Gig Economy: The growth of internet-enabled occupation – (1)

Source: Daniel Adjei | Management Consultant | Spint Consult Limited | dadjei@spintconsult.com |+233-302-915421
Date: 7th-april-2017 Time:  1:45:24 am

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Younger workers all around the world now want to work differently than their parents did. There’s no doubt that the freelance or “gig” economy is on the rise gradually even in Africa and Ghana.

The spread of the Internet and wider use of technology has enabled us to work with a vast number of people in a collaborative way, or what is known as crowd-work. Similarly, we are increasingly able to secure services when needed by using ‘apps’ managed by firms. These new tools of the “gig economy” have made many business processes more efficient and reduced costs according to IHRB.

This trend also poses fundamental challenges to the nature of work. Some companies are moving from hiring permanent staff to temporary workers or offering “zero hour contracts”. This has granted workers flexibility – but also made them more vulnerable. Too often these workers do not have the protection of unions, and nor are they considered employees by companies using their services, which in some countries means they may be less likely to access important benefits such as health insurance, even though they do the same work as the permanent workers.

Technological advances are often value-neutral, and the impact of the gig economy can cut both ways for women. Many women want greater flexibility once they have had children, and some assert the gig economy grants them more options. But the evidence is mixed. While outwardly such work arrangements look more attractive for women, economists are divided over its longer-term impact on women staying in the workforce. This has economic implications given that women continue to earn less than men – refer to my article on “occupational sexism” couple of weeks ago. Often, this flexibility comes at a price – lower-end jobs. Concerns over safety and high start-up costs also prevent women from seeking out certain jobs within the gig economy, such as drivers.

In 2017, competitive pressures and consumer demand may prompt other industries to replicate this model, shaking up many sectors that rely on intermediary functions. Companies adopting new technologies should take steps to reskill their employees and make it easier for a broader range of job-seekers to apply for opportunities. State intervention may become necessary where there is clear evidence of contracts that disempower workers, erode labour rights, and limit the right to collective bargaining.

The challenge for governments will be upholding rights obligations while encouraging technological changes that can benefit industries and services. There is still work to do to find consensus on how to benefit from technological advances and protect rights within the gig economy. To borrow the words of Professor Sundararajan, today, more and more of us choose, instead, to make our living working gigs rather than full time. To the optimists, it promises a future of empowered entrepreneurs and boundless innovation. To the naysayers, it portends a dystopian future of disenfranchised workers hunting for their next wedge of piecework.

This explosion of small-scale entrepreneurship might make one wonder whether we are returning to the economy of the 18th century, described by the economist Adam Smith in his book An Inquiry into the Nature and Causes of the Wealth of Nations. The economy Smith described was a genuine market economy of individuals engaging in commerce with one another. Over the following two centuries, however, the emergence of mass production and distribution yielded modern corporations. The entrepreneurs of Smith’s time gave way to the salaried employees of the 20th century. A different technological revolution – the digital revolution – is partially responsible for the recent return to peer-to-peer exchange. Most of the new on-demand services rely on a population equipped with computers or GPS-enabled smartphones. Furthermore, the social capital we’ve digitized on Facebook and LinkedIn makes it easier to trust that semi-anonymous peer.

So it seems like we’ve invented a new institutional form – the peer-to-peer platform – a digitally powered hybrid between organizing economic activity through the market and within the organization. And because these platforms provide layers of trust, brand, and expertise on demand, the need for specializing before you’re qualified to become a provider is reduced. Almost anyone with talent can become a part-time hotelier or an artisan retailer on the side through any of the social media platform.

And providers don’t have to commit to full days of work. You can pick up your kids from school and have more time with yourself but still achieve career goals in between. In the gig economy, the lines between personal and professional become increasingly blurred.

There’s certainly something empowering about being your own boss. With the right mindset, you can achieve a better work-life balance. But there’s also something empowering about a steady pay cheque, fixed work hours and company-provided benefits. It’s harder to plan your life longer term when you don’t know how much money you’re going to be making next year. On the other hand, starting a new business has generally been an all-or-nothing proposition, requiring a significant appetite for risk. There are benefits to dipping your toes into the entrepreneurial waters by experimenting with a few gigs on the side. Perhaps this lowering of barriers to entrepreneurship will spur innovation across the economy. Economist Thomas Piketty tells us that the main driver of sustained economic inequality over the past two centuries has been the concentration of wealth-producing “capital” in the hands of a few. This seems less likely if the economy is powered by millions of micro-entrepreneurs who own their businesses, rather than a small number of giant corporations.

But the latest generation of specialized labour platforms also raises the spectra of greater social inequality. We’ve now got apps through which providers can do so many things for, buy and deliver your groceries, and get you your drinks. There’s a risk we might devolve into a society in which the on-demand may end up serving the privileged few. Professor Sundararajan concludes that many countries, key slices of the social safety net are tied to full-time employment with a company or the government. Although the broader socioeconomic effects of the gig economy are as yet unclear, it is clear we must rethink the provision of our safety net, decoupling it from salaried jobs and making it more readily available to independent workers.

One way companies can continue to survive and thrive in the new economic landscape will be to replace certain clearly defined hierarchies with looser talent clusters. As PwC researchers point out, “Looser, less tightly regulated clusters of companies are seen to work more effectively than their larger and potentially more unwieldy counterparts.” Not only does a more robust freelance economy make that possible for more businesses all over the world, it’s also the way more people seem to actually want to work. And in that sense, it’s a win-win. If this is encouraged in Africa and Ghana we will see younger entrepreneurs even at the junior high schools been developed to create employment for themselves and the economy, standard of living will be improved and there will be more focused business-minded youth for generational transformation. At the end of the day, the power is yours.

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