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Nailing down the gig economy

Posted on 14 March 2018 by Katriina Lepanjuuri, Senior Researcher .
Tags: economy, gig economy, income work, sharing economy

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The trend of using online platforms to source and offer on-demand jobs and unused assets has grown substantially in the recent years, drawing more and more interest from all sides to the number of people employed in this sector and the practices within it.

Recently, NatCen have carried out two studies looking at this area. One report focused on the ‘sharing’ economy, and another on the ‘gig’ economy.

While there is a huge amount of coverage of the sharing and gig economies in the media, and a general agreement that the use of online platforms for managing work has grown exponentially, there are hardly any formal definitions of the terms. Both are areas that have emerged recently and are relatively under-researched.

While we already have fairly set definitions for things like the hidden economy (where some sources of income are not declared for tax purposes), the gig and sharing economies are a lot less clear-cut. In addition, both gig and sharing economy are areas which are evolving rapidly, with new platforms and approaches emerging and disappearing.

We might intuitively know what should be considered to be part of a phenomenon, but coming up with inclusion/exclusion criteria is not as easy as it seems. A lot of thinking and testing goes into coming up with these definitions, as we know that these subtle differences may have a substantial impact on the end results, and can make or break the research.

Since I've begun research in this area (which is only the last year and a half), I have seen a number of different estimates of how many people are involved in the gig economy emerging, all with slightly different definitions underpinning them. This is not necessarily a problem, but does make drawing comparisons tricky.

In a situation like this, we would start off with extensive desk research on the topic to get a well-rounded idea of what the existing literature has to say. We would usually involve one of our in-house questionnaire development experts in this process, as well. Naturally we would also work in close contact with our commissioners, as they are usually already somewhat experts in the area we’re investigating.

It’s also common that we would collaborate with an external expert if we felt that we might not have enough expertise on the topic in-house. This is what we did on both of these studies.

Once we have a good draft definition together, we could also test this with real people to check that the terms we use are easy to understand. We could also set up an expert panel, where a carefully assembled group of experts would review the definition. (This is what we did on the sharing economy project.)

In addition, we would carry out extensive testing on the subsequent questionnaires to make sure the questions that were underpinned by the definition were understood in the intended way. This is, in a slightly geeky way, a fascinating process.

So, what did we come up with?

We wanted the definition of the sharing economy to specifically cover money-making activity facilitated by internet platforms. The study was carried out for the HMRC, and unless money is exchanging hands, for obvious reasons the HMRC would not be interested (nothing to tax!).

In the sharing economy, digital platforms and apps enable people to share, sell, or rent their property, vehicles, resources, time, or skills. We agreed that it could include a wide variety of activities, including renting out a space, selling handmade crafts and offering delivery services.

When it came to defining the gig economy, we had already come up with a definition for the sharing economy. Therefore our natural starting point was to compare and contrast the two. What is involved in the sharing economy that doesn’t exist in the gig economy, or vice versa? What makes gig economy work different from self-employment, or from online advertisement of one’s own services which have existed for a long time?

For our research on the gig economy, we agreed that it ‘involves the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment-by-task basis.’

The key difference between the sharing and gig economies, in our view, was around the nature of the work. We understand gig economy as more focused on gigs (i.e. tasks and payment by task) while the sharing economy additionally covers sharing of unused assets, such as the renting of space through Airbnb, or car sharing.

While we think that the definitions we came up with were pretty good, well-understood, and provided us with robust measures, it might be that in a few years’ time the market has changed so radically that they’ll be outdated. Such is life.

 

If you are interested in reading more about these two projects, please visit our study pages here and here.

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