There is little new about the ‘gig economy’. The word ‘gig’ originates from 1920s jazz musicians who played a small concert or ‘engagement’ at a venue. Dolly Parton may have sung about working 9 to 5, but her life was moving from one gig to another. We have always had plumbers, electricians, and lawyers who do temporary work, and are not paid by clients when they are idle. However, do new apps such as Uber or Deliveroo mean the end of the 9 to 5 job, and do these platforms need to be regulated?
Similar to the introduction of the Yellow Pages phone directory, new smart phone apps lower the cost of collecting information and searching for a worker. Apps can show when people are available, their current location, and offer reviews of a worker’s reliability. Such ease of use may increase demand for gig services, and estimates of those working through such apps range from 0.5% to 3.5% of the workforce in advance economies. This, combined with scalability, allows new services to be provided such as food delivery from small restaurants, whereas before the market lacked the depth to be viable.
Though apps have been described as providing large scale efficient marketplaces, they may have market power. Certain aspects can lead apps to become a natural monopolies, and they may warrant regulation. As an app reduces search costs there is little point in having several apps providing related information. Apps benefit from ‘network externalities’, whereby the value of being connected with an app increases with the number of other users. Over time one app could become the access point for a gig service, similar to how supermarkets are for food.
There may also be high switching costs for gig workers, allowing app owners to extract rents. In an information age, reputation can be a worker’s most valuable asset. If a worker has established a reputation (via online reviews) with one platform, this reputation capital may be lost if the worker switches platforms. App owners can extract some of the value of the reputation. However, allowing the “portability” of workers’ existing good ratings from one platform to another would lessen the dependency of workers upon single platforms.
As much work happens in spurts, employers often value flexibility, and apps can help firms outsource tasks. Managers trade off the cost of having a worker on standby against the cost of disruption when a crucial worker is unavailable in a crisis. This is why factories often permanently employ electricians, and banks hire IT specialists. Though apps can lower the length of such disruptions, the effect is likely to be small. Having employees is like insurance, and is cheaper for lower paid workers.
Despite the advantages of flexibility, firms still hire staff. Search costs remain, especially for high-skill jobs. Reviews on apps do not provide the information that a standard job interview does. Once a firm finds a suitable worker, it may be cheaper to offer them a full-time job than pay the costs of constantly searching for staff, and giving firm-specific training. The cost of integrating a worker in a team is also likely to increase with the complexity of the job.
Also, whether someone does a good job can be difficult to monitor, and apps have not overcome this. This is especially the case for high-skill jobs and it can take a long time to discover whether the worker is doing a good job or not. This helps explain why people use legal firms rather than directly employ lawyers for complicated tasks (as the law firm itself has built up a reputation) but a local lawyer for conveyancing or drawing up a will. Self-employment works best when it is easier to assess the service provided than the effort a worker expends on providing it. This is why truck drivers were self-employed before on-board recorders were invented, but now tend to be employees.
Although the ‘gig economy’ refers to self-employed workers, in recent years firms have looked for more flexibility among employees, especially in the low-paid retail and hospitality sectors. There has been a move to an “on demand” or “just-in-time” workforce. While many of these long-term changes were likely driven by changes in regulation (such as for shop opening hours), technology has cut the cost of posting rosters, allowing them to be changed more frequently. Employers can now use software to notify staff of rosters, rather than phoning each member of staff, and it is now common for such workers to be texted their hours at the beginning of the week.
Maintaining a pool of idle workers so as to have such flexibility in the economy is not free, and firms will try to shift such costs on to the workforce and the social welfare system. Ever since employers have had the obligation to pay social security contributions or give paid holidays, there has been a need to define whether a worker is self-employed or an employee. In a recent court case in London, it was found that Uber drivers were employees due to their lack of control over their work, such as the ability to set fares. Though some workers (such as students) may want flexible work, there is strong evidence that most low-pay, low-hours workers want more hours, or at very least certainty over weekly rosters. There is a paradox of flexibility. Irregular rosters can make it more difficult for workers to arrange childcare, take on a second job, or have a normal social life. Apps may help to reduce some of these frictions, but will not eliminate them.
