Small Business

Can anyone expect commitment on demand in the gig economy?

The cafe owner apologised to me for slow service. A new waitress did not show up for work or tell her employer in advance. The cafe scrambled to find a replacement, at no notice, on an unusually busy day. Frustrated customers complained.

The owner was resigned to casual staff occasionally not showing up for work or calling in sick just before their shift. Others quit a few days into the job, saying "it wasn't for them". The owner wasted precious hours interviewing and training them.

I do not know what goes on behind the scenes, but the owner is personable and appears to treat staff well. He seems like a good bloke. The upmarket cafe has a friendly clientele and runs at a steady pace. Surely there are worse places for casual staff.

"We do everything we can to get good casual staff and hold on to them," the owner, a cafe veteran, told me. "It's getting tough to find young casual staff who stay at the one job for a while, are reliable, and consistently do a good job. Something has changed."

Loyalty, of course, works both ways. It is hard to feel sorry for businesses that axe casual staff or chop their hours in a blink. Or overwork them, underpay them, or treat them like expendable dogs. Then whinge when casual staff do not behave like full-time permanents – or remind firms that "casual" employment works both ways.

I wondered if the problems facing this cafe will spread to businesses in other industries that are casualising their workforce at light speed and outsourcing everything that moves. And if the "gig economy" will drive firm loyalty to new lows.

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Everywhere I look, more people are working on contracts, as consultants or freelancers, or scraping by on casual hours from different employers. Contracts are shortening, freelance work is becoming more competitive and casual hours are less reliable.

How much commitment can firms realistically expect from these "on-demand" workers?

For some, the labour market resembles a scene from The Hunger Games – on-demand workers pitted against each other in a game of survival, as wealthy owners watch from the sidelines. Inevitably, the race has one direction: to the bottom, as pay and conditions fall.

Don't get me wrong: I like the gig economy, where companies hire people on a project basis. Competition is good, to a point. An agile workforce is an asset for industry and the gig economy potentially means higher pay and better lifestyle for those who succeed.

It is a question of balance. Some companies have moved so far from hiring full-time staff that they rely on an army of casuals/contractors/freelancers/consultants. Their business would stop in its tracks if on-demand workers left en masse, at little notice.

Companies used to provide lower-risk work to casuals or freelancers. Now it is business as usual in some firms to have their senior lawyer on a short-term contract; to rely on information technology contractors for critical computer work; to outsource high-level marketing jobs to freelance advertising or communication professionals; or rely on backpackers for entry-level legal or accounting jobs.

As the gig economy speeds up, more people will work for more employers on shorter projects. Competition for talent will increase; loyalty will decrease.

That is fine when it works. But as the gig economy speeds up, more people will work for more employers on shorter projects. Competition for talent will increase; loyalty will decrease. More workers will quit at short notice. Customers will suffer.

Some companies will rely on independent workers who barely care about the firm, its brand or clients. These workers know another project is around the corner when their three-month gig is up, so why invest extra discretionary effort in the role?

Companies that expect contractors to work hard and do more than expected, to ensure their contract is rolled over, will get a shock.

Nowhere near enough employers – or governments, for that matter – have thought through the long-term implications of the gig economy. We are talking about millions more Australians who will provide on-demand labour in coming decades.

There were 4.1 million freelancers alone in this country, found a 2015 study by Upwork, an online freelancing platform.

How will company succession planning and talent management be affected when half the workforce might provide some form of on-demand labour?

What will it do to the nation's skill levels when millions of workers are expected to provide their own training (beyond the usual day-to-day stuff) and no longer have larger firms to train them, both formally and through work experiences?

What happens when so many workers effectively move sideways from project to project, rather than a more traditional career progression that exposes them to greater responsibility and challenges, and develops their skills?

How will this trend affect the nation's tax base when millions more Australians are effectively small business owners who are expected to organise their tax payments, and perhaps take a generous interpretation of tax deductions?

I could go one with other potential long-term implications of the gig economy. The most pressing is: how can companies engender greater loyalty, commitment and quality among their growing workforce of on-demand employees?

The scary answer: I doubt they can.

Just keeping the commitment of on-demand workers at current levels will be a challenge.

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