Dis­rupt­ing the tra­di­tional 9-to-5

Around the world, peo­ple are tak­ing on free­lance “gigs” to sup­ple­ment their in­comes, while some have even aban­doned their per­ma­nent jobs, opt­ing to make this grow­ing in­for­mal econ­omy their only source of in­come(s).

Finweek English Edition - - COVER GIG ECONOMY - By Ciaran Ryan edi­to­rial@fin­week.co.za *Marco Ryan is a close rel­a­tive of the au­thor.

soft­ware­de­vel­oper Marco Ryan* lives in Jo­han­nes­burg but “works” in the US. Four years ago he an­swered an on­line advertisement from a US com­pany look­ing for de­vel­op­ers. The pay wasn’t that ex­cit­ing at the time, and the rand was a lot stronger than it is now. He started off work­ing a dozen or so hours a week for the US firm, which is in­volved in the en­ter­tain­ment in­dus­try, and the pay – and the num­ber of hours – in­creased steadily.

Prior to this he had been a full-time em­ployee, first at a Jo­han­nes­burg-based soft­ware de­vel­op­ment com­pany ser­vic­ing the mo­bile net­works, and then at a re­cruit­ment firm. When the fi­nan­cial cri­sis hit in 2008, the job mar­ket fell apart, so he de­cided to ven­ture out on his own as a soft­ware de­vel­oper.

One of the down­sides of work­ing for a US firm from Jo­han­nes­burg is keep­ing the same of­fice hours as the US. This means he usu­ally gets to bed around 4AM, which can play havoc with fam­ily life.

But the up­side wipes out the neg­a­tives: he earns US dol­lars at a time when the rand has been sink­ing, and now works for a string of US com­pa­nies. He is part of the so-called “gig econ­omy”, which is re­shap­ing the way we work and live. Tech­nol­ogy and high-speed in­ter­net ac­cess have opened up work pos­si­bil­i­ties that sim­ply weren’t there a decade ago.

There are es­ti­mated to be more than 4 000 Uber drivers in SA. With noth­ing more than a car and a smart­phone, they are feast­ing on the guts of the di­nosaur taxi busi­ness, which seems des­tined to go the way of the VHS player. Airbnb is hav­ing the same ef­fect on the ac­com­mo­da­tion busi­ness, with more than 21 000 list­ings in SA and R210m in rev­enue from the coun­try last year.

Uber drivers can set their own work times, and for many this is a part-time gig to sup­ple­ment in­comes earned from reg­u­lar jobs. Airbnb has opened up in­come-earn­ing pos­si­bil­i­ties for thou­sands of South Africans with spare rooms to rent. Airbnb now rents out 2.3m rooms in 191 coun­tries. Its in­ven­tory makes it big­ger than the three largest ho­tel chains – Hil­ton, Mar­riott and In­ter­Con­ti­nen­tal – com­bined, ac­cord­ing to Bloomberg.

The gig econ­omy is most vir­ile among tech-savvy mil­len­ni­als, and ac­counts for the rise of free­lanc­ing sites such as Up­work, Free­lancer.com and Peo­ple per Hour, where vir­tu­ally any skill imag­in­able is now on of­fer, from nurs­ing to ar­chi­tec­ture, ac­count­ing, writ­ing and web de­sign.

The gig econ­omy is noth­ing new: since the first mo­tor car, me­chan­ics would work on friends’ cars in the evenings to sup­ple­ment their in­comes, and doc­tors would tend pa­tients pri­vately. What is new is how tech­nol­ogy is rip­ping across ge­o­graph­i­cal and sec­toral bound­aries. Why em­ploy a full-time ac­coun­tant with all the reg­u­la­tory and cost headaches this im­plies when some­one half­way around the world can do it more ef­fi­ciently and cheaper?

There are down­sides for both em­ploy­ers and free­lancers. The em­ployer has to test the free­lancer’s com­pe­tence in spe­cific tasks be­fore en­gag­ing them – but can also drop them in a heart­beat if the work is not up to scratch. Free­lancers re­ceive few of the perks or ben­e­fits avail­able to full-time em­ploy­ees – but this is some­thing both par­ties un­der­stand from the out­set.

A study by McKin­sey Global In­sti­tute (MGI) en­ti­tled In­de­pen­dent Work: Choice, Ne­ces­sity, and the Gig Econ­omy, found that 20% to 30% of the work­ing age pop­u­la­tion in the US and Europe en­gage in some form of in­de­pen­dent work.

“Work­ing nine to five for a sin­gle em­ployer bears lit­tle re­sem­blance to the way a sub­stan­tial share of the work­force makes a liv­ing to­day,” says MGI. “Mil­lions of peo­ple as­sem­ble var­i­ous in­come streams and work in­de­pen­dently, rather than in struc­tured pay­roll jobs. This is hardly a new phe­nom­e­non, yet it has never been well mea­sured in of­fi­cial sta­tis­tics – and the re­sult­ing data gaps pre­vent a clear view of a large share of labour mar­ket ac­tiv­ity.” MGI reck­ons on­line tal­ent plat­forms such as Up­work will grow the world econ­omy by 2% over the next decade, cre­at­ing the equiv­a­lent of 72m full­time jobs. These work­ers fall into four cat­e­gories: free agents, ca­sual earn­ers, those who are forced to work out of ne­ces­sity – the “re­luc­tants” and the fi­nan­cially strapped. By far the big­gest of these are the ca­sual earn­ers, rep­re­sent­ing 40% of the gig econ­omy, says MGI. With roughly half of SA’s youth of­fi­cially un­em­ployed, the gig econ­omy of­fers one of the few av­enues open to them. Ca­sual earn­ers in­clude a large per­cent­age of re­tirees with spe­cific skills, such as en­gi­neers and ar­chi­tects.

MGI says other forces could fuel growth in the in­de­pen­dent work­force: the stated as­pi­ra­tions of tra­di­tional work­ers who wish to be­come in­de­pen­dent, the large un­em­ployed and in­ac­tive pop­u­la­tions who want to work, and the in­creased de­mand for in­de­pen­dent ser­vices from both con­sumers and or­gan­i­sa­tions.

Tech­nol­ogy and high-speed in­ter­net ac­cess have opened up work pos­si­bil­i­ties that sim­ply weren’t there a decade ago.

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