Unfortunately research on the ‘gig’ economy has been hampered by the lack of data. Important questions remain, such as to what degree do consumers benefit from apps, who bears the costs of flexibility, and what level of flexibility is optimal. Such research will likely be an ongoing project, not a one-off gig.
It’s a gig, but is it a job? Brian Keeley on OECD Insights
OECD (2016), “Anticipating Change: Work, Skills and Job Quality”, Background Document: Meeting of the Council at Ministerial Level 1-2 June 2016, DELSA/ELSA(2016)8/REV1
Eurofound, (2015), New forms of employment, Publications Office of the European Union,
Katz, L. F. and A.B. Krueger (2016), “The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015”, National Bureau of Economic Research Working Paper Series, No. 22667
Manyika, J., S. Lund, J. Bughin, K. Robinson, J. Mischke, and D. Mahajan (2016) Independent Work: Choice, Necessity, and the Gig Economy, McKinsey Global Institute.
Smith, R., and S. Leberstein (2015), Rights on Demand: Ensuring Workplace Standards and Worker Security In the On-Demand Economy, National Employment and Law Project.
Stefano, V. D. (2016), “The rise of the ‘just-in-time workforce’: On-demand work, crowdwork and labour protection in the ‘gig-economy, ILO Conditions of Work and Employment Series, No. 71 .
More than four out of ten workers in European OECD countries held jobs where the quality of the working environment resulted in job strain in 2015, with male, low-educated, and younger workers disproportionately affected and significant differences across countries. Nearly two-thirds of workers in Greece and over half in Spain, for example, worked in ‘strained’ jobs in 2015.
Why do statistics on the Quality of the Working Environment matter?
It goes without saying that working in a strained environment will impact negatively on the quality of individuals’ lives and their well-being but measures of job strain can also provide important insights into other policy domains too, such as changes in and drivers of labour force participation, productivity and economic performance more generally.
…And what are they telling us?
Data show that, on average, 43% of workers in European OECD countries experienced job strain in 2015. Around half of these workers cited time pressure at work as a contributory factor and one-third reported exposure to physical health risk factors. Indeed, over one-fifth reported both as contributory factors. Moreover, factors considered as alleviating job strain were relatively low. Less than one-third of workers reported having autonomy at work and learning opportunities, while only one quarter described their social work environment as supportive and more than half had neither resource.
Among European OECD countries (for which data are available in 2015), Scandinavian countries typically have the lowest levels of job-strain, with Finland (28%) and Denmark (30%) performing best. The two countries with the highest rates of job strain are Greece (64%) and Spain (52%).
Source: OECD Job Quality Database
Job strain differed significantly across education levels. Workers with high levels of education enjoy the lowest levels of job strain (29%), lower than workers with medium levels of education (42%) and significantly lower than those with low education levels (62%). Differences across age groups are less marked however. Younger workers aged 15-29 have only a slightly higher percentage of job strain (45%) than older workers (42%).
Source: OECD Job Quality Database
Gender differences are also apparent. For example job strain amongst men is 15% higher than amongst women in Poland, 12% higher in the Czech Republic, and 9% higher in Greece, while the reverse is true in Finland, Ireland and Austria. Overall, within European OECD countries, 45% of men experience job strain, as opposed to 40% of women.
What happened to the Quality of the Working Environment during the economic crisis?
There were significant differences between countries in terms of how the quality of the working environment was affected during the initial phase of the economic crisis. In Belgium, Finland, France, Luxembourg and the Slovak Republic the quality of the working environment deteriorated significantly between 2005 and 2010, but returned to pre-crisis levels in 2015. In other countries however, such as Austria, Hungary, and Spain, measures of job strain improved during the crisis, in large part reflecting the fact that the crisis saw disproportionate losses in low quality jobs. Indeed since 2010, as employment has begun to grow again, so too have measures of job strain in all three countries.
