorporated self-employed workers who do not report a business number on their T2125. These on-demand, freelance workers are self-employed but do not own a business. They gig through platforms like Uber, Skip the Dishes, Airbnb and Task Rabbit. Not all gig workers use digital platforms, but, between 2005 and 2016 the percentage of gig workers rose to 8.2 percent of all Canadian workers, up from 5.5 percent. Gig working also spiked between 2008 and 2009, and again from 2012 to 2013, corresponding with the entry of gig work platforms into Canadian markets.

Statistics Canada uses tax and administrative data to identify people within the self-employed category whose work is characterized by particular forms of payment, contract types, work schedules, schedule of earnings and supervision.

The Foodora case from earlier this year illustrates the precariousness of gig work. In February, drivers for the app-based food-delivery service won the right to unionize in Canada – a precedent-setting victory. Soon after, in April, the company announced it was closing its Canadian operations, blaming stiff competition during COVID-19. The timing raised eyebrows.

Gig workers are often perceived as having autonomy and flexibility. But their choices are constrained. For example, on some gig work platforms, price algorithms make some shifts more profitable than others. Gig workers might only turn a profit by working those particular shifts, undermining the notion that they can freely choose their schedule. While the 2016 median after-tax income of Canadian households was $59,200, the median net income for a gig worker that year was only $4,303. During the COVID-19 crisis, many gig workers operating without security or benefits have faced a trade-off: risk exposure to the virus by working or give up needed income to stay safe.

The drawbacks and trade-offs of gig work are detailed in a July 2020 paper – Understanding the Nature and Experience of Gig Work in Canada – published by the Public Policy Forum and the Diversity Institute. Policy-makers must consider these aspects when shaping recovery period labour policies. They include the question of:

1. Choice. What conditions lead to people to choose gig work? How much of a choice do people really have when they sign on for work characterized by a double edge of independence and isolation?
2. Flexibility. Companies present it as a perk, and workers value it. But this freedom is not absolute. For example, Foodora drivers are given options for when to work, but schedules and payment rules restrict and influence their choices. Choice is largely designed and controlled by the app.
3. Exploitation. Gig workers are decentralized and disaggregated, presenting opportunities for exploitation. The lack of visibility and reduced lines of accountability make the gig economy difficult to regulate, and gig worker status poses barriers to unionization and collective bargaining.
4. Benefits. Gig work presents challenges in terms of accessing benefits, and skills and training opportunities critical for economic recovery. Solutions such as portable benefits, and skills programming detached from employers are growing in importance and many jurisdictions are experimenting with models.

Not all gig work is undesirable. Consultants often make good, if cyclical, incomes and we need to create opportunities for entrepreneurship that don’t require access to deep capital. Gig workers can use gig platforms to enter markets and incubate business ideas. As task-based roles are gaining in popularity, the economy could end up being rebuilt with millions of micro sole-proprietor businesses rather than 9-to-5 jobs. The “gig economy” may become just “the economy.”

A lack of common definitions for gig work has contributed to a lack of understanding of the gig work experience. There is a significant difference between the experience of an Uber driver and a Java developer. By the end of this year, Public Policy Forum and the Diversity Institute will release a second report on gig work, setting out a typology for better understanding the diversity of gig workers. This work will help inform the development of effective policy as we move into recovery. Sophisticated policy solutions will be critical in responding to the growing uncertainty, vulnerability and precarity amongst Canadians who have lost jobs because of COVID-19 and who may be pulled or pushed into gig work in increasing numbers.

Periods of unemployment are often the catalyst for a move into gig work, and there is good reason to believe that an increasing number of Canadians could be considering gig work. Between February and June 2020, about 301,960 Canadian businesses closed (compared with 195,492 business closures during the same time period last year). The unemployment rate in the core working age (25 to 54 years old) in August 2020 was 8.9 percent, up from 5.5 percent in August 2019. Additionally, 100,600 more people had dropped out of the labour force — were unemployed and not seeking work — over August 2019 figures. Behind those numbers are Canadians who can’t find work or have closed their business. Some have gone back to work on reduced hours; others have chosen not to return to work as an employee because of care-giving responsibilities. They could make up a new wave of Canadians bringing different skills and qualifications to gig work.

We do not have timely or adequately detailed public data about gig workers — the sectors they work in, their incomes, their demographic characteristics, or an understanding of their lived experiences and needs as gig workers, all of which might be changing as we speak. In the recovery period, we need timely analysis of who is gig working and how, and what their needs are. Further, we need to explore systems of support such as portable benefits untied to individual employers to ensure gig workers are not vulnerable now or later in life.

As the gig economy takes up a greater share of the Canadian economy, we might also question how to bridge interested gig workers into business-ownership; after all, many gig platform operators funnel profits outside of Canada. It is time to take gig work seriously as a part of the Canadian economy, and to get creative with policies that will mitigate the cons and capitalize on the pros of gig work for Canadians.

This article is part of the Tackling inequality as part of Canada’s post-pandemic recovery special feature.

This article first appeared on Policy Options and is republished here under a Creative Commons license.