COVID-19 is Shaking the Labor Market – How can we Move Forward?

The labor market has undergone major changes in the last 10 years, with the latest transformation currently underway. However, the way we work has evolved since then: there are over 1000 different gig platforms today. Appjobs believes this is only the beginning.

The Appjobs Institute was created with the mission to gather, analyse and distribute the latest data on the emerging Future of Work.  In a nutshell, they analyze behavioral data provided by the 1 million gig-working members of Appjobs and their interactions with over 1,000  gig-companies. This data is cross-links behavioral data with other data sets, to help decision-makers and the public to shape the Future of Work by making predictions based on facts.

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Cast your mind back to a decade  ago, when Uber and AirBnB were started, right before the 2009 financial crisis. Two platforms who were pioneers, creating a new way of working. Instead of hiring drivers the way a traditional taxi firm would, Uber built an application where drivers could remain self-employed and have flexibility of choosing the gigs that suit them with the payment arriving directly after working. Due to technological advancements and innovations, the cost of communication has decreased dramatically during the past century; with some costs having dropped nearly to zero. The cost of making a telephone call, the cost of flying and the cost of storing data have all plummeted; communication is what leads to information. Having full access to information means it’s getting increasingly easier to find, communicate and to collaborate with each other and spurs on the gig economy.

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From a stiff and strict corporate structure to independent actors making transactions on an open market.; this new way of working can be defined as the gig, freelance, sharing or platform economy. As with any unfamiliar territory prior, there are a plethora of different names that have been given to this form of economy which is all part and parcel of facing something previously uncharted. Employment in a Corporation is associated with security regards to legalities, pension, and healthcare. However, this security has often come with limitations to issues such as time commitments (for example, vacation and sick leave), loyalty, compensation limitations and physical constraints (such as the requirement to be in a physical office).

However, with the direction that work is heading, this security-flexibility dynamic is changing. The gig-economy brings a lot of flexibility. But at the expense of security. For example, in several countries, gig-workers are not entitled to safety nets as healthcare and paid sick leave.

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An analysis made by the Edelman Intelligence corporation forecasts that in 2027, less than 7 years from now, more people in the US will work as gig-workers than non-gig-workers. This so-called “Gig-economy” is growing and will eventually become just “The Economy”, it’s high-flexibility low-security dynamic is likely to create an intense and important public discourse.

However, how has this trend been affected by the COVID-19 pandemic?

Based on numbers from the Appjobs community, we track supply and demand in the gig-economy in real-time. It can be seen that the COVID-19 pandemic is impacting the labor market differently in different countries. For example, as unemployment is rising in the US, more people are looking for work in the gig-economy. In Spain, on the other hand, fewer people are joining the gig-economy compared to before the outbreak. Possible because of the strict look down affecting the overall economy in a negative way.

Within the gig-economy the coronavirus has caused an increase in demand for delivery services since there has been an increase in demand for the delivery of food and commodities. On the other hand, as people are traveling less and are spending time home, this has decreased the demand, for example, drivers and dog walkers/pet sitters.

Over the past months, COVID-19 has taken over conversations. Though it has been predicted that there will be a decline in cases over the coming quarters, it is important for actors in the gig economy to pay attention, as this is preparation for what is to come.

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It is easiest to consider the impact as two waves. The first is the impact of the virus itself: the isolation, government policies and job losses. The second wave will be larger and contain the aftermath of the virus; the recession or even depression that follows. While it is important to focus on the first wave, it is vital to prepare for the second wave. This first wave has sent many to the gig economy in hopes of economic opportunity, with Appjobs having over 120,000 new members in March alone.

To find out how the coronavirus pandemic is affecting individual gig-workers, at the end of March the Appjobs Institute surveyed 1,400 of Appjobs members. Almost 70% of gig workers said they now have no income, and only 23% have some money saved. Among gig workers surveyed, around 90% are now looking for a new source of income. Over half of gig workers said they had lost their jobs and more than a quarter had seen their hours cut. On top of that, almost 70% of the workers surveyed said they were not satisfied with the support they had received from their companies during the pandemic. Over half expected some help either from the government or the companies they work for.

While the gig economy has increased demand from gig workers, there has been a change in demand within the gig economy itself. The opportunities have changed alongside government regulations; the Appjobs ecosystem will adapt to the working ecosystem.  In terms of how we can deal with the impacts of the pandemic in the long run, companies like Appjobs will need to get creative and find innovative ways to provide stability for gig economy players.

Appjobs solutions include the creation of a resource centre as well as the creation of a meta profile (which will be officially released in the coming weeks)- these are two small, but extremely important steps. If all actors in the gig economy can integrate the necessary solutions for working in the gig economy, it will create stability and reduce the fragmentation. All new gigs can be seen as a fresh start: this is why hitting a home run in the gig economy is vital.

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COVID-19 has magnified both the challenges and opportunities that come with the Future of Work. The gig economy will continue to grow as companies seek a low risk staffing option and workers seek economic opportunity in the gig economy with minimal effort to participate. Therefore, the trajectory towards the emerging Gig-economy where more and more people are working as gig-workers, is likely to be catalysed by the COVID-19 pandemic. This, in turn, raises several questions on how we, as stakeholders from different sectors, can contribute to a world with suitable work and economic growth.

It is important to figure out what innovation is needed, the type of policies that need to be implemented, the initiatives that need to be taken and most importantly, what you can do to shape the Future of Work