Source: OECD Job Quality Database
Interestingly, a remarkable decline in the quality of the working environment took place in countries that enjoyed the highest levels in 2005, such as Sweden, the Netherlands and Ireland, although all three countries remain at the low end of the job strain scale. At the same time those countries where the quality of the working environment was comparatively low in 2005, such as the Czech Republic, Poland, Italy, Germany and Portugal, saw some improvement. Overall, the quality of the working environment showed a process of convergence across countries between 2005 and 2015.
The measure explained
Job strain forms one of three dimensions of the OECD’s framework to measure and assess the quality of jobs, which also includes measures of earnings quality (that capture the extent to which earnings contribute to workers’ material well-being) and labour market security (that captures those aspects of economic security related to the risks of job loss and its economic cost for workers). Measures of job strain relate directly to the quality of the working environment, which captures non-economic aspects of job quality. Together, they provide a comprehensive assessment of job quality.
Strained jobs are defined as jobs where workers face a higher number of job demands than the number of resources they have at their disposal. Two indicators of job demand and two of resources are used in the OECD’s Job Quality Framework. Job demands include: i) time pressure, which encompasses long working hours, high work intensity and working time inflexibility; and ii) physical health risk factors, such as dangerous work (i.e. being exposed to noise, vibrations, high and low temperature) and hard work (i.e. carrying and moving heavy loads, painful and tiring positions). Job resources include: i) work autonomy and learning opportunities, which include workers’ freedom to choose and change their work tasks and methods, as well as formal (i.e. training) and informal learning opportunities at work; and ii) social support at work, which measures the extent to which supportive relations prevail among colleagues. The overall Job Strain index, thus, refers to those jobs where workers have greater demands than resources (See OECD 2015a, pp 24-26; OECD 2014a, pp 104-114).
Where to find the underlying data
Measuring and assessing job quality: The OECD Job Quality Framework, Cazes, S., A. Hijzen and A. Saint-Martin (2015a), OECD Social, Employment and Migration Working Papers, No. 174
Measuring labour market security and its implications for individual well-being, Hijzen, A. and B. Menyhert (2016), OECD Social, Employment and Migration Working Papers, No. 175
Unemployment, temporary work and subjective well-being: Gendered effect of spousal labour market insecurity in the United Kingdom, Inanc, H. (2016), OECD Statistics Working Papers, No. 2016/04
More unequal, but more mobile? Earnings inequality and mobility in OECD countries, Garnero, A., A. Hijzen and S. Martin (2016), OECD Social, Employment and Migration Working Papers, No. 177
Well-being in the workplace: Measuring job quality, OECD (2013), How’s Life? 2013: Measuring Well-being, Chapter 5
How good is your job? Measuring and assessing job quality, OECD (2014a), OECD Employment Outlook 2014, Chapter 3
Non-regular employment, job security and the labour market divide, OECD (2014b), OECD Employment Outlook 2014, Chapter 4
In the United States it’s called “the 9-to-5”; in France it’s métro, boulot, dodo –“subway, work, sleep”; in Japan it’s personified as the “salaryman” and his female equivalent, the “office lady”. Whatever it’s called, the traditional job seems to be something we all identify with.
So it was a surprising to read earlier this year that most jobs are anything but permanent, routine and predictable. According to the International Labour Organisation (ILO), only around one in four workers worldwide have what most of us think of as a traditional job – stable and full-time with predictable earnings and working for a single employer. The rest? They’re all “employed on temporary or short-term contracts, working informally often without any contract, are self-employed or are in unpaid family jobs,” as The Guardian reported.
To be sure, there are major variations. For example, even though there are signs of a slight shift towards higher rates of formal employment, very few people in poor and developing countries have formal jobs. In Sub-Saharan Africa and Southeast Asia, fewer than one in five workers are working 9-to-5, says the ILO.
