The adage,‘Necessity is the mother of invention’, has been ringing true during the past decade or more as tech innovations keep disrupting diverse verticals across the globe. With full-time jobs lost in myriad domains, jobless workers have taken to offering their services on a freelance, flexible or part-time basis. Now, the ongoing coronavirus pandemic has lent greater momentum to the gig economy — the term used to describe the freelancers’ ecosystem.
On the other side, companies hard-pressed to continue business operations are also receptive to the idea of hiring gig workers. There are multiple reasons for their predilection. Besides being more cost-effective, gig workers can help scale up operations exponentially and much faster while optimising operational costs.
All these advantages can help safeguard company margins that were already under pressure due to the pre-pandemic economic slowdown, which was subsequently exacerbated by the coronavirus-related lockdowns and restrictions.
Without a doubt, the gig economy is turning out to be a big blessing for both out-of-work persons and companies struggling to keep operations going. The latter include small and big enterprises, start-ups, MSMEs and other entities. In the case of employers, gig workers offer the benefit of quick hires on short-term contracts or predetermined project work. As the rigmarole of talent hunting, hiring and on-boarding are no longer required, there are tremendous savings in time, energy and resources.
According to the 2019 ‘World Development Report’, some of the drivers for the transition towards the gig economy include the widespread disruptions in production processes and the swift ascent of digital technology. As the traditional system of operations was disrupted by technology-driven challenges and new-age competitors, companies were left with only two options — adapt and co-opt the new digital system or sink without a trace into oblivion.
Therefore, despite upfront one-time investments in deploying digital technologies, companies have preferred to embrace digital to keep operations running. The best examples of this — remote working and the work-from-home regime that has been popularised overnight across the globe.
In India, the steady jump in Internet penetration, particularly in tier 2, tier 3 and tier 4 cities, has been instrumental in opening up greater gig options, both for individuals as well as enterprises. Going by a report from consulting firm Kantar, India’s monthly active Internet users are expected to touch 639 million by the end of December 2020 from the present figure of 574 million. As per the report, the nation’s rural areas have been driving the digital shift. In 2019, rural India had an Internet penetration growth of 45 per cent while the urban region registered only 11 per cent. Thanks to this momentum, rural Internet users are expected to reach 304 million by end-2020, soaring from 264 million users.
Performance plus permanence
All these factors as well as the pandemic are boosting the velocity of the gig economy’s expansion. As their BCPs (business continuity plans) become the need of the hour for companies, sustaining business operations more cost-effectively through the gig economy makes these enterprises more viable.
In retaining their competitiveness, some companies are deploying a hybrid working model by using a mix of in-house employees and gig or remote workers. Increasingly, however, it is becoming clear to entrepreneurs that gig workers have greater advantages during the present pandemic. Apart from saving on the overt and covert expenses of full-time employees, gig and remote workers are proving to be more productive, efficient and deadline-oriented. Be they big or small, these elements offer companies a better competitive edge.
In the case of individuals, the focus is on developing future-ready skills, which include soft skills. As their present skill-sets are subpar or inadequate in meeting changing needs in the new normal, people are using virtual learning platforms in upgrading skills from the safe confines of their homes or offices. It is now accepted that in the digital era, learning is a lifelong, never-ending process for people seeking to retain relevance in the employment landscape — for now, and the future.
Meanwhile, gig workers benefit from the freedom of choosing the type of work they wish to accept and their working hours. Traditionally, freelancers have found ample work in creative verticals such as the media, advertising and communications. Gig assignments are also available in arts, design and recreation, entertainment, computer and IT, construction, transportation, logistics and warehousing, among others.
In the ultimate analysis, the threat of the Covid-19 pandemic will remain most virulent for a couple of years or so. But the paradigm shift it has triggered in business operations and the work economy worldwide is slated to remain permanently. For individuals and institutions benefiting from the gig economy, remote working and the WFH regime, there couldn’t be better news.
The writer is Co-Founder and CEO, GigIndia
What Prop 22 means for the American gig economy’s future
California is as resilient as ever in the face of the unknown. Aside from wildfires, a global pandemic, and the resulting mass exodus from urban centers, a major concern for businesses that rely on gig workers has been California’s new AB-5 ruling.
To start, we’ll need to fully clarify what exactly AB-5 is, along with its resulting implications. California Assembly Bill 5 (AB-5) is a California law that went into effect January 1, 2020, that “…requires companies that hire independent contractors to reclassify them as employees, with a few exceptions,” according to Investopedia’s Rebecca Lake.
