Is the Gig Economy Still the Future of Work, or Is the Gig Up?

The abrupt exit of Deliveroo from the Australian market in November 2022 may have left you questioning everything you thought you knew about the project-based labour market: Is the gig economy sustainable, or is the gig up?

Well, not only is this on-demand economy sustainable, but it is still on the rise, with more and more people opting for freelance or contract-based work. Researchers at the University of Melbourne are even going so far as to say that the gig economy is transforming our cities.

How does the gig economy work?

In a gig economy, the labour market relies heavily on temporary and part-time positions filled by freelancers and contractors rather than full-time in-house employees. These independent workers typically provide paid B2B or B2C services through digital platforms. The most common on-demand economy services in Australia are food delivery services, ride-sharing services and personal services, such as graphic design or gardening.

So, why is the gig economy growing?

The pandemic has made remote and hybrid jobs more popular than ever. On the one hand, organisations are looking to save money and reduce overhead costs by transitioning to digital operations and laying off full-time employees. On the other hand, technological advances have made it easier for people to move away from traditional workplaces, offering increased flexibility and independence.

Although non-traditional contract work existed pre-pandemic, a Pew Research report found that ‘the gig economy has ushered in a new way of connecting people with consumers and those who want to hire them’. This has effectively added another dimension to the labour force. Organisations have realised the importance of this development and are starting to draw on contract workers in more and more circumstances.

How big is the gig economy?

According to Safe Work Australia, the gig economy is a growing part of Australia’s workforce, with currently more than 100 platforms operating in the country. ‘Looking internationally, Australia has a very high level of non-standard work’, says Dr Caleb Goods, Senior Lecturer in Management and Organisations at the UWA Business School. According to a report by the Australian Actuaries Institute, more than a quarter of a million Australian workers are part of the gig economy, including many men and – especially – women who do this type of work as a side job that fits around their other commitments.

In June 2022, Australia counted some 320,000 labour-hire workers according to data released by the Australian Bureau of Statistics, and the trend is still rising.

How can you benefit from the gig economy?

When you make your next strategic decisions, ask yourself how you can maximise the benefits of an independent workforce in your organisation. Here are some considerations:

1) Address the drawbacks and boost your reputation

Despite their flexibility, freelance economy workers are usually experiencing some drawbacks as well. These include difficulty in making a living wage, instability of jobs and a lack of perks and benefits. If you offer your contract workers some of the same benefits you are giving your permanent employees, your reputation as a socially responsible, humane employer will soar – and thus your employer brand!

This is especially important in light of a potential upcoming government initiative to give project workers more job security. The Fair Work Commission is considering awarding gig workers entitlements such as collective bargaining, superannuation, minimum wage and unfair dismissal rights. Essentially, this means treating contractors more like employees – and this is where you can get ahead of the curve.

2) Adjust your hiring strategy

When making hiring decisions, adopt an open-minded approach and tap into the gig economy to get the most out of it for your organisation. Build a cooperative ecosystem comprising in-house staff and freelance contractors. This will give you extra flexibility and the option to scale labour force as needed. There's no one-size-fits-all approach, so make sure you do what's best for your business and pick and choose the best resources from both groups.

3) Implement technology to manage freelancers

When all your staff are in the same building as you, it’s easy to keep tabs on things. But when your workers are off-site all the time, this is much more difficult. It may be a good investment to put new technology in place that lets you monitor your freelance workers and effectively communicate with them, too.

Keep an eye on the latest HR tech trends to stay informed on relevant technological developments in this area.

4) Just say no

When you feel that a project worker isn’t a good fit or didn’t deliver what you expected, you can simply not hire them again. While it can be tricky to tell an in-house applicant that they weren’t successful after a personal interview, you’ll face no such dilemma with gig economy workers. This freedom can be a huge benefit for employers.

Takeaways

According to Indeed Hiring Lab's Callam Pickering, although the 2022 labour market was strong and we recorded more than double the number of Indeed job postings than before COVID-19, high inflation is shaping up to threaten the Australian economy next year. As an employer, you may be well advised to take advantage of the benefits offered by the freelance economy in order to stay competitive.

Adapt your hiring strategy, implement new technology and boost your employer brand by offering attractive benefits to project-based workers – and you’ll thrive in the gig economy.