‘Gig economy’ thwarts Moon’s policy

Regular-centric policy may go against trends

Reducing the number of irregular workers is one of the key goals in President Moon Jae-in’s job policy. It is based on the belief that low-paying and unstable irregular jobs have left households with little room for spending and thereby made the economy lose steam, not to mention aggravated social polarization.

The expansion of the so-called “gig economy,” however, may pose a new challenge to President Moon’s job policy as businesses avoid hiring regular workers.

The term comes from U.S. jazz musicians in the 1920s. For a concert of a jazz vocalist, jazz players would be hired to do the “gig job.”

The gig economy has come under the spotlight after the introduction of online platforms like Uber and Airbnb.

These digital intermediary services only connect customers with services. Uber, for instance, doesn’t hire drivers. Those working with Uber provide taxi services with their own cars, working only when they want and where there is demand for the service.

Park Byung-keun, a researcher at KT Economics and Management Research Institute, notes in a report the gig economy already exists in Korea, citing a chauffeur service for drunk drivers as an example. When an individual customer calls the platform company, a chauffeur who is available is connected. The concept of the gig economy has expanded, now including any kind of freelancers or temporary workers.

Developed countries around the world have been witnessing the gig economy expand.

According to McKinsey Global, these independent workers make up between 20 percent and 30 percent of the working population in the United States and Europe.

Pew Research Center also reports that 8 percent of U.S. adults in 2015 earned money through digital platforms like Uber, taking on a job or task.

The jobs were as diverse as one can imagine. Babysitting, editing, freelance writing, home repair, moving furniture, legal services, personal online secretary, tutoring, offering parking, energy brokering and IT consulting were among the list.

Flexibility — biggest merit of gig economy

The biggest merit of the gig economy lies in flexibility. Some people may want to work freelance as they prefer flexible working hours. Those who support the idea also say it allows more people to get jobs.

However, there is consensus the gig economy leads to lower wages.

According to Pew Research Center, young people under 30 were more likely to get work via online gig platforms than elderly people.

The ratio was also higher among blacks and Latinos than with whites. Households with lower income or people with less education were also more likely to get a gig job.

“The gig job is concentrated on workers who have no stable income. In other words, most of the gig work is part-time-level jobs. It means the gig work usually provides insufficient income for living,” Park said.

“Though there are positive aspects, we can’t deny the gig economy is a byproduct of fewer stable jobs and a widening economic gap.”

The gig economy may also provide businesses pretext to avoid hiring regular employees. Businesses have already been actively outsourcing manpower, which freed them from diverse responsibilities as employers or argument whether they are paying fair.

They have gone beyond subcontractor companies. Now individual freelance workers get their orders.

The increase of gig workers who are not protected by traditional labor laws may pose a new challenge for the Moon administration which pledged to decrease irregular workers.

“Though irregular workers make up less than 35 percent of total workers in statistics, vulnerable workers constitute a much bigger portion when including indirectly employed workers or those at the borderline. The form of employment has become so diverse,” said Chang Ji-yeun, a senior fellow at the Korea Labor Institute.

She cited independent contractors who work as tutors, insurance salespeople and deliverers as example. Many of the independent contractor jobs are not categorized as workers by law and are not included in social insurance schemes.

Pointing out that current job categorization doesn’t fully reflect the rapidly changing labor market or diversification in employment, she stressed there should be expanded protection for workers.

“An active labor market policy has become more crucial than ever,” she said. “The most difficult task is how to provide job security.”