This law has been spotlighted as of late given three major gig-worker employers — Uber, Lyft, and DoorDash — have resisted enacting its mandates since its passing. The very same companies, however, have been reprimanded for their lack of compliance to AB-5, and “…on Aug. 10, 2020, California Superior Court Judge Ethan Schulman ordered the companies to reclassify their contract drivers as employees with the same protections and benefits as their other staffers,” Lake continues. This means that these companies would become responsible for providing the same benefits that traditional employees are entitled to, including workers’ compensation, unemployment insurance, family leave, and much more.
That’s not all there is to the story. On September 4, 2020, an additional law was passed that created exceptions for numerous types of professional gig workers, stating these individuals would be exempt from the mandates of the AB5 ruling, including (but not limited to): insurance agents, certain health care professionals, securities broker-dealers, investment advisers, certain types of salespeople, real estate agents and more.
That said, there are several red flags with this approach for the everyday gig-worker in California. This law is about to set a precedent that would extend employee classification to gig workers employed by companies like Uber, Lyft, DoorDash and more, which would be impossible to enforce in one single month. Plus, it would be very costly for said businesses and majorly disrupt not only their operations, but also the livelihoods of the tens of thousands of people who work for them. There will also almost certainly be more professions that crop up and need inclusion on the already running list of exemptions, triggering the need for added layers of legislation, and so on and so forth.
In response to these issues, gig worker-supported businesses shelled out almost $200 million to support a state ballot measure known as Prop 22, which California citizens voted to pass in November. Companies like Uber, Lyft and DoorDash will now be exempt from reclassifying gig workers as employees. Associated gig workers would maintain their independent contractor status, while wage, safety and benefit standards would be implemented. This will include items like health care compensation.
Prop 22 at a glance
Business operations impact:
Pros for consumers
Pros for major players, like Uber, Lyft and Doordash
What Prop 22 means for gig workers
It is clear that the introduction and intention of AB-5 is to fight for better compensation for workers, but where it falls short is in its attempt to forcibly weave outdated processes into a modern economic issue, without any actual beneficial fix.
Failure to pass Prop 22 would have completely removed the option for thousands of individuals who rely on those positions to earn extra income. Up to 76% of Uber drivers alone would have lost their jobs, leaving 158,000 Californians scrambling to find other ways to earn an income — which could prove exceptionally difficult in the current pandemic-driven economic climate of mass furloughs and unemployment spikes.
With Prop 22′s approval, workers maintain their independent contractor status, leaving the door open for these individuals who earn money from these services to continue to earn.
The NAACP, one of the largest proponents of Prop 22, offered a unique perspective. In their eyes, gig work like driving for Uber, Lyft or DoorDash “…provides an accessible, low barrier-to-entry way to earn income for those who often find traditional employment challenging — communities of color, seniors, disabled veterans and those formerly incarcerated.”
It’s also important for all of us to think about the impact that access to this type of gig work can make in the lives of immigrant workers. A recent article by Greg Ferenstein sheds light on the huge population of Brazilian drivers in San Francisco. “Many escaped South America’s terrible economy to learn English and earn a better living in the global market,” he writes. “It’s hard for them to pass interviews for employee work. While driving, they practice speaking with passengers with the hopes of one day returning and providing for their family with the kind of money that a bi-lingual speaker can make.” Moreover, not every gig worker wants to become a traditional employee. Many enjoy the freedom and flexibility that the gig work lifestyle provides.
Regardless, the consequences of Prop 22 will have long-lasting impacts on gig workers in California and set a precedent for the rest of the country.
The future of gig work in California and beyond
The gig worker ecosystem as it is in the U.S. is far from perfect, and the legislation and protections provided to this broad spectrum of workers is in need of a major overhaul. The truth is that some independent contractors need more protection than others. For instance, an Uber driver earning $20 an hour will need a much more robust safety blanket than a data scientist earning $350 an hour, and is exactly why different structures should apply.
A universal solution simply does not exist, and AB-5 is not the right way to get closer to a semblance of balance. “Ultimately, the greatest impact of Prop 22, passage or not, may actually be felt outside of California,” wrote Joel Feldman of Slate Law Group. “As the legal challenges over AB-5 show, labor laws were not prepared for the gig economy and current regulations did not anticipate the use of independent contractors in such a way and at such a large scale.”
This is sure to be one of the most significant cases in a long string of such laws in states throughout the U.S. California’s decision will likely determine the outcome of our country decides to navigate these issues, now and in the future.
Shahar Erez is CEO and Co-Founder of Stoke Talent.
Insurers may gain from California gig drivers’ new benefits
Ride-hailing and food delivery companies like Uber Technologies Inc., DoorDash Inc. and Lyft Inc. are preparing to roll out benefit packages that include health insurance subsidies for their gig drivers in California, a move that experts say could benefit managed care providers.
The healthcare subsidies are one of the results of California voters approving Proposition 22 in the Nov. 3 general election. The measure allows gig economy companies to continue treating their drivers as independent contractors rather than employees but also requires them to offer certain benefits comparable to those of full-time employees.
