The gig economy is a widely misunderstood term. It is actually a sub-sector of the economy which enables all organisations and individuals to participate in the broader digital economy. It is also known as the sharing economy, the open talent economy, the freelance economy and the on-demand economy. The gig economy is best defined as a market based on fixed-term contracts paid for by a company, a third party or an online marketplace.
The onset of the global Covid-19 pandemic has accelerated the digitalisation of the world’s developed nations, which further exacerbates the lack of potential pathways for developing countries to compete and thrive in a high-tech global economy. Within South Africa, the economic decimation wrought by months of lockdown restrictions has had the unintended consequence of worsening both the unemployment rate and the gap between the haves and have-nots.
This combination of factors is a recipe for a socio-political time bomb. While digitalisation has quickly realigned the global economy towards those with technical skills, it has also laid the platform for redress through enabling the gig economy.
The South African economy currently benefits from a relatively highly developed internet infrastructure, regulatory conditions supporting innovation, high levels of unemployment, a substantial informal sector and extreme inequality. It is, therefore, no surprise that the conditions for rapid growth of the gig economy are in place. The gig economy – a “side hustle” or even finding work as a formally unemployed person – has become a necessity for many.
According to the World Bank Group’s Poverty and Equity Brief, 55.5% of South Africa’s population (30.3 million people) is living in poverty. 13.8 million South Africans are contending with food poverty. Women have it hardest, with 52.2% of women falling below the poverty line compared with 46.1% of men, according to South Africa’s Living Conditions Survey. This is where micro-tasking or crowdsourcing gig jobs can make a substantial impact on those who need it most.
Impact of Covid-19:
- Halted employment for many who were already vulnerable. It is estimated that the pandemic will push another million South Africans into poverty – especially in rural areas.
- Put businesses under immense financial pressure.
Before the COVID-19, shifting towards the use of gig workers was well underway but the pandemic has brought the benefit of flexible working into sharper focus, highlighting its crucial role in enhancing business productivity without the associated costs of employing permanent staff.
Trends driving the future of the gig economy:
- Automation – widespread automation will drastically change the tasks companies delegate to contractors as well as how contractors complete that work. The question will be whether companies use automation in support of workers, or workers in support of automation.
- More organisations will use gig workers – in trying to operate more efficiently, businesses can gain the financial and resource savings benefits from securing expertise as and when needed, rather than having individuals in full-time employ, for skills that might be not be utilised continuously.
- Stigmas will fall away – unfortunately, and unfairly, gig workers are still subject to a lot of biases and misunderstandings. In the future, gig workers may wear their multiple lines of work as a badge of honour. Members of the gig economy may be seen as driven self-starters to a degree that their traditionally employed peers are not.
- Regulations will catch up – because the gig economy is still emerging, labour regulations remain focused around the traditional employment model. But when half or more of global workers are engaged in gigs, expect laws to be rewritten around the gig economy.
- Online market transformation – The Covid-19 pandemic has redefined the way we socially interact with one another, shop, consume, and use technology. The must of social distancing has pushed us to rely on digital platforms more. The closure of shops and the fear of catching the virus has put gig economy companies as a valuable option for those that did not use it before.
For some organisations, embracing the gig economy will be challenging. Others already find themselves more closely aligned with it. There is a huge demand for gig work but we need to have a change of mindset before true sustainable can be felt. Why do it the traditional way when you could do it the digital way using the crowd making work more efficient?
As organisations experience the advantages of the on-demand workforce, the gig economy will become more and more sustainable.
The question the gig economy faces in the 2020s isn’t whether it will grow, but by how much it will grow?
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