What to do with the gig – sharing economy?
Freelancers in the US account now for around 15M people but the forecast for 2020 rises up to 40% of the workforce or around 60M people.
Two main factors are driving this transformation. On one side Internet and connectivity blurs the difference between employees and external contractors. Your location and company status doesn’t matter as much as long as you do your job. On the other side, the digital transformation lowers the cost of the tools necessary to perform a job, a laptop or a desktop with an Internet connection is many times enough to start your own venture, whatever this is.
Transforming the hierarchical logic of employees into freelancers has obvious benefits for companies that can organize work in a more flexible way matching the competences needed with the requirements of the task in a more precise way, employing the people that they need only when they need them, etc.
These incentives are powerful and they will certainly transform what we understand for labor market rendering obsolete many of our old conceptions and structures.
What about employees and the overall society?
Employees and the society in general will also benefit too. People for whom the job market is now closed will be able to work, many times fixing their own conditions. Organizations like über or airbnb democratize value capture allowing people that will a difficult time to work for a taxi company, even less own a taxi and a license to work and bring money home. Airbnb provides extra money to large segments of the society that belong the the working class or low middle class in contrast to hotel owners where the logic of chains and large investments rules the market.
This is a blow fresh air to a society dominated by incumbents either local or global where the individual initiative represented by the small shop owner, the single taxi driver, the boutique hotel, the freelance designer, photograph, … seemed to be a thing of the past.
Thanks to the sharing and gig economy we have a re-visited version of the individual entrepreneur that shaped many of our cities and most of what we understand for civil society.
However, the job market will change dramatically. The differences between being an employee and not having a job will dissolve. A multitude of variations will appear: part-time, working only several months a year or several days a week, multiple occupations, etc. thanks to platforms that will be able to accommodate much better than corporations all these multiple variations.
Together with that, new requirements will appear. Branding, networking, remaining up-to-date, will become not only a priority but employee’s responsibility. This new and pressing needs will spur new industries such as on-line and continuos learning offerings, particularly with formats and courses directed to the immediate, pressing needs of this collective and not to obtain a title that could open the door of a corporation. Offers such as ways to increase clients, better on-line branding or how to thrive in this new online world would be and are on the rise.
The gig economy is based on a new form of organization. It is not the hierarchical company but it is not either freelancing as we knew it. When you drive an über car you clearly benefit from a brand, from a structure and from a platform where business rules are embedded that makes this service not only possible but superior to existing offerings. The boundaries of this organization are not as clear and fixed as in traditional companies, however they exist, we know if it’s an über car, an udemy course or an airbnb apartment.
The important implication is that this new organizations don’t fit in existing structures designed for people who work in companies where basic things such as social security, unemployment benefits, liability, norms and regulations, … are highly coupled to working in a company.
Now we will start to have generations of workers that don’t follow this traditional schema, that don’t work in companies. What about them? Who will have the responsibility and liability when things go wrong ? Will they have Social Security ? Will their unemployment benefits match their contribution to the society?
Obviously the actual model doesn’t work in this new world !!!
As a society we have to decouple employment, rights, benefits and liability in a way that could ensure the necessary protection while correctly attributing responsibilities when something goes wrong.
If we fail to engage in this market design, not only the conditions of workers will be completely at the mercy of these new organizations degrading society but the associated conflicts will stop its development and this will not be the fault of the sharing or the gig economy but solely our fault as a society, as regulators, as market designers that marry social objectives with growth and a thriving economy that provides opportunities for development to its citizens.
In the early times of capitalism when the market was completely unregulated societal conditions deteriorated profoundly. Was this the fault of the market or of the regulators that were not able to align market forces with societal goals?
The gig economy represents a complete change on how the market operates. Rewards will be democratized, such as happens now with über, airbnb, but at the same time these meta-organizations, many times global, will capture a large portion of wealth if left unregulated because of the shift of risks and the ownership of the tools to freelancers. Market will be driven by competence and innovation and structures like unions will either have to reinvent themselves or have a progressively smaller place in this world.
Together with that, it will create completely new jobs to support these new demads. Just take a look at the flourishing of co-working spaces or the offer of on-line and blended courses for online branding or having an online presence. A simple look at the offerings of GA, Udemy and so many others will convince you of the vitality and the force of this new form of organizations.
But what if a society chooses not to act? Prohibit and penalize these new forms of organizations instead of engaging in market design and their integration ?
Certainly nobody can stop time. Not participating won’t make us safe, on the contrary it will comparatively diminish the quality and quality of services that our citizens enjoy, will make us less competitive and therefore poorer, will limit economic growth and we will have to rely on old structures such as hierarchical companies for employment that will benefit from the increasing power that we give them and ask for additional benefits from governments.
Therefore the cost of not acting is huge ! As almost always not acting is probably the worse option …
In a global world, remaining competitive is the only way to ensure the prosperity of our citizens. Only competitive societies can have governments that can attempt more equalitarian wealth distributions, offer opportunities for realization to their citizens and contribute to global equality.
You can only distribute wealth, there is nothing to distribute when the only left is misery. This is why a real social state offering real opportunities to their citizens can only exists when society is competitive and thriving.
Let’s integrate the gig economy and let’s do it now ! Negation and prohibition is the worse we can do !