Under the provisions of Prop 22, gig employers must provide subsidies consistent with the average employer contributions required under the Affordable Care Act, which would enable contractors to buy healthcare coverage. Beginning in 2021, drivers will receive subsidies each quarter after they submit proof of coverage either via private carriers or through the exchanges.
“If drivers were to pick an insurance coverage through the exchanges or the individual market, UnitedHealth and Anthem would be well-positioned to absorb this demand because they offer cost-effective access to healthcare services through a large network of physicians, hospitals and outpatient facilities,” Hardy said in an interview.CFRA Research analyst Sel Hardy said the new law could present profitable opportunities for carriers such as Anthem Inc. and UnitedHealth Group Inc.
Piper Sandler analyst Sarah James said Centene Corp. and Molina Healthcare Inc. could also benefit from the new measure.
“Insurance companies are making anywhere from low- to high-single-digit margins on exchange products,” James said in an interview. “Centene is one of the largest exchange providers and they’re also, from a percent of total company earnings perspective, the most exposed to that business.”
The subsidies will be based on drivers’ engaged time with passengers, which is limited to driving to, picking up and transporting customers to their destinations. Time spent waiting between gigs would not count.
Drivers engaged between 15 and 25 hours a week would receive subsidies amounting to approximately $184 per month, while drivers engaged more than 25 hours per week would receive subsidies of about $367 per month.
The new law also requires network companies to provide on-demand occupational accident insurance to cover medical expenses, up to $1 million, as well as lost income resulting from injuries or illnesses suffered during engaged time. Disability payments and death benefits also must be similar to those provided by workers’ compensation.
However, gig employers do not have to offer other protections such as workers’ compensation and unemployment insurance, nor do they have to provide for family leave or sick leave or allow workers to form labor unions.
The measure overrides California Assembly Bill 5, signed into law in September 2019, which sought to bring labor protections to more gig workers and force companies to classify them as employees.
The industry responded by pushing Prop 22 and spending $200 million to back its passage. The measure was approved by a 58% to 42% margin.
The measure is scheduled to be officially approved by California Secretary of State Alex Padilla on Dec. 12 and go into effect on Dec. 17.
Labour eyes stronger employment rights for precarious ‘gig economy’ workers
Labour is looking at extending employment rights for workers in the so-called “gig economy” under plans detailed in a new think-tank report.
Precarious workers like Deliveroo riders and Uber drivers would get the same rights as other employees and have their rates set by collective bargaining, under the proposals being examined by Ed Miliband.
While the party’s final policies are yet to be decided, the shadow business secretary said new blueprint drawn up by Common Wealth contains “useful insights” into how workers’ rights could be extended.
Many workers currently miss out on basic employment rights because firms have successfully argued in court that they are in fact self-employed – a loophole that leaves them without holiday pay and even minimum hourly wages.
“There is nothing innate in the concept of the platform that means that work organised through it should be precarious, badly paid, or lacking in control,” the Common Wealth report argues.
Pinpointing “a weakness of regulation and the wider power imbalances” in the labour market, the think-tank recommends closing the loopholes exploited by tech companies to run down pay and conditions for workers on their platforms.
It says this could be done by creating a new “worker” legal status covering all jobs, whether agency workers, bogus “self-employed” or employees. There would be a “statutory presumption that all individuals qualify as employees unless the employer can demonstrate that they are genuinely self-employed”.
This would ensure all workers enjoyed rights such as statutory redundancy pay, sick pay, maternity, paternity, and adoption leave and holiday pay – which many do not currently get.
Zero hours contracts would also be scrapped and replaced with flexible contract that guaranteed employees a minimum number of hours, based on the existing German model.
Responding to the report, Mr Miliband, who sits on the board of the think-tank, said: “Digital innovation and developing technologies offer big opportunities for society, but we must ensure that companies do not wield excessive and anti-competitive power, so that technology works for the public good.
“This report provides useful insights into key ideas and concepts, including looking at how workers rights could be enshrined in light of the changing use of data; and how a National Investment Bank could help catalyse private investment in projects focused on the public good.”
The report also suggests that digital platforms like Deliveroo and Uber should be regulated like public utilities if they achieve monopoly status. It also
Mathew Lawrence, report co-author and Director of Common Wealth said: “There is nothing fixed or inevitable about how the digital economy operates.
“Though the monopoly power of the platform giants is producing a series of stark economic and social challenges, we can reimagine their power and recode how they operate. That should start with a new deal for all workers.”
He added: “But we should go further. A new architecture of multi-stakeholder ownership and control, giving suppliers and users of the platform genuine voice and control, can better unlock the democratic and enlivening potential of platform technology for all.”
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Judge: Nevada jobless office in contempt in gig workers case | Business News
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