Monday, August 05, 2019
Since the Global Financial Crisis, unemployment has dropped to low levels in most of the developed world at least. That’s fantastic. It needs to continue.
One of the important factors in this positive trend seems to be the evolution of work arrangements that enable quick responses to fast-moving markets and consumers. Flexible work creates work! But this gets regulation-lovers worried. They reckon that if work isn’t controlled through government regulation, there’s got to be something wrong. Currently their focus is on the so-called ‘gig’ economy. Apparently, it’s a big ‘problem’ that needs a solution.
We’re intensely interested in the ‘gig’ issue because ultimately the regulation-lovers’ push is about squashing the right of people to be self-employed. And that’s a right that we love!
There are heaps of inquiries and reports. As examples, there are questions over Uber (ride sharing), Facebook, AirBNB and so on generating big media coverage. But here’s a core question. Just how many people are earning their income through ‘gig’ engagement’? How big is the issue?
We’ve pulled together data from reliable sources covering the United States, the United Kingdom and Australia. Here are the summary tables.
Get this. For all the big noise about the ‘gig’ economy the number of people using ‘gig’ engagement as their income source is tiny. The stats show that:
- Only 1 to 1.8 per cent of workforces are involved in ‘gig’ work but, of those,
- 0.63 per cent to 0.88 per cent are in fact ‘regulated’ employees.
- For 56 per cent, gig work is less than 15 per cent of their income. (UK)
- 69 per cent earn less than £1,000 a year from gig work. (UK)
The results are similar in the USA and Australia.
That is, for the bulk of people using gig engagement, it’s pocket money or top-up ‘nice-to-have’ income, but not core income.
But it’s important also to distinguish between ‘gig’ and other self-employed work. The Centre for Research on Self-Employment (CRSE) in London has produced a great research report on this. The report looks at the freelancer side of self-employment and finds that:
- 85 per cent of freelancers undertake project-based and ‘portfolio’ work.
- Only 15 per cent are gig workers.
This is consistent with our summary table.
What’s more, CRSE identifies that the freelance sector generates some £140-145 billion of economic output for the UK economy. It’s major stuff. Here are some key extracts from the CRSE report.
An important finding by CRSE identifies skills as the key issue relating to income levels, not the nature of the contract:
…high skilled gig work generates higher quarterly income than equivalent employee work. It seems that skill rather than the nature of the employment contract is the most important determinant of a worker’s income…
Why are we concerned? Too often we’ve seen attempts by worker regulation-lovers to use ‘invented’ problems to try and kill off self-employment. It’s a campaign that’s been ongoing since around the 1990s. Its current rebirth is ‘gig’ focused.
Regulations are needed for real problems. But let’s not invent problems. We want a fact-based debate. Self-employment in its many forms—freelancing, gig, traditional shop-keeping, trades and so on—all make an important mix for job creation, economic activity and personal income creation. Let’s not kill off the good stuff!