Venture capital is a fascinating indicator to watch in an increasingly murky economic picture. Economic downturns go hand in hand with innovation, particularly in the tech sector. Talented employees lose their jobs and collaborate on projects that otherwise never would have happened, backed by investors looking for rare growth opportunities.
Given investor disinterest in certain tech platforms, what’s clear to see is that the gig economy is now on its knees. This spells disaster for freelancers, part-time workers and those seeking ways to make an extra buck.
Before we dive in: how do we define ‘the gig economy’
Perhaps it is worth defining what is commonly understood under the term ‘gig economy’ and how we have ended up where we are now. The ‘gig economy’ is a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs. In sectors such as the arts and journalism, for example, this system has been in place for decades, but for services such as ride-hailing and food delivery, it is a fairly new phenomenon that has been growing hand-in-hand with the rapid technological progress of the last decade.
For the proponents of this system, it is a liberalisation of the market that allows flexibility for everyone. Workers should have the freedom to choose when and how much they wish to work and get paid accordingly, and customers have access to quicker and cheaper services around the clock. Theoretically, companies such as Uber and Deliveroo do nothing more but put both workers and consumers in contact; often, this is done through a very well-designed app, which makes the whole process all the easier. It is undeniable that, for us consumers, our lives are ameliorated by the fact that companies like Uber and Deliveroo enable us to find a driver and hop into their car within five minutes or have hot meals delivered to our door at any time of the day.
As it stands: the gig economy of 2022.
Although this phenomenon of gig economy insecurity isn’t new, it’s exacerbating an already tough economic environment for the expanding workforce. Workers of all kinds are turning to side hustles to cope with high levels of inflation. According to software technology company Qualtrics, 38 percent of American workers have looked for a second job, while another 14 percent are planning todo so, with parents particularly likely to be looking to cover the gaps. It’s a similar story here in the UK—34 percent of workers have a second job, while 15 percent are set on securing one to make ends meet.
Amid a year of major and widespread layoffs in the tech industry, companies are turning to greater numbers of contractors and expanding their already extensive shadow workforce, instead of hiring and training permanent employees for vacant roles. In India, 65 percent of firms are employing gig workers to tackle a tech talent crunch. Much of this work is facilitated through digital labour platforms, where reputational insecurity is rife. Having already increased by 65 percent between 2016 and 2022, according to the Online Labour Index, the demand for online gig work is unlikely to slow anytime soon.
A study carried out across cities including London, New York, San Francisco, Los Angeles, and Manila by researchers from the University of Bristol and Oxford University has found that the majority of gig economy workers feel under threat from feedback processes. And tech companies are only compounding the problem, leaving workers fearful for their future income and even more fiscally exposed amid the cost-of-living crisis.
The research, published in the journal Sociology in early November, found that seven in 10 gig economy freelancers providing services for some of the biggest digital labour platforms, including Fiverr and Upwork, are worried about unfair feedback and its negative effect on their future earnings. Faced with fickle review processes and volatile algorithms, work can feel like playing a game of whack-a-mole, while blindfolded. To cope, many workers are going above and beyond to keep getting work, from putting in extra hours without pay to doing entire jobs for free to avoid negative ratings.
With limited channels for recourse if workers disagree with a client’s rating or want to understand more about algorithmic-generated decisions, workers are striving for perfection. Anything less and they risk seeing their ranking drop so low that they are unable to make a living. Many workers on Fiverr and Upwork carry out free supplementary work or give clients the option to pay less than the agreed amount in exchange for a five-star rating.
Playing the devil’s advocate: are tech structures to blame?
So, perhaps, it isn’t so much the gig economy as a whole that is crumbling, but more the new form it has taken with the development of technology, which has been morally and legally questionable. In European countries, the rising popularity of apps such as Uber, Uber Eats and Deliveroo has put a strain on welfare states; in recent years, there has been an expanding number of workers who are dependents of a company, without receiving the social security that comes with such dependence.
It is, therefore, high time that the status quo undergoes change, and these two landmark court rulings are hopefully the first step towards a legislative update regarding self-employed workers in the UK and abroad. Today there is a need for change. With the development of platforms such as Uber or Deliveroo, the line between what is a self-employed, independent worker, and what is a worker whose income solely relies on a single company – but is not an employee– is getting blurrier.
Yet, there is hope for preserving the gig economy if we understand that the cheapest prices for services are often made at the cost of decent working conditions. We have seen that drivers and especially food couriers, perform essential jobs, which many of us have come to rely on in our everyday lives. But, it is worth asking ourselves what is behind the ever-lowering price of these services and whether we accept it by contributing to it.