The Gig Economy:

Solving the Riddle of Employed Entrepreneurs

How it can work better for everyone

In many countries today  the phenomena of the Gig Economy changes labour markets and society. Some of those that become members of the gig workforce are happy for the freedom they feel it gives them. Some benefit economically. Most don’t enjoy the situation as for many of them it isn’t by choice.

Employment insecurity, lacking benefits, missing even social interaction sometimes. In some countries it is still in an infant stage. Latest available statistics (The Economist, this week) seem to show that in the US it is only 1% of the workforce, but that would be only those that are full time “Giggers”. According to Forbes, a Gallup poll reveals that a third of US workers participate in the gig economy while having another job.

In other countries, such as the Netherlands, estimates are that 5-10% of employees have become (mostly unwilling) entrepreneurs. The number usually counted by the country’s statistics institutions is 800,000 people.

We could go on, but you get the idea. It’s a growing phenomena and affects a growing number of people. Uber and Lyft drivers, couriers, but also architects, analysts, experts in many different fields. Many companies believe it is more cost effective for them to hire people by the hour or by project rather than have them on the payroll.

How can we combine this new model of employment to put employees in a better position so that they too can benefit from this situation. A society after all, isn’t about how companies are doing but how are its memebers as people are doing.

This is intended for those who aren’t willing entrepreneurs and for many others who find that having so many people at higher levels of risk is not an optimal situation. Not socially or economically. The  question of efficiency for companies is not a topic here. Just short: for some companies this might be better, for others not. Nor is the question of the effects on

the economy or economic growth a subject of discussion. This blog concerns itself with income inequality and decreased benefits such as pension or health care, as well as higher levels of income insecurity causing emotional stress or inability to borrow for a home, are factors that increase inequality.

Some of the major problems for most Giggers as I call them, include:

– Bargaining powers with employers (in all but legal title)

– Work benefits such as health insurance, vacation

– Job security and closely related unemployment benefits

– Social interaction with peers and colleagues

The proposed solution in short is for Giggers to form cooperatives. Agreements with parties contracting the services of a member of the cooperative would be signed with the cooperative and not with the individual. Such cooperatives could also promote themselves and hopefully be accepted as members of labour unions. Giving these organisations a new encouragement and growth that are so missing in the neoliberal environment we are still in currently.

Parliament, government, employers, unions, academia and other players in society,  would create legal and fiscal frameworks to encourage, allow and promote the creation of cooperatives that would employ and be owned by those caught in a gig situation unwillingly.

Such cooperatives need to become legal entities with a special status that would enable their members to enjoy an improved employment and life quality situation.

We can imagine a cooperative of Uber drivers for example. The members would buy the vehicles together since no one drives 24/7 on the one hand while at the same time vehicles have time off for repair and maintenance. Such a cooperative will find the optimal number of vehicles they need to acquire. That number would most definitely be less than one vehicle per person. The government could apply VAT and other fiscal advantages to encourage these cooperative entities to use more electrical vehicles. Their pulled in, common and therefore increased purchasing power would help make that a preferred option. So more than one cause can benefit and improve members’ as well as others’ lives.

A legal framework that require Uber and similar companies to accept cooperatives as contract partners, where for example a commitment for certain number of hours, or vehicles would be active can be made. While at the same time, as a group, the bargaining powers of its members increase and even allows it as a group to move to another contracting partner (or better said: employer) if an agreement isn’t reached. As a group, they are always stronger than individuals. They can give more and receive more.

Such cooperatives could grow to include even hundreds or thousands of members and several cooperatives could enter negotiations with “employers” together about wages, working conditions or any other issue. Size should not be an aim in itself. A cooperation of cooperatives can also create enough size to increase members’ powers. If cooperative members join unions, the unions could also join and help.

If we think of various couriers of packages, post, food etc. similar bargaining powers are to be won and conditions improved.

Architects, programmers, engineers, consultants and other higher end service providers would also benefit from working in cooperatives. By joining forces, it will be easier for cooperatives to negotiate and bargain for industry wide minimum hourly rates for example and make these transparent and public. They would at the same time also be able to offer more comprehensive solutions to customers by joining several experts from different fields within a cooperative. So the contracting party also enjoys additional benefits of people used to working together on a common project.

All cooperatives would obviously also benefit from reducing costs such as accounting, health, disability and other insurances or legal advice since they will acquire such services as a cooperative and can engage service providers  (maybe from another cooperative even) together at a lower cost per person. Each would have likely spent much more individually in terms of money or time or both.

Members can share locations, secretarial services, work related material purchases such as office supplies, cloud services, other internet services and much more.

Fiscally and legally, cooperatives could also be encouraged to join forces and possibly even create supra-entities. In addition, not only laws would be made to require employers (contractors) to engage and negotiate with such cooperatives. Discriminating against cooperative members could potentially be outlawed or penalised if experience and time show it as necessary.  Carrots in terms of improved status in tenders or some special fiscal treatment could also be used to encourage the interaction of large economic entities, private or public, with cooperatives.

Government could favor cooperatives in tenders or in awarding public works in general. Government could also create physical and fiscal conditions that would assist with a physical location if necessary although that might go too far for some. Still an option to be considered. WeWork and similar entities are not always the most efficient of cost effective solution, although such companies might surprise and see such cooperatives as an opportunity.

In some branches  these cooperatives would form something similar to a modern version of old fashioned unions (vakbond). We could consider making these cooperatives where relevant associates in some form of the existing unions. Or maybe form their own representative organisation just as employers and employees today. As such they could join the yearly wages and salaries’ discussion and where relevant, also the negotiations.

The concept needs to be worked in more detail and with teams of legal, fiscal, social and other experts to form concrete proposals that can be made into laws and regulations. This is meant as just a base for further discussion and maybe action.

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