Growth of on demand economy is transforming work and workplaces 0

On demand economySome of the key characteristics of the workplace of the near future are starting to crystallise pretty rapidly. In many ways, employees are aware of this to a greater extent than employers, legislators and politicians. For example, this week and over recent weeks Uber has been arguing in courts around the world that its drivers are not employees but are in fact self-employed. This is the shape of things to come. In the UK, around a fifth of the workforce is already freelance or self-employed, something which politicians like to misinterpret as small business, possibly  because it makes them look better because they associate it with entrepreneurialism and the prospects of these firms employing other people. The idea this is simply not the case is supported by a new report from software provider Intuit which claims that just 13 percent of British workers think they will be in traditional employment in 2025.

The Intuit report links its findings to the growth of the sharing or on demand economy. It claims that around a fifth of UK employees generate up to £1,500 a week in income from the sharing economy, some in addition to their full-time jobs. Around six percent of people already rely on their work with sharing economy operators like Uber, Airbnb, Etsy and Zopa for their primary source of income and 17 percent of the entire population now use such services. In addition, three percent of British workers are now active in what it terms the ‘gig’ economy earning up to £5,000 per week.


Co-working at WeWork, South Bank, London

In practice, these people are working outside of the boundaries of the 9 to 5 norm. Over two thirds of those surveyed by Intuit agree that they accept that the new normal for them involves no set hours, no set place of work and a greater choice of jobs. The report also suggests that a lot of people do not realise the potential they have to pool their resources in the sharing economy. Around 64 percent of respondents said they own but don’t monetise their car through apps like Uber, 54 percent have a spare room but don’t rent it out and 51 percent have buyable skills but don’t trade them.

A global issue

Worldwide, the report suggests that the number of people participating in the sharing economy will double over the next five years. Intuit estimates that there are 3.2 million people who currently work in this way but that in five years, their numbers should hit 7.6 million.

It’s worth nothing that Intuit has its own reasons for sharing this report. It has recently announced the launch of Intuit Workforce, a product that aims to support the administrative needs of self-employed and on-demand workers and the companies that use them. It’s presented as a form of HR system for this new world of work.

The battle lines are already being drawn as legislators seek to take some sort of control over these potentially chaotic new economic reality. Uber finds itself in the vanguard of this conflict worldwide. This week alone it is facing legal challenges in both the US and Australia and in the UK, London Mayor Boris Johnson has literally found himself besieged by Black Cab drivers for suggesting they are Luddites for resisting the rise of Uber across the capital.

Let battle commence

Meanwhile in Australia, Uber is challenging decisions across a number of state and federal jurisdictions, including the imposition of more than $1.7 million in fines in Queensland on drivers on the basis they have provided unlicensed taxi services.

What_Is_An_Uber_DriverOver in San Francisco this week, an Uber board member and former advisor to Barack Obama called David Plouffe has said the company is confident it will succeed in the legal claims that have been brought against it around the world. His main argument is that Uber drivers are in fact entrepreneurs in their own right and should be viewed by the Government and tax authorities as independent contractors rather than employees.

“We are very confident in our business model and in the legal case that is going on in the US,” he said.  “In the US, half our drivers drive less than 10 hours a week. It’s a legal process it will take many years to work its way through. We are not going to speculate about that, because we are very confident in the result here, just based on the way people are using the platform. We are eager to continue to work with governments, we have made a lot of regulatory progress here in the US. A conversation about how does Uber or a competitor of Uber fit into 40-year-old transportation laws is not going to be a satisfying conversation. What is required is countries to say how do we create a new set of laws.”

In other words, what we are experiencing is a new era of work that is so profound it will change economic structures and require Governments worldwide to readdress how people work. Whether this is true or not in the case of Uber (this feature in the FT says it is problematic for the firm) the underlying point about the on demand, freelance, sharing economy is already manifest at ground level. A growing number of people appear to be aware of this and we are already witnessing rapid expansion of the structures needed to serve it, including co-working spaces. It’s up to those who govern this to catch up with a revolutionary process that is well under way.