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Growing pains: Is the gig economy slowing down?

If you’ve ordered a taxi or a fancy takeaway using an app recently, chances are you’ve contributed to the ‘gig economy’. Since access to on-demand conveniences has become normal, we wonder what we did without it.

But where did it come from?

Start-ups like Uber, Deliveroo and Taskrabbit may have begun with a great idea, but they wouldn’t have enjoyed massive growth if there wasn’t a large pool of people willing to work of them. This can be attributed to the aftermath of the 2008 recession. Driven by the difficulty of finding secure employment, many have chosen to supplement their income or make a living using new digital platforms.

This trend isn’t confined to the taxi and courier industries. Services like PeoplePerHour and Upwork are also quietly transforming the employment market, allowing designers, consultants and even accountants to work remotely and charge for their services on an hourly basis.

The unique selling point for gig workers is the same as it is for consumers – convenience. Being able to dictate your hours and work from home allows people to balance their freelance careers around childcare or a full-time job.

It also has its downsides.

By classing their workers as ‘entrepreneurs’, gig firms are able to duck out of basic employment rights such as minimum wage, holiday pay and breaks, along with liability for accidents which may befall them or their customers. This business model has grabbed headlines and drawn the ire of many commentators, including some in the recruitment community who fear that it will encourage deregulation and damage the wider industry (Matt Charney has a typically apocalyptic take on this).

Many will have been pleased to hear the result of a tribunal brought against Uber which focused on the question of whether or not they should be treated as employees. Ruling against the company’s claim to act as a technology platform for the self-employed rather than a transport business, the court decided that drivers are entitled to worker’s rights – giving them access to minimum wage and holiday pay.

This decision was largely based on the amount of control which Uber exerts over its drivers’ business; important functions such as the complaints procedure are taken out of drivers’ hands, while the rating system essentially amounts to a disciplinary measure.

The ruling is likely to have an impact on the wider gig economy. With the current government inquiry into modern employment practices, there is a great deal of public interest in this subject, by Gig companies will likely have to adapt their business models to factor in basic workers’ rights - Deliveroo drivers in London are already taking steps to fight a similar case.

What does this mean for the recruitment industry?

It may be too early to tell. I would argue that there is an opportunity for recruiters here to showcase their traditional value, taking responsibility and emphasising the human relationships which candidates enjoy, as opposed to the anonymous experience with a chatbot which many gig workers have. There is a great deal of work to be done here, as some agencies are still misusing the exclusions to agency worker regulations such as the Swedish derogation.

For clients, the ability of recruiters to ensure that candidates are properly vetted – shortlisted, screened and referenced - cannot not be easily replaced. The rating system which gig platforms currently employ is generally based on performance, rather than personality, so good recruiters who take the time to match candidates with their clients will have another opportunity to excel.

This isn’t an excuse for the industry to rest on its laurels however. With LinkedIn also moving in to the freelance market with its Profinder service, the gig economy isn’t going anywhere soon. Using these new digital platforms and investigating alternatives should be as vital to recruiters as their traditional service offering.

This was posted in Bdaily's Members' News section by Tom Short .