How to manage the gig economy’s growing global jobs market

Source: Financial Times, published on 30 October 2018

Nationalist rhetoric is on the rise. Politicians are hardening their borders against “outsiders”. After decades in which globalisation seemed like an unstoppable economic force, “ deglobalisation” is suddenly the word on everyone’s lips.

But to focus on border walls and goods in container ships is to miss another phenomenon, one that is happening out of sight and outside of politicians’ control. The gig economy is facilitating the rise of a global marketplace for online labour. For good or ill, this is a new strain of globalisation in its rawest form.

When most people imagine the gig economy, they probably think of companies such as Uber or Deliveroo — apps that connect customers to nearby workers to do physical tasks like driving and delivery. It is easy to see why these companies have been in the limelight. They are vast and visible. Everyone can see how they have upended the traditional employment relationship.

But there is another type of gig economy platform that focuses on service sector work that is done remotely. Individuals and companies break up a job into a series of tasks or assignments — anything from data entry or translation to coding or copywriting. They offer these tasks on platforms including Upwork, Freelancer and Fiverr. Workers, who can be anywhere in the world, place “bids” to do the work on offer. Think of eBay — but for human labour. This side of the gig economy, sometimes called the “human cloud”, is growing apace. California-based Upwork, the biggest of the platforms, listed on Nasdaq this month and has a market value of about $1.9bn.

Plenty of people in developed countries find work on these sites, but it should not surprise anyone to learn that a sizeable chunk is going to the developing world where the cost of living is lower.

Data from Upwork, contained in the prospectus it filed with the US Securities and Exchange Commission, shows that about 20 per cent of revenue from freelancer fees comes from the US, almost 30 per cent comes from India and the Philippines and the remainder is from the “rest of the world”.

You can make a good case for the human cloud. It gives talented people in developing countries the opportunity to access global demand for their skills, when local markets are limited. The same might be true for people living in economically depressed regions of rich countries. This unlocks human potential that may otherwise be squandered. It also allows people to work from home — so long as they have the internet — in countries where poor infrastructure can mean gruelling commutes.

This year, academics at Oxford university surveyed 679 online gig workers in south-east Asia and sub-Saharan Africa. Many said the work was stimulating and varied, and they enjoyed the freedom it offered.

But there are dangers too. The first is inherent in any form of globalisation: workers in richer countries can find themselves undercut by competitors in poorer places. When manufacturers began moving production from the developed world to Asia in the 1970s and 1980s, insecurity hovered in the air on factory floors as people wondered if their jobs would be next.

In the human cloud, the sense of competition is more visceral. Online gig workers told the Oxford academics there was an oversupply of labour due to growing global connectivity. “Immediately you see an offer being posted . . . you will see 50 proposals have been submitted,” said one Nigerian worker. Another said: “I’m sure there are 100,000 people out there across the world who could do exactly what I do . . . for cheaper as well.”

Online gig workers also reported long working hours, often overnight because of timezone differences. As freelancers, they have no employment protections. Governments will struggle to gather tax revenue from all this economic activity happening in people’s bedrooms.

Some of the world’s smartest trade unions, such as IG Metall in Germany and Unionen in Sweden, are alert to the opportunities and threats of this new flavour of globalisation. They have set up a site for users to rate the working conditions of different platforms and are pushing for data transparency, respect for local minimum wages and better dispute resolution procedures.

Policymakers, too, have a chance to intervene to shape the future of this new world of work while it is in its infancy. The danger is that they are so busy grappling with the consequences of the last wave of globalisation that they fail to see the next one coming.

Copyright The Financial Times Limited 2018

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