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The Gig Economy Can Be A Win-Win Situation For Both Workers And The Job Market

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Since the COVID-19 pandemic hit the world, the traditional workplace, whose foundations go back to the 1940s, has gone through some pretty striking changes, with everyone wondering about what will unfold to replace the nine-to-five jobs that we are familiar with. The answer is actually very simple, and in fact, it’s not a very new trend either- gig work, also known as side hustles or freelance and contingent work, seems set to be a key part of “the new normal.” 

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Now, the world is not a stranger to the gig economy. The early creators of the term were actually jazz musicians in 1915, who referred to their performances as “gigs.” The term “gig economy” was coined in 2009 by former The New Yorker editor Tina Brown to describe “a bunch of free-floating projects, consultancies, and part-time bits and pieces, while they transacted in a digital marketplace.” The concept found itself being heavily presented in companies like Uber, Airbnb, and others, and that led to the further growth (and appeal) of the gig economy.  

Side hustles were already available in the market prior to 2019; yet, little to no interest was attributed to them as most individuals favored stability over freedom. Back then, most employees preferred to work regular jobs, punching in from 9-to-5, regardless of their productivity, and receiving a paycheck at the end of the month to make ends meet. But then the COVID-19 pandemic happened, which led to the loss of jobs for many, the furlough of others, and the enforcement of working from home for the rest. Stability was no longer rewarding, and employees had to opt for other options to sustain their lives.  

Related: “The Great Resignation,” And The Future Of The Workplace

This is where gig work came in handy. The newly unemployed and readily available in the job market were able to directly place themselves, furloughed employees hunted temporary jobs to fill them until they return back to work, and employees working from home discovered the flexibility behind having a side hustle. It was a win-win situation for both the job market and the employees. Fast forward to 2021, the gig economy is still on the rise, and there seem to be no turning back. According to a study conducted by Gartner, 32% of organizations are replacing full-time employees with contingent workers as a cost-saving measure.  

The rise of the gig economy has brought with it new trends to the workplace and the job market at large- here’s a look at just three of them:  

1. Work shifts from fixed to flexible Freedom matters for both sides of the coin, businesses and individuals. These days, both interests of companies and employees align through flexible employment. For instance, businesses considering freelance jobs are taking advantage of hiring contractual on-demand experts for certain roles that are hard to fill in-house. Freelancers are not paid the benefits that a regular employee has, and they are also not subject to strict employment guidelines- they are there for a fixed term, and not forever. On the other hand, freelancers do not work from 9 to 5, and they hence enjoy a certain degree of flexibility at work. They are there to complete projects/short-term assignments, and their focus is on deliverables rather than time spent, and if they are also employed elsewhere, they appreciate a supplemental income to their regular salary.  

2. The growth of on-demand talent platforms On-demand talent platforms (ODT) are not new to the market. Some are widely known and profitable, and others are struggling to survive. When people moved to mass remote working, many started searching for alternative jobs, just in case a job loss is on the way. Platforms such as LinkedIn, Fiverr, and Upwork flourished, and both companies and talents interacted more. From startups to well-established companies, every business posted job ads, and talents started applying. The opportunity that such platforms provided through which anyone sitting behind their couch can apply to any job in any part of the world -and get paid through the medium of this platform- is just mind-boggling. The beauty of it is that it is actually simple, and it works. This surge in interest in ODT platforms has been rumored to encourage LinkedIn to launch its own gig marketplace. With LinkedIn boasting of the greatest number of professional users, an ODT platform of its own will allow the side hustle market gain greater accessibility to a larger audience, globally. 

Related: Finding Jobs And Building Careers In The Age Of COVID-19 And Beyond

3. Hiring for skills and hiring fast Remember when hiring was subject to many barriers and biases, such as degrees, years of experience, and so on? Today, opportunities that open through certain employment platforms are fully focused on required skills only. Take, for example, a business that creates a job ad on an ODT platform for a web developer with experience in, say, Rust, a programming language. When receiving the applications, the hiring manager doesn’t care or consider neither the person’s name, race, gender, years of experience, languages, or degrees, but only the experience that this applicant has in coding in Rust, and hire them accordingly. Skills are assets, and this is where individuals now are investing post pandemic. The more valuable skills one has, the better their chances at landing a side hustle for additional financial support. 

Adding to that, hiring freelancers removes other obstacles in the hiring process. Employers do not invest more time than needed in the hiring process, and they are also free from certain liabilities of full-time employment, such as benefits, insurance, pension, etc. The same goes for freelancers, who also do not have to study the company when applying and consider all aspects of the job, but simply send their proposals, and share their samples ahead of a potential interview. If both match, contracts are created, and the work starts. Removing layers makes the exercise easier and faster in a market that is rapidly changing. 

Gig work is currently revolutionizing jobs. Freelance has become the new normal, and both individuals and companies are no longer afraid of making the jump. While this article sheds light on major trends impacted by this model, a lot is still left to be discovered, and many aspects need to be explored, including the legislation around gig economy, freelancer benefits, knowledge transfer, freelancer growth, and training and development needs. Even though the current benefits of the gig economy outweigh its problems, it is a matter of time before we will know whether it is here to stay for the long term, and whether it will replace the traditional workplace, or simply just move along in parallel with it. 