By contrast, traditional jobs are much more widespread in the wealthy OECD countries. But that, too, is showing signs of change. While part-time and temporary work and self-employment still only accounts for about one in three jobs in OECD countries, it makes up a much bigger share of new jobs. Between 1990 and the crisis, around half of all new employment in OECD countries involved these sorts of jobs.
Part-time and temporary work doesn’t always have a very good reputation – often for good reasons – but it undoubtedly meets the needs of some workers. Women, who still bear the brunt of household chores and parenting duties, are much more likely to work part-time than men. Among women who work, about 40% are part-timers against 28% for working men. Young people, too, are a big presence in non-traditional jobs. Among temporary workers, close to half are aged under 30. Some may be tempted by the gig economy; others are probably finding it impossible to break into the permanent workforce.
The growth of non-traditional jobs is affecting not just workers and their families. Its impact can also be seen in society and the economy, and not least in income inequality. The main reason for this is that part-time and temporary jobs are helping to drive a trend towards job “polarisation” or a hollowing-out of the workforce. In other words, old-style jobs are vanishing in the solid middle of the workforce – middle incomes, mid-level skills – while non-traditional jobs are increasingly prevalent among both low and high-skill workers. So, goodbye full-time accountants, hello part-time cleaners and freelance designers.
This squeeze on the middle would tend to widen the income gap in any case. But its impact is exacerbated by the fact that, for low-paid workers, non-traditional jobs tend to pay less – hour for hour – than traditional jobs. Indeed, about 60% of so-called “working poor” households rely mainly on income from non-standard workers.
And lower pay isn’t the only problem facing low-skill temps and part-timers. As the OECD’s recent report on inequality, In It Together, notes, non-traditional workers “tend to receive less training and, in addition, those on temporary contracts have more job strain and have less job security than workers in standard jobs.” Non-traditional work is also rather less of a “stepping stone” to a traditional job than many people think, especially for part-timers and the self-employed.
And there’s a cost for businesses, too, from the decline of traditional jobs: As the OECD’s Stefano Scarpetta told the FT recently, the rise of temping “is not even good for the firms themselves nor for the economy, because this reduces the build-up of human capital on the job.”
Still, despite the drawbacks, it seems clear that growing numbers of people are going to be temping, working part-time or self-employed in the future. In response, countries will need to find ways of better supporting such workers to ensure they don’t slip beneath the poverty line. That may mean changes to taxes and benefits and more support in areas like training and job search to ensure that non-traditional workers can maximise their earnings and job prospects.
OECD Policy Brief: Adapting to the changing face of work
In It Together: Why Less Inequality Benefits All (OECD, 2015)
“How good is your job? Measuring and assessing job quality” – OECD Employment Outlook 2014
Where do you stand on the income scale? Find out with the OECD’s Compare Your Income web tool.
Today’s post is by Gaël Brulé and Alexandre Jost of la Fabrique Spinoza
The Spinoza Factory, together with Campagne Première Productions, have organised the Happiness at work days (journées du Bonheur au travail), in Paris from February 12-14. This three-day conference will include round tables, debates, and interventions by business leaders, psychologists, researchers, trade unions and employees.
The event will open with the screening of the 90 minute documentary “Le Bonheur au travail” (Happiness at work) by Martin Meissonnier. This movie explores a new vision of the working environment and shows creative ideas to improve the daily life of employees. The event will include innovative round tables, for instance, one where business leaders meet trade union leaders around the theme of happiness, or another one on how to find happiness at work in media organisations. A range of workshops will look at the work place, for example one around the so-called “fish philosophy” – which aims to introduce gaming in work – on how to renovate the working methods; or one lead by the “bienveilleurs’” (the benevolents), a network of employees committed to keeping an eye on each other’s well-being at work.
Well-being at work is a topic that has increasingly received attention, especially in post-materialistic societies. Since basic needs are largely fulfilled for most people in these societies, the hedonic treadmill has been turned on and expectations have risen. As a consequence, employees are increasingly asking for meaning and purpose at work. Extrinsic motivation alone is no longer sufficient for a growing number of employees. Intrinsic rewards and good working conditions are required, in a sort of upward movement on Maslow’s pyramid (a sociological theory establishing a hierarchy of needs from basic physiological requirements to higher ones, such as sense of self-realisation). As a consequence, companies have to be able to provide conditions for self-growth to be able to keep the best employees, as this will become a basic requirement along with a decent salary or health insurance.
