Christopher Niesche: The rise of the gig economy

People are setting up home offices or renting space in shared offices. Photo / 123rf

All over Australia, people are setting up home offices or renting space in shared offices and going to work for themselves.

It's the "gig economy", where rather than taking a job with a single employer, workers do jobs for a range of employers at the same time or do short spells of contract work, moving from company to company.

Working like this has long been established practice in things like contracting, writing and design, but it's moving into other professions as well, such as software development, sales and marketing, admin support, and even the law.

Online platforms such as Upwork and Freelancer.com are connecting people who want work with others who want specific tasks done.

By one estimate - albeit a self-serving one from Upwork - the number of Australians undertaking some form of freelance work has risen from 3.7 million in 2014 to 4.1 million in 2015.

It's part of a global trend. Intuit estimates that contingent workers will make up over 40 per cent of the US workforce by 2020.

It's a trend that is being driven by a desire to exchange the traditional five day nine to five working life with something that offers more flexibility as a way of achieving the holy grail of work-life balance.

Where their grandparents had a job for life, and their parents might have swapped jobs but still had permanent full-time work, millennials in particular, as seeking something else.

There are also many benefits for employers in the gig economy.

Employers have access to a contingent workforce, who they can pick up at busy times and stand down when they're no longer needed.

They also don't have to pay the workers when they're sick or on holiday or have to cover training, payroll tax and superannuation for them.

And in a significant shift from the centuries-old employment model where the worker provided the labour and the business provided the capital, many gig economy workers pay for their own laptops, phones, desks, offices and so on.

But there is a risk that many Australians could pay a heavy price for the added flexibility that the gig economy supposedly brings.

Australia's labour laws haven't kept pace with the changing workplace dynamic.
Laws ensure that salaried workers are a range of protections, such as being paid a minimum wage and not being required to work unreasonable hours or in dangerous conditions.

Freelance workers have no such protections. While they can in theory reject work, often the reality is different.

In competitive sectors there is often no negotiation over pay, with the freelancers knowing that others will do the job for the same rate and reasoning that something small is better than nothing at all.

Salaried workers in Australia have the benefit of the superannuation system, where an additional 10 per cent of their wage is put into a retirement account for them. While it's true that freelance workers can deduct some of their earnings to put into their retirement accounts, the reality is that many will spend their money on more pressing needs. We risk having one group of Australians with large retirement balances to live on and another group with nothing, forced to rely on the increasingly meagre aged pension.

Finally, it is sometimes questionable to what extent workers get the flexibility they want. They can find themselves working through the night or on weekends on an urgent project because they know if they refuse it, the client could go elsewhere and cut them off from work.

Even so, when it works it can be great. Ask some of the gig economy workers who have moved their work to seaside villas in Bali for instance, enjoying a standard of living that simple wouldn't be possible in Australia's capital cities.

DIGGING FOR PROFITS

While the profit season that got underway last week could so far be described as mixed at best, the one bright spot is likely to be the mining sector.

Coal and iron ore prices have risen steeply over the past few months and Australia is also exporting more of these commodities. The result will be solid profit gains for the miners.

Citigroup estimates that earnings in the mining sector will grow by 85 per cent this year, compared to less than 5 per cent for the rest of the market.

The surge in resources prices has also helped Australia to a record trade surplus.

Australia sold A$3.5 billion more in exports than we bought in imports in December.

The economy contracted in the third quarter last year, and the trade surplus means there is no chance the economy would have contracted in the final three months of the year.

Thus Australia has been able to avoid a technical recession and the economy is on track to surpass the Netherlands' record spell of 26 years without a recession. Australia last suffered a recession in in the June quarter of 1991.

In a result that would have seemed far-fetched just a year ago, we have the mining sector to thank for our continued prosperity.