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08 May 2019
Canada has recently seen its lowest unemployment rate in nearly 40 years.(1) However, despite that positive economic indicator, a majority of surveyed Canadians are experiencing a psychological recession. In other words, the country feels as if it is experiencing a mild or severe recession.(2) This economic anxiety may be a symptom of the uncertainty surrounding the modernisation of the Canadian economy and changes to the nature of work. The best way to respond to this economic anxiety may be to embrace the gig economy as part of the future of work.
Investopedia describes a 'gig economy' as one in which "temporary, flexible jobs are commonplace and companies tend towards hiring independent contractors and freelancers instead of full-time employees".(3) Gig economies are distinct from the historic model of full-time workers "who rarely change positions and focus instead on a lifetime career".(4)
In economically struggling communities and regions affected by globalisation and changing consumer demands, technology can create spontaneous work opportunities that may not have otherwise been available. The gig economy can also provide more efficient services to consumers. This growth is, in part, based on society's dependency on the Internet. Social media now allows service providers in the gig economy to connect with consumers in real time via 'work on demand' apps. For example, Handy is an app that allows users to retain people offering on-demand residential, cleaning, installation and other home services.
The gig economy is not limited to new apps. Canadian employers are already using the gig economy for work that does not require fixed employment.
A workforce study conducted in 2017 estimated that between 20% and 30% of the Canadian workforce already consists of non-traditional workers, meaning workers who are:
Workers in the gig economy are usually independent or dependent contractors. A key characteristic of the gig economy is that workers have increased control over their own affairs. This may be one of the key individual benefits. One study found that:
The benefits of the gig economy to competition have also come to light. The Competition Bureau of Canada, whose mandate includes promoting the benefits of competition, published a white paper in 2015 that concluded that the gig economy's impact on the traditional taxi industry was for the better and here to stay:
Consumers can expect to enjoy the benefits of this increased competition, including lower prices, greater convenience and availability, and better quality of service through improved technology. With the right balance of competition and regulation, passengers can expect that the industry will ensure safe, competitive, and innovative transportation options in the future.(7)
There have been fears that the gig economy will displace workers in traditional businesses; however, preliminary studies in the taxi industry have shown there may be more complementation (ie, working in both traditional and gig models) rather than displacement.(8) Some loss of market share may result from competition, but the pie can still grow and benefit everyone. For example, entrepreneurs can benefit from the multitude of professional services available to their business without being subject to onerous employment obligations.
In addition to increased competition benefits, gig economy platforms may have equitable effects. For example, ride-sharing services have become a preferred option for women due to stronger accountability features that make women feel safer accessing them over traditional enterprises.(9) There is also anecdotal evidence of enhanced consumer access for racial minorities and traditionally underserved communities.(10)
The gig economy may also lift people out of the underground economy by giving them legitimate, flexible work opportunities with low-entry barriers. Vulnerable members of society, like the disabled or those with cultural, language or social barriers, can avoid the traditional burdens of the hiring and employment process through gig economy platforms. After all, the only thing they need is an internet connection and a willingness to work.(11)
Gig economy workers are free to manage their own output, deliverables and earnings. They are not obliged to work, but if they choose to do so, they can work from wherever, whenever and for whomever they choose without exclusivity.
This is in stark contrast to the presumptions of the traditional employment relationship. The result of this dichotomy is that the economic opportunities for gig workers to earn a living are being limited because they do not comform to traditional employment models. The vexing question is why these commercially negotiated relationships must be interpreted as employment relationships at all.
As Canadian companies look to optimise operations and streamline costs, it has become clear that businesses, entrepreneurs and unemployed citizens alike may have to embrace the gig economy despite the muddy regulatory waters. The focus should be on encouraging gainful economic opportunities through better protections for gig workers, rather than quashing models that have the potential to empower the workforce.
For further information on this topic please contact Sherisa Rajah at Fasken's Johannesburg Office by telephone (+27 11 586 6000) or email (email@example.com). Alternatively, please contact Shane D Todd at Fasken's Toronto Office by telephone (+1 416 366 8381) or email (firstname.lastname@example.org). The Fasken website can be accessed at www.fasken.com.
(1) By the end of 2018, the rate had fallen to 5.6%: "Labour Force Survey, December 2018", Statistics Canada (4 January 2019).
(2) "Economic Outlook 2019: Canadians In Psychological Recession", Pollara Strategic Insights (13 January 2019).
(3) "Gig Economy", Investopedia (24 May 2018).
(5) "Workforce 2025: The Future of the World of Work", Randstad Canada (18 April 2017).
(6) "The Gig Economy: Achieving Financial Wellness with Confidence", BMO Wealth Management (30 July 2018); also see Elaine Pofeldt, "Why Older Workers Are Embracing the Gig Economy", Forbes (30 August 2017).
(7) Competition Bureau, "Modernizing Regulation in the Canadian taxi industry", Government of Canada (26 November 2015).
(8) Sunil Johal, Sara Ditta & Noah Zon, "Taxi and Limousine Regulations and Service Review – Emerging Issues in the Taxi and Limousine Industry", Mowat Centre (22 October 2015) at 7-8.
(9) See "City of Ottawa - Taxi and Limousine Regulations and Services Review: Customer Experience", Core Strategies (14 October 2015), at 8; Ashley Csanady, "If the Uber debate is really about safety, why are women's voices being sidelined?", National Post (26 April 2016).
(10) Gene Demby, "Apps Make Googly Eyes At Riders Tired Of Being Snubbed By Cabbies", National Public Radio (21 October 2014).
(11) See Steve Hawk, "What an economist learned by driving for Uber", Quartz (5 March 2018).
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Shane D Todd