COVID Accelerationism: Will the Gig Economy Increase Female Labour Force Participation?

The ‘gig economy’ provides a non-standard method of finding work and is defined by Duszynski as ‘’a free market system where organisations and independent workers engage in short-term work arrangements.’’ (Duszynski, 2020) The gig economy has often been lauded as a means of increasing participation of women in the labour market, where (as early work in neo-classical economics elucidates) varying levels of human capital investment by firms in the market between genders are a reflection of women’s roles in biological reproduction as well as their role in being primary caregivers in a household. (Kabeer, 2012) To consider the impact of the rise of the gig economy on women, the impact of women on the gig economy and more widely, the national/global economy must first be considered. The following column will examine two scenarios that could potentially occur if more women entered the labour force.

1) If the rise in female labourers was due to a shift away from the paradigm of female caregivers, wage rates may decrease due to a lack of job creation to match increased levels of competition.

2) Alternatively, if more women were to enter the labour force due to the increased availability of employment opportunities, traditional economic theory dictates that long-run aggregate supply should increase pari passu. Ceteris paribus, real GDP should rise, increasing wage rates as demand for labour rises (Weinstein, 2018). Increased wages are associated with the theory of efficiency wages whereby labour productivity rises as workers are more motivated to work (Spencer, 2015).

The analysis below argues that the latter scenario is more likely to occur since the rise of the digital economy (due to ease of transactions, scalability of transactions due to being precisely measurable in time and for supply and demand to be dynamically matched (PricewaterhouseCoopers, 2015)) – recently accelerated by COVID-19 (Cohron, et al., 2020) the use of sharing platforms (including Fiverr, Amazon. The growth of the sharing economy was forecasted to be from $15bn in 2013 to $335bn in 2025 (PricewaterhouseCoopers, 2015) but the pandemic has continued to expedite this. Firms are increasingly realising the opportunities for productivity that the gig economy provides, meaning leading platforms along with newer entrants are competing in the race to take advantage of this continually growing market. (Mastercard and Kaiser, 2019) The growth in the number of jobs available, combined with the flexibility provided by technological growth has meant it is easier for women, who are usually disproportionately burdened with unpaid care and domestic work, (UN Women, 2018) to enter the labour force via the gig economy.

A study conducted in Australia to gauge the motivations of women and men for working in the gig economy concluded that both genders were attracted by income-related reasons, with flexibility being the salient motivator for both genders. Yet, more women reported gigging since it ‘fitted with their schedule.’ (Churchill & Craig, 2019) This substantiates the assumption that women are more likely to be constrained by household responsibilities, which perhaps provides a trade-off with full-time work but increases the appeal of short-term gig work, which proponents argue provides a balance between personal and professional life. Insufficient flexibility within the traditional labour market is reflected in the employment rate in the UK of women with children under the age of 6 - over 15% lower than the employment rate for childless women (European Commission, 2017). In the gig economy, women (whether mothers or not) can ‘lean in’ and ‘lean out’ of work, challenging the traditional career ladder model, attributed to suppressing the ascent of women in the workplace, which often acts as a deterrent or women entering the labour market (Boyle, 2018).

In his article ‘The Uncertainties of Management in the Management of Uncertainty,’ Streeck argued that the key aim for firms was to become flexible as doing so can have benefits within a climate of ‘unprecedented degree of economic uncertainty.’ He defined ‘flexibility’ as ‘a general capacity of enterprises to reorganise in close response to fluctuations in their environment.’ (Streeck, 1987) The gig economy provides opportunities for firms to be flexible; by adopting the core-periphery model, firms can make use of a core (‘traditional’) workforce but also the peripheral part-time workers who are more flexible, (Pettinger, 2020) allowing rapid adjustment to a market which, as Streeck writes, ‘appears to have become more turbulent than in the past.’ By bringing new skills to the workplace, (Lagarde & Ostry, 2018) women augment the ability of firms to adjust to new market conditions. Thus, an appropriate response by firms would be to accept a greater number of gigs provided by women.

