'Desperate for work': The gig economy is booming but the jobs it's creating aren't the ones Australia needs

There’s only so many rideshare drivers Australia needs. (Jeff Greenberg, Education Images, Universal Images Group via Getty Images)
  • Unemployment in Australia plummeted to 6.8% in August, with the creation of 111,000 new jobs.
  • However, economists and data provided to Business Insider Australia suggest that much of that jobs growth may have gone to the gig economy as Australians are faced with little choice but to take insecure jobs.
  • As the amount of insecure work rises, along with underemployment, the economy could remain weaker for longer.
  • Visit Business Insider Australia’s homepage for more stories.

While Australian job vacancies are few and far between, there’s one type of work that continues to boom

The latest labour force figures show that unemployment actually fell in August, with 111,000 new jobs created. With unemployment still expected to jump to 10% by the year’s end, the unexpected growth “was driven by non-employees”, according to Deutsche Bank chief economist Phil O’Donaghoe.

“So who are ‘non-employees’? In a nutshell, our suspicion is the gig economy has driven this result,” O’Donaghoe said.

“Delivery drivers, and riders, of major online delivery services are not employed by their respective delivery companies. They are, in effect, ‘self-employed’ contractors, and would be classified as such by the ABS.”

For all those new workers, total hours worked in August increased by just 0.1%. In other words, more workers are sharing in what ends up being less actual work between them. 

The official figures don’t drill down far enough to absolutely prove the hypothesis, but it increasingly appears that gig economy workers are playing an outsized role in boosting employment statistics.

The gig economy is booming

Platforms that facilitate the gig economy say they’ve seen a major bounce since the end of July.

Rideshare companies Uber and DiDi both told Business Insider Australia they’ve seen activity largely return to pre-pandemic levels, outside of Victoria, with trip numbers continuing to grow.

Meanwhile, on the food delivery side of things, Deliveroo said riders and orders were both up, especially in smaller centres.

“Adelaide, Cairns and Geelong, for example, have all seen at least a 50% increase in users on our app,” a company spokesperson told Business Insider Australia. “Our rider numbers are reflected in the increase in order volumes, with more new riders being onboarded each week for the past 9 weeks compared to this time last year.”

Interestingly, one of the fastest-growing sectors of the gig economy appears to be associated with Airtasker, which finds people to complete tasks for others. CEO and co-founder Tim Fung said businesses are increasingly looking for skills on the site for one-off projects.

“I’m proud that Airtasker has been able to connect entrepreneurs with the expertise and skills they need to keep business running, or growing, and at the same time offer a way for Aussies to earn additional income during this challenging time,” Fung said.

Data provided to Business Insider Australia shows that business tasks have seen the biggest growth on-site, as individual tasks, especially in areas like market research, social media and telemarketing, are increasingly outsourced.

Australians are ‘desperate for work’

Australia’s job growth is a little more complicated than everyone strapping on a helmet, or downloading a rideshare app.

Callam Pickering, the Asia-Pacific economist for job site Indeed, suspects some of the employment growth is a sign of sole traders reopening and other Australians beginning to freelance. Certainly, that’s what Airtasker’s growth would suggest.

But, Pickering agrees there’s likely to be plenty of gig workers counted in the mix.

“A lot of the recent jobs being created is in what I would consider insecure work – these jobs are not necessarily long-term safe employment,” he told Business Insider Australia.

“Around 90% of the new jobs in the past two or three months have been part-time, and a lot of those are going to be gig or casual type roles.”

The trend isn’t necessarily new. Since the 2008 global financial crisis (GFC), the workforce has become increasingly casualised, with Pickering suspecting this trend may intensify as we emerge from the COVID-19 pandemic.

“Businesses favour that because in the uncertain economic situation, part-time workers are a safer bet than investing in a full-time workforce. As a result, there’s a big risk that underemployment, which is at around 11.2%, could come down very slowly, if at all, over the next 12 months,” Pickering said.

In many ways, the underemployment figure has become a more indicative measure of how the economy is faring. It translates to one in nine workers wanting extra work but being unable to get it.

Again, it speaks to a workforce that is increasingly being pushed into part-time or casual work when full-time steady employment is hard to come by. For the record, the total hours worked remains 5.5% down from where they were back in February.

“Jobseekers are a pretty poor bargaining position right now. Many are desperate for work, and they’re willing to take on any job that they can get their hands on. There just isn’t that many jobs out there right now and I think that’s likely to also contribute to the sort of conditions and work that job seekers find,” Pickering said.

More people could be pushed into the gig economy

If full-time work is being replaced by more gig work, it isn’t good for anyone.

Australian food delivery riders, for example, report they make just $10 an hour after costs, without the protections, entitlements, and job security of other types of work.

But there are also major consequences for those in more secure forms of work. As more people move into unstable work, spending decreases and the economy slows.

“If we have a situation where maybe the unemployment rate isn’t too bad but the underemployment rate is really high, and hours worked isn’t where we want it to be, then the end result is just going to be a pretty weak economy and one that could stick with us for some time,” Pickering said.

This sorry state of affairs is before the JobKeeper wage subsidy begins to be phased out, which will, in turn, make it more expensive for employers to retain full-time workers.

The rise of gig work, of course, will only keep underemployment higher for longer, as other jobs remain few and far between. So too will the fact that 200,000 people have given up on work altogether at the moment.

It’s this kind of economic weakness that might require the federal government to extend support, rather than retract it.

“We don’t really have a good feel for how much actual economic damage was done by COVID-19. We don’t know how businesses are going to cope when they’re not receiving these payments. And so there are some huge downside risks as we transition out of these policies,” Pickering said.

“There is going to be some disruption for a lot of households and businesses over the next six to 12 months because of what’s happening with changes to JobKeeper and JobSeeker, and so I’d be quite concerned about the potential impact that could have going forward.”

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