The Informal Economy – Are You Gigging It?

The informal or ‘gig’ economy is a work and worker (r)evolution. It is a natural reflection of how we live, think and socialise in the 21st century. Any attempts to over-regulate the sector or undermine its value to the economy are misguided.  

Let’s take a step back. On the one hand, much of what we do as customers today is underpinned by the platform economy. In a world where the online sourcing and purchasing of goods is the norm, it would be economically nonviable for a bricks and mortar store to stock every hook, bath plug, fuse or nail. These are usually low priced, low margin products meeting arbitrary customer demand. When we consider the plight of Woolworths, Poundworld, and similar companies in recent years, it is easy to contemplate the precarious outlook for any brand or business model based solely on the promotion and selling of low-cost items. The eCommerce platform aggregators have provided a new form of marketplace where ‘brands’ became the curators of stock but hold little or no inventory on a multiplicity of products – passing these orders off to partners and suppliers. These in their turn have little need for premium office space or marketing personnel or sales people. Growth has been exponential – and sales of Halloween costumes and Christmas presents depend upon it!

On the other hand, alongside the explosion of the online marketplace and the international brands that run them has been the evolution in payment services and the nature of payments themselves. By digitising much of the banking system that we interact with, we rarely write cheques or send postal orders, and use cash very occasionally. Mobile banking is popular and combined with m-commerce, this has contributed to the success of the platform economy through micro payments where many thousands, if not millions of digital financial interactions for small amounts build up into a substantial balance sheet for hundreds of thriving businesses.

Why then is it so difficult I wonder for some to make the conceptual leap from an acceptance of the platform economy to the reality of the informal or ‘gig’ economy?

The platform economy is now moving beyond goods into services where people who are time-poor with ever-busy lives are happy to pay for the convenience of help with everyday tasks on a demand basis. Resource aggregators like TaskRabbit, Thumbtack, and Upwork are sourcing the workers necessary to offer customers, on a 1-2-1 basis, the delivery of a broad range of services – whether it’s dog walking, hair and beauty services, putting up shelves, or building a website. With urban population growth trending upwards, and people more connected than ever, the rise of the informal worker economy appears obvious if not necessary.

In the BPO industry there is a clear alignment between the potential of the informal workforce and the delivery of CX management services. Call centres have evolved into contact centres that are evolving yet again into customer contact environments. Home workers are an established component of the CX business and the peak and trough nature of customer engagement has demanded over the years the creation of a myriad of flexible contractual models to maintain the availability of skilled and experienced resources. Brands need help to adapt to ever increasing volumes of customer engagement via the ubiquity of smart mobile devices and broadband. Automation can help, but a clear benefit to the BPO sector across multiple sectors will be the ability to tap into a trained and experienced workforce – including those that perhaps have taken a career break or are otherwise available but not currently under contract.

Across the Western world however, this new worker economy is proving contentious. This week’s Economist reports that Italy’s PM is going to come down hard on the gig economy in his “war on precarious work”. In the US, Massachusetts Senator Elisabeth Warren says “it is the next step in a losing effort to build some economic security.” But if we consider the professional freelancer, the Avon lady, the Amway business and of course the humble paper-round, they are all ‘gig economy’ in their own way. It has always been with us. What is also missed is how the informal economy can sometimes offer the perfect employment solution – at a point in time, for a particular period – not necessarily for a person’s entire working life. Critics making calls for ‘resource aggregators’ to offer employee benefits misunderstand the sector too. When a certain tipping point is reached, the competitiveness between informal/formal and between one informal economy brand and another will promote as incentives those very employee-type benefits that so many legislators are now calling for. They also miss the point that many who would avail of the benefits of the informal worker economy are in households where they may not be the primary earner – ‘gig’ is a perfect way for them to find work they consider both ‘useful and meaningful.’ It pays the bills, keeps them engaged in society but commits them to a limited contractual arrangement with an employer at a time when they may be re-training for a new career, taking a break from a full-time role or simply on a wind-down into retirement with limited responsibilities.

These short-sighted arguments also run counter to a broader evolution of work and the nature of the worker/workplace relationship. This is reflected in the autumn issue ofIntelligent Sourcing magazine. The articles focus on the future of work and consider collaboration, automation and the continued relevance of the role of the human workforce in business. Whether we like it or not, even the corporate world is embracing change in all its forms. Office blocks are becoming shared spaces like WeWork, and banks are offering space as accelerator environments and worker communities for local businesses and start-ups. While some traditional roles may indeed disappear from corporate life such as those that perform repetitive and recycled activities that can be anticipated and planned for, more complex work will continue to require the emotional intelligence and the creative and critical thinking that is natural to us homo-sapiens.

Looking to the future, the informal economy may also have a role to play in reducing the impact of another economic crash. According to Ray Dalio, co-chairman at Bridgewater investment firm, if in two to three years time we go into a deeper recession than 2008, the model of financial solutions adopted ten years ago are less likely to be effective. The informal worker economy might just be the solution to promote today that will ensure people are not made destitute or unable to feed their families in the future. Dalio cites the role of micro payments for example as a potential mechanism, along with others, to help address wealth creation in a time of recession, which chimes with the success of the platform economy and the potential for success of the informal worker economy where digital person-to-person micro payments accrue into significant individual earnings.

Ultimately, the future of work is going to allow for the close relationship of several models, including the informal workforce. The informal worker economy may not be perfect today, but in the coming years, in precarious (and for some nations – precocious) economic and political, times it will certainly prove valuable to individuals, communities, and entire sectors. Time spent not ‘digging gig’ is time wasted on unlocking its full potential.

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