The Spinoza Factory has – among other topics such as education, gender inequality or beyond-GDP indicators – led a study carried out by more than 20 citizens and experts on the different facets of well-being at work. An analysis of indicators as well as a proposal for a new analytical framework were presented in a report delivered in November 2013. This framework, or grid, encompasses 12 dimensions, partly derived from the best practices in well-being indicators such as the OECD Better Life Index, comprising 11 dimensions: housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety and work-life balance.
This grid is dedicated to life in general and is not specific to the working environment. Using the framework but completing and adapting it to the work sphere, the Spinoza Factory has merged some of these indicators to create a composite grid specific to the professional environment. This framework includes 12 dimensions: working conditions, management, work organisation, governance, social capital, compensation and benefits, relationship to private life, nature of the work, relationship to time, ethics and values, training, and job security.
The Spinoza Factory has created a wiki dedicated to well-being at work, WikiBET
If you’re fretting, chafing, sighing, grieving, complaining, finding faults, repining, grudging, weeping, vexing, disquieted in mind, with restless, unquiet thoughts, then you’ve probably been eating cabbage, which as you should know by now, sends black vapours up into the brain, provoking melancholy. It’s not the only cause, of course, and you should also avoid sorrow, fear, shame, disgrace and any other emotion as well as too much exercise, too much study, poverty, scoffs, pleasures immoderate and werewolves.
You’ll find all this and more in the hundreds of pages of Robert Burton’s 1621 masterpiece Anatomy of Melancholy, where he describes the causes and symptoms of psychiatric disorders and discusses possible cures, ranging from herbal teas to drilling holes in the head. What he doesn’t mention is work, except to say that hardworking servants have no time for such ladylike maladies.
That’s where the OECD steps in. Sick on the Job? Myths and Realities about Mental Health at Work says that on average, one in five workers in OECD countries suffers from a mental illness, such as depression or anxiety. From a third to a half of all new disability benefit claims are for mental health reasons, and that figure rises to 70% for young adults. The report highlights the “considerable lack of awareness, non-disclosure and under-treatment among adolescents and young adults, with the gap before the first treatment of a mental illness on average being about 12 years”.
As a result, many young people struggle to get through school, and once they leave they are unfit for work and go straight onto disability benefit. The human cost is appalling, and the economic cost is considerable too – around 3% to 4% of the EU’s GDP according to the International Labour Organisation.
As the subtitle implies, Sick on the Job tackles some of the myths about mental ill-health, and notably the idea that prevalence is increasing. It’s not, but there is much more public awareness of mental disorders, less stigma, and better assessment tools. Unfortunately, at the same time, that’s also meant that more people suffering from mental disorders have been excluded from work, perhaps because many jobs now require social skills or cognitive competencies that workers with mental health problems don’t have.
The problem could get worse though, as working conditions grow harsher and job insecurity grows. The share of workers exposed to work-related stress, or job strain, has increased in the past decade all across the OECD. And in the current economic climate, more and more people are worried about their job security (a rising fear among the employed according to this poll).
What can be done to improve the well-being of people suffering from mental disorders? The OECD report argues for a “three-fold policy shift will be required thereby giving more attention to common mental disorders and also sub-threshold conditions; disorders concerning the employed as well as the unemployed; and preventing instead of reacting to problems””
How about Burton? Apart from cutting down on the cabbage, what did he have to propose? In OECD jargon, we’d say a holistic approach to increasing overall well-being accompanied by timely, targeted interventions aimed at the most vulnerable.
