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The Gig Economy – What Does it Mean for Communities?

The Gig Economy – What Does it Mean for Communities?

This week our #WednesdayswithMDBInsight post features Evelyn Paul, Consultant, sharing her thoughts about the growing gig economy, “giggers”, and economic considerations for communities.

The Great Recession of the late 2000s and early 2010s led to the rise of a new economy – one where people work as independent contractors or on temporary contracts. Since then this economy has grown, in part due to the fall of labour unions, restructuring of traditional industries and the move towards service jobs. Digital technology and the rise of millennials stimulated further growth – ‘giggers’ today include those that provide services such as driving for Uber or Lyft, providing food delivery, house cleaning, and dog walking as well as consultants, designers and creatives, and those who crave work/life balance. 

The gig economy is not just a buzzword anymore; it is a growing part of the modern labour market. The ‘gig/side hustle’ can mean that a person could be helping a small business grow their social media profile one day and be a personal shopper the next. While the gig economy is great in terms of the flexibility that it provides and could be viewed as the rise of the entrepreneurial generation and more efficient service delivery, little is known in terms of its actual benefits. Is the gig economy really efficient? Do gig economy workers make a decent living? What does the gig economy mean for a community?

On that last question, the following considerations provide important context for a community:

  • Need to quantify the gig economy: Recent data from Statistics Canada serves as a starting point to measure the gig economy. The data, released in a research report in 2019, is based on the Canadian Employer-Employee Dynamic Database and the 2016 Census of Population. It determined that 1.7 million workers were part of the gig economy in 2016, representing 8.2% of all Canadian workers aged 15 and older. 
  • Need to recognize it as a growing part of the economy: The research paper defines gig workers as unincorporated self-employed workers who enter into various contracts with firms or individuals to complete a specific task or to work for a specific period of time. The gig economy is growing in Canada, as the percentage of gig workers rose from 5.5% in 2005 to 8.2% in 2016.
  • Not as lucrative as expected: while the gig economy is growing, the data shows that being a gigger is not beneficial; the median net gig income was only $4,303 in 2016. Workers in the bottom 40% of the annual income distribution were about twice as likely to be involved in gig work as other workers. Furthermore, the majority of ‘giggers’ are in the arts, entertainment and recreation sectors. 
  • Consider the gig economy as a critical part of labour force conversations – Measuring the gig economy is not an easy task, given the lack of a clear definition. There needs to be a differentiation between a ‘gigger’ who does multiple jobs due to the flexibility or for work/life balance and those who do multiple jobs to pay bills and out of necessity. Policymakers, governments and organisations need to understand the impact of this, specifically for those at low income levels.
  • Digital tech infrastructure is central to growth – given that the economy is largely reliant on digital technologies, ensuring reliant digital infrastructure is important to sustain economic growth. 
  • Communities and their relationship to the Gig Economy –There are limited examples of countries/communities partnering with gig economy companies. Australia’s GigSuper Fund is one example. Through a low-fee service, the funding offers ‘giggers’ a traditional superannuation fund plus a built-in savings account which allows for contributions. The newly passed California New Gig Economy Law, AB5, is another example of community recognition for the importance of the gig economy. The law is, however, drawing backlash from companies as it requires them to treat workers like employees with protection and benefits, including minimum wage and unemployment and disability insurance, among others.

Evelyn resizedTo learn more about Evelyn and the other members of our team, go to https://mdbinsight.com/team-bios/

Our Wednesdays with MDB Insight posts feature the thinkers and doers on our team sharing ideas and talking about what’s important to us as professionals. We have very diverse backgrounds and a range of interests to share with you. We hope you’re enjoying these posts and that you will join the conversation with us and let us know what’s on your mind mid-week.

Reference: Measuring the Gig Economy in Canada Using Administrative Data, December 16, 2019: https://www150.statcan.gc.ca/n1/pub/11f0019m/11f0019m2019025-eng.htm

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