Related: Paradigm Shift: Developing The MENA Region’s Gig Economy

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Portugal – Gig-economy workers set to be formally employed (Reuters)

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26 October 2021

Portugal has moved a step closer to ordering work services platforms such as Uber and Glovo to employ some of their drivers as staff with formal contracts and benefits, becoming the latest European nation to tackle the gig economy in this way, reports Reuters. The bill, which was approved by the government last week but still needs to get the final stamp of approval from parliament, aims to grant thousands of riders working rights as employees and not freelancers. It is likely to be approved as the Socialist government has the support from other left-wing parties. Portugal’s Labour Minister Ana Mendes Godinho said the bill assumes that a worker of the digital platform operator is staff with a formal contract whenever there is evidence of relationships between the platform, the worker who provides the service and the customers.

Earlier this year, the Spanish government announced a decree that food delivery companies based in Spain must hire their riders as employees and not freelancers. Also, earlier this year the UK Supreme Court ruled against Uber in a landmark case with the ridesharing firm having to classify its drivers as workers rather than self-employed.

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Startup Point Pickup’s CEO Wants to Make Gig Work a Career

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  • Point Pickup CEO Tom Fiorita said the gig work his delivery company relies on isn’t sustainable.
  • He’s launching a digital platform to increase transparency and community for retail gig workers.
  • The platform, GigPoint, is in an invite-only beta test now and will fully launch later in the fall.

For the founder and CEO of a gig economy delivery company, Tom Fiorita has surprisingly little faith in the gig economy. 

Fiorita calls his outfit, Point Pickup, the largest delivery company nobody’s heard of. Founded in 2015, its national network of 350,000 drivers make deliveries for Walmart, Kroger, and other major grocers. Its drivers and shoppers, and millions like them who work for Shipt, Instacart, DoorDash, and more, take on work one task — or gig — at a time. 

Retailers have rapidly adopted the model throughout the pandemic as delivery became an essential service. And though their conditions vary, Fiorita said the group as a whole must change to survive. 

That’s because the gig economy, while meeting the challenge of lightning-fast delivery, presents new problems. Workers are siloed from one another and contend with a lack of consistency or transparency — they often don’t know how much they’ll earn by day’s end when they start. They don’t have a central place to go for community or financial services tailored to their needs. 

“The current way it’s being done, we believe, is not sustainable in the future,” Fiorita said. 

That’s why he’s launching GigPoint, an online platform for gig workers that aims to make this kind of work a viable way of life in the long-term — and a viable business model.

The platform has launched an invitation-only beta test offering insurance purchasing, banking services, and a rewards system where workers earn points to exchange for cash bonuses, vacations, and discounts. The full version will launch for all Point Pickup drivers in the fall, and expand to the entire gig ecosystem in the future.  

‘The system’s gonna break’

The pressure is on to make gig work a better gig. Workers don’t often stay loyal to any given platform, and retaining gig workers tends to be harder than recruiting them to start with. 

“We see it all the time, they end up bopping around,” Fiorita said. He sees that “bopping around” as a threat to his company and the broader industry of gig delivery.  

“It’s gonna break,” he said. “There’s too much fragmentation.”

The GigPoint platform aims to encourage workers to keep coming back with features the company said address workers’ top priorities, including financial services like microloans and the ability to work out recurring shifts with predictable income. 

“Everything you need to be successful at gig work and be sustainable so you can continue to do it for a long period of time,” Fiorita said. 

‘A wave we cannot stop’

Major gig players like Instacart, DoorDash, and

Postmates
could all eventually be GigPoint clients, Fiorita said. So could retailers that don’t currently use gig workers. He aims to grow the platform into a digital hub for work that’s increasingly being outsourced to gig workers, like counting inventory, seasonal cashier work, and resetting store displays. 

GigPoint platform could be a homebase for any kind of retail gig, Fiorita said, with a more mindful and “caring” approach.

The company has yet to work out the finer points of how the platform will work. “We are working with gig worker focus groups now to determine the best business model,” a spokesperson told Insider. “We’re also discussing models with our retail clients — but not ready to discuss details at this time.” 

Still, the overall approach could benefit the gig companies, too, since the legal challenges to gig work are unlikely to stop.

“It’s a wave that we cannot stop. I think the government knows it,” Fiorita said. “We’re enabling the ability for true flex work as an actual classification of a worker in this country.” 

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After winning big in California, gig companies take their worker classification fight to Massachusetts

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The coalition representing these gig companies, Massachusetts Coalition for Independent Work, said it filed Wednesday to have a question put on the state’s 2022 ballot that would “grant historic new benefits” and allow workers to “maintain their flexibility as independent contractors,” something it says most drivers want.

“Without the ballot measure or a legislative solution, the future of app-based rideshare and delivery could be in jeopardy,” the coalition said, in language reminiscent of how dire the issue was positioned to Californians.