But let’s hear him argue for a welfare state, pensions, social security and justice in his own, magnificent, words: “If they be impotent, lame, blind, and single, they shall be sufficiently maintained in several hospitals, built for that purpose; if married and infirm, past work, or by inevitable loss, or some such like misfortune cast behind, by distribution of corn, house-rent free, annual pensions or money, they shall be relieved, and highly rewarded for their good service they have formerly done; if able, they shall be enforced to work. For I see no reason why an epicure or idle drone, a rich glutton, a usurer… should live at ease, and do nothing, when a poor labourer… that hath spent his time in continual labour…, and without whom we cannot live, shall be left in his old age to beg or starve, and lead a miserable life worse than a jument.”
Cheers you up, doesn’t it?
When you want something very much, you are ready and even willing to make sacrifices, hoping that in the end your efforts will pay off. Such an approach to life is generally accepted in society – you have to work hard to achieve something. However, how much should a young person be ready to give up in order to earn a living?
For young graduates, entering the labour market nowadays is not an easy task. The transition from education to employment is long, marked with little stability, low income and tasks that rarely correspond to acquired knowledge and skills. Postgraduate internships are a typical example. This practice is spreading in many countries, and is often used by industries with very healthy profit margins. Young people are queuing up and competing for 3-month unpaid internships, usually with no prospects of a permanent contract. And after one internship there will have to be another and then another. For many young people this will a be a sacrifice leading to nowhere, not serving as a stepping stone and not offering them a dream job. Despite adding a line or two to a CV, postgraduate precarious internships are not a solution. Thanks, but no thanks!
Why do we in the European Youth Forum care? Because our members live this precarious reality. The Forum is an independent, democratic, youth-led platform made up of 98 National Youth Councils and international youth NGOs from across Europe that works to empower young people to participate actively in society to improve their own lives, by representing and advocating for their needs and interests and those of their organisations. Youth employment is one of the strategic priorities of European Youth Forum, and our actions show a good example of how young people can mobilise to fight trends and developments that they do not find acceptable. The European Youth Forum`s work on internships is based on its Opinion Paper on Internships.
Proving with numbers! The European Youth Forum recognises the urgent need to properly identify the scope of the problem. At the moment internships are rarely included in statistics, because interns no longer have student status and are not yet considered employees. In order to gather such data, the European Youth Forum has created a survey on internship experiences in Europe. This data will provide a better representation of the real situation of internships regarding access to internships, mentoring, remuneration and job opportunities. Across Europe, it will help to advocate for a more beneficial internship experience, a smoother transition from education to employment for young people, and is likely to further confirm the need for a European Quality Charter on Internships that will establish quality guidelines for internships across Europe. Please help us spread this survey, by sending the link to your friends, contacts and fellow interns!
Showing the reality! In 2010 the European Youth Forum made a short film, “Internview”, as part of its on-going advocacy work on internships. The purpose of the video is to take a look at the lives of the interns themselves, to go beyond the policy and to see how interns and former interns feel about the internship system.
Raising awareness! The European Youth Forum does not only address external actors but encourages its Member Organisations to address youth employment matters (and internships as part of it) more actively. One such initiative, the Youth Employment Action, was established in 2009 by a transnational consortium of European Youth Forum Member Organisations. It aims to improve the situation of young people by providing practical training and projects at local and European levels, exchanging best practices, and providing information, resources and lobbying for constructive action to be taken to ensure adequate and fair employment opportunities for young people in Europe. By providing this information to young jobseekers and workers, and through lobbying on their behalf, we hope to improve the position of young people in the labour market and work for economic growth and sustainability in the future.
Clearly precarious internships are not a sustainable solution for the autonomy and future of young people. They can serve as a temporary solution – but accepting such offers only aggravates negative trends. The European Youth Forum believes that more efforts are needed from relevant stakeholders to improve the situation of young people in the labour market. Youth organisations try to lead by example and hereby invite others to join in this work. If not more, could you at least take a few minutes to fill in and spread the survey?
Off to a good start? Jobs for youth OECD study
Cooking, Caring and Volunteering: Unpaid Work Around the World OECD Social,Employment and Migration Working Paper