A Growing Trend – the Gig Economy

The impact of the ever-shifting global economy, increased business competition, and rapidly advancing technology has created a new workplace reality for many workers, otherwise known as the “Gig Economy”.

The “Gig Economy” is one in which temporary positions are common and organizations tend to contract with independent workers for short-term engagements rather than hire full-time employees. According to a July 2018 BMO Wealth Management Study, there are reported to be 2.18 million workers in Canada who are taking part in some form of temporary work.

Think about the workplace evolution over the past 60 years. Up until the 1960’s when you joined a good company, you most likely believed that you would remain there throughout your working life. “Retirement 55” was the focus and you could expect a gold watch and a solid pension when you retired. The recession and resulting layoffs of the 1980s caused a lot of disruption and people had to reconsider their career options. It became understood that an individual might have three to six “careers” within their lifetime. Additional education and new types of work made it exciting for people to re-shape their careers.

Into the 2000’s, technology and competition were starting to impact the workplace even more. Organizations started contracting out work in order to focus on their competitive advantages and boutique service organizations became prevalent. Consumer demand required that organizations expand their hours of operation for customer convenience resulting in more part time employment. The growth of tourism and its seasonal activities (e.g., ski hill in the winter to resort in the summer) required more temporary work and workers were forced to move from job to job to maintain year-round employment. Employment legislation did include consideration for temporary and part time workers for vacation entitlement, statutory holidays, notice, etc. As organizations understood the value of these varied work arrangements, they started providing benefits for part-time staff, as they too were looking for stability within the new competitive environment.

Businesses had to adapt quickly and five year strategic plans became a thing of the past. Small businesses and start-ups increased in number and popularity, as individuals relied less on the large businesses of the past. With the growth of the internet, new communication media and the use of artificial intelligence, the very essence of work was changing. Automation and “serve-yourself” models allowed businesses to replace labour with machines as they strove to meet their financial targets. Businesses had to focus on the bottom line to be successful and were not as inclined to offer full time or even permanent employment to their workers.

This is the setting for the growth of the gig economy – a name borrowed from the film industry where it is common for actors to make a career of working on a series of short-term projects. Employees working in the gig economy come from all age groups: Aging Boomers, who have developed subject-matter expertise and are enjoying good health, may want to supplement their income and remain actively engaged in the business environment; mid-career individuals may take on additional projects to expand their knowledge and experience; or young people who are working to get into a new business or line of work that will align with their values and availability.

The movement to a sharing economy has provided an opportunity for people to set their own hours, while using their own equipment. People may provide technical expertise on a short term contract, or drive for Uber or “Skip the Dishes” in order to supplement their income. Most of this work is done as an independent contractor vs an employee, and as such individuals are not entitled to the security associated with employment.

This has created some legal challenges as the definition of an employee is defined in the legislation and there are currently class action lawsuits arguing the definition of an employee.

According to a recent study by the Canadian Centre for Policy Alternatives of workers and consumers in the Greater Toronto area, nine per cent say they have worked or currently work in the gig economy, while 38 per cent say they have used gig-economy services. And among those providing services, 90 per cent say they’ve attended college or university, and almost half (48 per cent) have been doing the work for more than a year.

This new work reality is expected to grow and governments may choose to react. For example, Britain is considering creating a new category of protected worker called a “dependent contractor,” which would establish standard benefits such as sick pay and vacation time for gig workers. In addition, the European Commission, after a recent review, has suggested the concept of “portable benefits,” which would be tied to individuals that would move with them from job to job.

It will be interesting times as workplaces continue to evolve in the changing business environment.


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