The gig economy – a solution to labour market shortcomings, piecework for the digital age or just more of the same?
The gig economy has been the most hotly debated trend in the employment landscape over the last 12 months. The Productivity Commission report Digital Disruption: what do government need to do? defines the gig economy as “digitally enabled marketplaces where companies use websites and apps to pair workers with tasks that occur both online and offline.”
Gig economy platform managers or “job posters” define their suppliers as independent contractors. This means the workers are covered by commercial rather than employment law which in turn means, as Joellen Riley points out, they have access only to the unfair contract terms provisions set out in Australian Consumer Law. They do not have access to standard employment entitlements that apply to employees including minimum wages, annual leave, sick leave, penalty rates, workers’ compensation, access to unfair dismissal or collective bargaining.
In The Emergence of the Gig Economy, the AiGroup claims that the gig economy “has the potential to have real economic effects by addressing dysfunction in the labour market”. They suggest that the gig economy facilitates “more efficient matching between the demand and supply of labour” and that the gig economy will “lead to the creation of more productive and rewarding jobs and improvements in living standards”, that it offers workers unprecedented freedom and workplace flexibility, is a solution for unemployment and underemployment and will ensure the skills needs of the economy are better aligned with the workforce. They suggest that those working in the gig economy “would work only a few hours a week, concentrating only on one task” and this would create super-efficient “hyper-specialised” teams. They also suggest that job security “can render permanent employees complacent” and that shifting the employer-employee relationship into a customer-freelancer relationship makes workers truly accountable “with performance standards dictating future security and income”.
Taking a very different view, Unions NSW says the gig economy is creating dysfunction by subverting established labour standards: “The increased prevalence of digitally enabled, gig-based work is actively fragmenting labour standards and disintegrating traditional jobs into short-term tasks with no employment safety nets.” They suggest the gig economy “has used a cloak of innovation and progress to reintroduce archaic and outdated labour practices, circumventing minimum wage rates and removing employee safety nets.” Professor Joseph Davis, an expert in information systems and services at the University of Sydney, says the service agreements generally utilised in the gig economy means that “All the risks and most of the costs are borne by the workers.” He goes on to say in Protecting the Rights of the Workforce in the Gig Economy that “Many platform owners and innovation gurus have tried to dress up the gig economy as ushering in a new era of flexible, egalitarian, liberating work” but that “at its core, it has reinvented piecework for the digital age.”
So overall, the question is – Is the gig economy piecework for the digital age as suggested by Davis, a solution to the “dysfunctional” labour market as the AiGroup claims, or as Unions NSW put it, more of the same with digital platforms operating much like real-world labour hire agencies that attempt to avoid their employment obligations?
Professionals Australia’s view is that while digital disruption offers new challenges and opportunities, workers must be protected from employers trying to undermine minimum employment standards, avoid their employment obligations and divert risk on to workers by misclassifying them as independent contractors. If we fail to do this, we destroy any chance of a level playing field for those who do comply with their employment obligations. We recognise independent contractors’ freedom to operate in the manner they choose where genuine choices exist. We recognise independent contracting as a wholly legitimate form of engagement where the opportunity to negotiate fair contract terms is in place, and we acknowledge the right of business to engage contractors to meet workflow peaks, overcome skills gaps and provide a level of flexibility in their labour force.