This morning, Theresa May is urging employers to provide better terms to freelance employees, rather than trying to skirt around responsibilities of sick pay, holidays and fair terms and conditions.
The gig economy has disrupted the rules of employment for individuals, organisations and the Chancellor. The relationship between employer and employee is transforming. The risks for individuals, organisations, HM Treasury’s revenue and wider society are still muddied.
For the employee: greater freedom of choice around their own time is balanced with risk of short-term income and lack of rights. For the employer: greater flexibility to match the ebb and flow of business is matched with challenges of continuity and effectiveness.
Many ‘giggers’ love the feeling of not being owned by an employer…but there are downsides too.
A lack of belonging to a group can have a bigger – and unexpected – impact on employees, causing isolation and additional stress. The breakdown in belonging within an organisation can have profound consequences for a business including reduced collaboration and commitment to shared values.
Last week the Chancellor’s swift U-turn on proposed increase of National Insurance (NI) payments by the self-employed symbolised the confusion in this area.
In February, the Office of National Statistics confirmed the scale of the UK’s ‘gig economy’. There are now over 1 million people in the UK who work freelance, as short-term contracts or with several different ‘gigs’ at one time. Across the UK, the number of non-employing businesses has increased by 28% from 2010 to 2016. In London specifically, the New Economics Foundation found that the number of gig economy workers in London had grown by 72% between 2010 and 2016, and now totals over 65,000. In 2016, freelancers contributed £119 billion to the economy, a rise of £10 billion from 2015, according to a study by the Association of Independent Professionals and the Self-Employed (IPSE).
Within the gig economy, there has been a rise in zero hours contracts. The number of people on these controversial contracts has reached a record high of 910,000. New figures based on an analysis of Office for National Statistics data reveal that 110,000 more people were on contracts that do not guarantee work in 2016 compared with the same period in 2015. That’s an increase of nearly 14%, and 30% higher than 2014.
Earlier this year, test cases by ‘gig’ employees for courier companies demonstrated the need for a careful look at terms and conditions. Cases against Uber and other courier companies illustrate a shift towards recognising self-employed people as employees, giving them more benefits.
So what’s it all about?
It’s not only the more recent phenomenon of Zero Hours, outsourcing and contracting-out are long-established business models that also carry belonging challenges.
Symptoms of lack of belonging include confusion, fragmentation, no sense of community, and isolation.
Risks for the organisation include weak links leading to poor collaboration, delayed reaction to failure, inconsistent service and lower commitment to the organisation’s higher purpose. These risks have a direct impact on performance and profitability, health and safety or ethical contravention, reputation and customer good-will.
Barry Flack, our lead associate in this areas of our work, has seen the effects close-up on organisations and individuals. Reflecting on his employer-side experience as HR Director for global banks and retailers, and now consultancy-side, Barry says,
“Government focus in the gig economy is currently heavily focused on providing a basis for legislating against exploitative working practices at one end and equalizing tax contribution at the other.
However, the issue of how our employment landscape caters for the importance of belonging and innovation creation in a system that may look highly transient and transactional is a bigger concern in the long run.”
For the gig economy to succeed, employers, employees and government need to find the right balance for a healthy culture. All parties are still wrestling with the short-term benefits and long-term implications for sustainable business, employment and economy.
We continue to examine the intricate challenges in this aspect of belonging in the 21st century workplace.