But with the benefit of seeing how things played out in California, the opposition is on its front foot this time against the playbook it believes was used last time. The Coalition to Protect Workers’ Rights, an alliance that includes labor advocates and community groups, argued this week that the Massachusetts measure would “permanently create a ‘second class’ status” for the workers, noting the majority of whom are Black, Brown and immigrants.

Classifying on-demand workers as employees has long been viewed as a potential existential threat to the business model popularized by Uber and Lyft. The companies have scaled their businesses with massive fleets of workers who are treated as independent contractors, avoiding the responsibility of providing costly benefits entitled to employees, such as a minimum wage, overtime, paid sick leave and unemployment insurance.

The companies have also shown they’re prepared to go to great lengths to get themselves a more favorable law. When faced with a new labor law in California, Assembly Bill 5, that made it much harder for companies to classify workers as independent contractors in the state, Uber, Lyft, DoorDash and Instacart spent a combined $225 million on a ballot measure known as Proposition 22 or Prop 22 to effectively side-step it. They waged an aggressive campaign of television ads, in-app messages, and confusing mailers to bombard Californians with its messaging. Prop 22 allows the companies to classify workers as independent contractors while granting some drivers certain benefit concessions, but not the full suite of protections that they would likely have gotten had the measure not passed and they were classified as employees.
Next up is Massachusetts, which has a similarly strict labor law. The Massachusetts Attorney General is currently challenging Uber and Lyft over how they classify workers, an effort the companies have indicated they intend to fight.
Similar to Prop 22, the proposed Massachusetts ballot initiative presents a minimum earnings guarantee of “120 percent of minimum wage” based on “engaged time,” meaning the only time counted is when a driver is fulfilling a ride or delivery request but not the time they spend waiting for a gig. (An analysis from UC Berkeley Labor Center had estimated the pay guarantee under Prop 22 for Uber and Lyft drivers would be equivalent to a wage of $5.64 per hour, instead of $15.60 or 120% of a $13 minimum wage, given such loopholes.)

Workers would also receive $0.26 reimbursement per engaged mile to cover vehicle upkeep and gas. (The UC Berkeley Labor Center previously pointed out that Prop 22’s $0.30 reimbursement is lower than the IRS’ estimated $0.58 per mile cost of owning and operating a vehicle.)

While the proposal includes a health care contribution from a company for certain qualifying workers, that too is based on “engaged time” and only a small portion of workers would likely qualify, according to the Coalition to Protect Workers’ Rights, due to minimum engaged time requirements. (Using “engaged time” as a metric allows for the flexibility of the job, according to the Massachusetts Coalition for Independent Work, claiming that the “majority of drivers receive healthcare from other sources, often from a full-time job.”)

Some workers could also earn paid sick time, paid family and medical leave, and in lieu of worker’s compensation, benefits for medical and disability in cases of on-the-job injuries. Workers would have the ability to appeal if their accounts are deactivated, and would receive training on public safety issues.

It would also let gig companies avoid contributions to unemployment or Social Security, and deny app-based workers more robust legal protections around discrimination, including when it comes to compensation. (The Massachusetts Coalition for Independent Work said the initiative prohibits companies from discriminating against the workers on any characteristic protected by the Massachusetts Civil Rights Act, but that is not expressly stated in the initiative’s language.)

“Things aren’t getting better with these gig companies, they’re getting worse. This [measure] is going to cause more and more drivers to be even more dependent on social programs that we taxpayers foot the bill for, less money going into the unemployment fund, the social security fund. We are just sick of this exploitation,” said Beth Griffith, an Uber driver and chair of the Boston Independent Drivers Guild, on a press call Tuesday organized by the Coalition to Protect Workers’ Rights. “We say ‘no’ to being a permanent sub-class of workers. This is ridiculous.”

Uber drivers win their first ever unionization deal

Shannon Liss-Riordan, a Boston-based lawyer who has challenged Uber and Lyft over worker classification through various lawsuits for more than seven years and was also on the press call, warned: “They’re going to try to get this ballot measure passed by deceiving the public into thinking that this is somehow for the benefit of the workers, but why would Uber, Lyft, DoorDash, Instacart and all these companies be putting $100 million or more behind this unless it was to benefit these companies and line their pockets?”

(Given the amount the companies spent on passing Prop 22 in California and the significance of the Massachusetts legislature, a spokesperson for the Coalition to Protect Workers’ Rights said it estimates the coalition representing the tech companies will spend upwards of $100 million on its efforts in the state. When asked how much funding is behind the measure to date, a spokesperson for the Massachusetts Coalition for Independent Work said “contribution reports are not required for some time.”)

Also on the call, Veena Dubal, a labor law professor at University of California, Hastings, and a vocal advocate for labor rights, similarly said the effort will likely rely upon confusion.

“They will continue to say ‘we are extending all of these great new perks and benefits to these workers.’ In fact, they are taking rights away from workers who really need them,” said Dubal, who noted that while the companies made promises ahead of passing the California law — including around how it would preserve flexibility for drivers — some of these have since been broken.

For example, flexibility was touted as a core need for Prop 22, with Uber introducing the ability for drivers in the state to set their own prices. But months after Prop 22 became law, Uber stopped allowing drivers to do so.

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