Close panel

Close panel

Close panel

Close panel

World's 'gig economy' larger than thought

Between 20 and 30 per cent of people in the US and Europe are working independently in the so-called “gig economy” according to a new study that counts moonlighters as well as full-timers.

Advocates say this style of work allows more people to participate in the labour market, giving them the flexibility they want. Critics say employers are offloading risk on to “independent” workers who do not enjoy employee protections such as the minimum wage or sick pay.

To twitter

The debate over the gig economy is complicated by the fact that there is no agreed definition of what exactly it is

The debate over the “gig economy” is complicated by the fact that there is no agreed definition of what exactly it is.

McKinsey’s researchers defined “independent workers” as people who chose when to work, had multiple employers and could move between jobs fluidly. The researchers included people on temporary contracts of less than a year, so long as they were not “permatemps” who were effectively working like employees but on rolling short-term contracts.

Not everyone will agree with this definition. Temp agencies, in particular, are privately furious when people lump them into definitions of the “gig economy”, since they usually employ the temps themselves and provide them with employee rights and benefits.

While rapidly growing online work platforms like Uber and Deliveroo have attracted much of the attention, the McKinsey study suggests these remain a tiny fraction of the overall phenomenon of independent work. Just 6 per cent of the independent workers in its survey were using online work platforms like these.

Nor is it a trend that is driven exclusively by millennials. The survey found that in the UK, 39 per cent of adults aged 55 and over were working independently versus 31 per cent of 25 to 54 year olds. The same pattern was found in Sweden and Germany.

“Our survey finds that the majority of independent workers in all countries participate by choice,” said Susan Lund, a partner at the McKinsey Global Institute. She said it was “especially well-suited to seniors, stay-at-home caregivers, and young people – all large and growing demographic groups with an interest in working but with significant time commitments or reluctance to take 9-to-5 jobs.

“Our survey finds that the majority of independent workers in all countries participate by choice

“The study split the independent workers into four segments: 30 per cent were “free agents” who actively choose independent work and derived their primary income it; 40 per cent were “casual earners” who used independent work to top up their income by choice; 14 per cent were “reluctants” who made their living from independent work but would prefer traditional jobs, and 16 per cent were “financially strapped” and topping up their incomes out of necessity.

“Although the reluctants and the financially strapped together constitute a minority of independent earners, the magnitude of the problem is still striking,” the report said. “Scaling up the results of our survey suggests that 50 million Americans and Europeans are independent out of necessity, and more than 20 million of them rely on independent work as their primary source of income.

“Although the reluctants and the financially strapped together constitute a minority of independent earners, the magnitude of the problem is still striking

“Theresa May, the UK’s new prime minister, has just ordered a review into workers’ rights in the gig economy, saying she wants to be “certain that employment regulation and practices are keeping pace with the changing world of work”, including the use of self-employed staff by companies such as Uber and Deliveroo.


For more articles from the Financial Times/ FT.com please register here

Source: Sarah O’Connor. 2016. ‘World’s ‘gig economy’ larger than thought’. Financial Times / FT.com. October 10, 2016 Used under licence from the Financial Times. © The Financial Times Limited 2016.

All Rights Reserved.Articles sourced from the Financial Times have been referenced and are used under licence from The Financial Times Limited. These articles remain the copyright of The Financial Times Limited and were originally published in 2016. All rights reserved. “FT” and “Financial Times” are trade marks of The Financial Times Limited. The Financial Times Limited has not endorsed, verified or been involved in the creation of the information provided from other sources in this publication, and is not responsible or liable for its accuracy, completeness or content.

Other interesting stories