Side Hustles & Gigs: The Economy of Flexible Working
The traditional workforce is getting a makeover, and a new way of working is redefining how we earn.
Written by Victoria Kent, Senior Investment Specialist
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It used to be the norm to have a full-time job with one employer. Now, the traditional 9-5 is getting a makeover, and a new way of working is redefining how we earn. We take a look at the enablers of this shift in working and where to from here.
Welcome to the gig economy; where it’s common to have a 'side hustle', and technology is critical to enabling flexible work. The gig economy refers to a labour market where workers are paid per task rather than hired for a permanent position.
Australia's gig economy has seen an extraordinary surge, thanks to the perfect blend of technological advancements, changing work preferences, COVID-19 lockdowns, and our national entrepreneurial spirit.
Traditional employment is no longer the sole means of financial sustenance. We’re in the era of 'hustlepreneurship,' – where individuals are crafting careers that could see them start the day as a rideshare driver, switch to food delivery in the afternoon, and finish off the day graphic designing for a client across the country.
Digital platforms like Airbnb, Uber, Amazon Flex, Airtasker & Upwork have facilitated the source of 'on-demand' workers on a large scale. They do this by facilitating the efficient matching of those requiring services with those able to deliver them.
Gig work makes a substantial contribution to the Australian economy. In 2022, an ABS survey estimated around 7% of the population had signed up to work on at least one platform.
Let's talk about Uber
In July 2023, Uber announced it created an estimated $10.4 billion in economic value for the Australian economy, and produced $6.6 billion in consumer surplus in 2021 – equivalent to 0.35% of GDP.
An incredible 150,000 Australians use the Uber platform to earn extra income each month. In 2022 alone, $3.8 billion was paid out to drivers and delivery people.
To put this in perspective, Woolworths group, Australia's largest employer, employs around 190,000 people. If Uber was considered a traditional 'employer', its workforce would be one of the largest in Australia.
Thankfully, Uber Australia signed an agreement with the Transport Workers Union to create minimum standards and benefits for those working in the gig economy in 2022.
The demographics of a gig workers
An Australian survey (2019) found gig workers were typically young people aged 18–34, often temporary or permanents residents (compared to Australian citizens).
These workers were twice as likely to be men as women, and more likely to speak "a language other than English at home".
15% of these workers considered the income earned from platform work 'essential for meeting their basic needs', while 52.3% said it was 'nice to have' but they could 'live without it'.
A more recent American survey found gig, contact, freelance and temporary workers were found to make up 36% of the U.S. workforce. While these workers came from all walks of life, they were more likely to be immigrants, younger workers and workers with lower incomes.
What makes gig work so appealing?
Uber Eats General Manger Bec Nyst believes the overwhelming majority of platform workers choose this type of work because they value the distinctive flexibility it offers. It allows workers to curate their work hours around their lifestyle.
While some chose gig working as a sole means to support their financial needs, some use it to supplement their traditional income.
But it's not just about extra bucks, side hustles can be a source of personal growth and creative exploration. There is something to be said for curating a portfolio career, where one can mix and match different gigs to create a unique and varied income stream.
The benefits aren't just for the workers though, there are benefits to the employers and economy too. The independent workforce enables companies (as well as not-for-profits & government agencies) to expand their workforces during periods of peak demand - e.g. the holiday season for retail.
What are some of the pitfalls?
Independent workers face real barriers to their wellbeing. Because these workers are classified as independent contractors, they have fewer rights compared to traditional employees. This includes the lack of traditional job benefits like insurances, a minimum wage, healthcare, superannuation and paid leave.
The Australian government released a consultation paper on "Employee-Like forms of work" to determine stronger protections for independent contractors together with industry.
The unpredictability of the income stream is one of the pitfalls in this type of work and explains why many gig workers often work across multiple platforms.
Zooming out to assess a broader downfall, there is a risk of organisations replacing full-time employees with contingent workers in an effort to save costs.
COVID-19 impacts
An Actuaries Institute paper noted the gig economy in Australia 'is evolving rapidly, especially under the influence of the COVID-19 pandemic'. If you ordered takeaway food while in lockdown, you were not alone! And thank goodness we did, because for many restaurants, delivery services were essential for sustaining their businesses during the pandemic.
There is no doubt the COVID-19 pandemic, and subsequent government responses, has significantly altered the way businesses and consumers interact. This has resulted in broad disruption throughout the general economy and brought about shifts in the on‑demand economy.
Where to from here?
The gig economy isn't a passing trend; it's a transformative movement shaping the future of work in Australia. We believe freelance and contract work, gigs, and side hustles are growing features of the modern workforce.
There are many individual and societal benefits from a flexible workforce. However, there is much work to be done to protect and support this form of labour.
As technology evolves and cultural norms shift, the way Australians approach work will continue to adapt. The traditional concept of a "job" might soon be replaced by a tapestry of gigs that collectively define a person's professional identity.