However, there is evidence that flexibility is not always a mutually beneficial agreement, especially in low-skilled professions. Requirements including being available for work at short notice despite no guarantee that work is available force women, particularly in developing countries, to make risky childcare decisions, including leaving young children alone, since if they refuse to work they will lose their contract and so, their incomes. Furthermore, gigs are not always offered at times that workers would choose due to some timings creating an increased security risk – it was reported in South Africa that female workers were violently robbed whilst travelling to carry out early hour gigs. (Hunt & Samman, 2019) This risk and uncertainty is arguably creating a new class of precariat workers who are forced, through a lack of alternative jobs and social protection, to enter the gig economy.

The inability of gig workers to express concerns about their work to employers due to a lack of unfair dismissal rights highlights the issue of a lack of employee rights. Unlike the traditional labour force, those in the gig economy are ‘independent contractors,’ unable to access the same rights, including rights to a pension, minimum wage, parental leave, holiday pay and sick pay. The prospect of no guaranteed income during time off work and after retirement from work is likely to disincentivise women from entering the gig economy. The UK Government has attempted to overcome these caveats by dividing the population into three broad categories; self-employed, employees and a middle-ground called ‘workers.’ Gig workers could be classified into any of these three categories which have varying levels of benefits. The ‘self-employed’ are entitled to almost no rights, ‘employees’ are entitled to a range of rights and ‘workers’ can access the minimum wage, holiday pay and a pension. (Kasliwal, 2020) Yet, it is firms who control this categorisation and according to traditional economic theory, firms aim to maximise profit, suggesting that they will choose to categorise gig workers as ‘self-employed’ to reduce their financial burden e.g. paying National Insurance contributions.

As a market-based solution, the gig economy has many drawbacks. Pryce argues Government intervention in the form of quotas is required since ‘‘Market failures require intervention.’’ (Pryce, 2020) Gender quotas are a ‘Positive measurement instrument aimed at accelerating the achievement of gender-balanced participation and representation by establishing a defined proportion (percentage) or a number of places or seats to be filled by, or allocated to, women and/or men, generally under certain rules or criteria.’ (European Institute for Gender Equality, 2020) By definition, quotas are a direct acknowledgement of the under-representation that exists within the labour force. As a means of realising and overcoming the male quasi-homogeneity within its Parliament, Belgium enforced the ‘Tobback-Smet Act’, making it mandatory for political parties to make sure at least 1/3rd of their electoral lists were female. The legislation was successful; resulting in an increase in the proportion of female members of parliament from 16% in 1994 to 25% in 1999. (Turan, 2015) France, Norway and Italy have adopted similar legislation for firms with fines and risk of dissolution if they fail to meet quota targets of women being appointed to board level. (S.C., 2018) However, evidence from analysis of reform in Norway found inconclusive evidence of the positive impact on women in business outside of those directly appointed to boards. (Bertrand, et al., 2019) Arguably, it is too early to conclude the impact of quotas, since they are relatively nascent but the findings provided incontrovertible proof that appointing women to the board did not negatively the performance of a firm – as sceptics of quotas feared.

At face value, the gig economy appears to provide opportunities for women to balance work and home life. However, a possible impact of the COVID-19 pandemic is that the flexibility developed in the gig economy to potentially favour women could be overshadowed by millions of unemployed men, actively seeking the freedom that working via a digital platform brings. Empirical evidence has shown that despite women working longer hours on the platform, their average hourly rates are roughly 2/3rds that of their male counterparts, even after being adjusted for experience, educational attainment and feedback score. (Barzilay Renan & Ben-David, 2017) This is a consequence of ‘Discrimination 3.0’ whereby algorithms determining wage rates ‘’tend to repeat classist, racial and patriarchal biases.’’ (López, 2020) This suggests a wider problem of male-centric norms; people still believe it is unacceptable for women to have a paid job. (International Labour Organization, 2018) Though more effective than the gig economy, intentional actions by Governments to increase female participation can only go so far as to challenge ingrained beliefs. Whilst these speculations prevail, women will continue to face barriers to entry into the labour force.

References:

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