Not all workers are employees

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We’ve all heard of the self-employed, freelancers, consultants, contractors, gig economy, click workers. And we’ve also heard about the debates about whether these new forms of work enable organizations to save cost at the expense of workers’ protection. The debate in this space peaked with the new California “Gig Economy Protection” law, Assembly Bill 5, which went into effect at the start of this year. Supporters will claim that companies have been exploiting contract workers because they are not considered employees and thus don’t receive benefits and workers’ compensation. That is one way of looking at the problem, to force everyone into the old definitions. This perspective is based on the assumption that the new forms of work are bad, that if we could only choose, we would prefer salaried employment. But is that true? And can we really push the new types of work emerging back into salaried employment?

A new book, Ghost Work, attempts to dive deeper into the new types of employment and identifies an even newer type of  workforce growing beneath the surface of the web. Researchers Mary Gray and Siddharth Suri argue that what we call the ‘gig economy’, the broad range of self-employed forms of work completing short-term projects through networking platforms, is undergoing another transformation towards ghost work. The term “ghost work” refers to the transparent people, who make the web look smart in this interim age, where artificial intelligence is still not sufficiently intelligent. These are the people behind sites such as Amazon, Google, and Uber. They transcribe and correct the spelling mistakes in auto-captioning on videos, tag images so that we can find them in search. Essentially, they bridge the gap between what machines might be able to do in the future and the services already providing us with the experience we want, but which automation is still unable to deliver in itself.  This is an always-on work paradigm, where people take on projects through companies that assign, coordinate, and pay without the end customer knowing or even communicating with the worker.

As such, many of these jobs are under the radar of labor laws, many of them below minimum wage with no social benefits or job security. But that isn’t the case for all of them. For example, there are today a few large consulting companies who operate through a network of experts around the world. The company approaches the experts per project in response to customer questions. In both cases, low paid click workers as well as highly paid consultants, there is an intermediary system between the person doing the work and the client who ordered and defined the terms of the contract. And in all cases, the terms of that contract do not look anything like what we recognize as the terms of employment for salaried employees. The interesting question raised by the researches in the book is whether this is necessarily a bad thing.

Jobless Growth

Employee rights are a relatively new addition to human rights. In England, about two hundred years ago, legislation began protecting workers, restricting the employment of children in factories and limiting hours of shift work. In the United States, a century later, the International Labor Organization brought the same conversations. In Israel, many of the labor protection laws governing employer-employee relations were enacted from the initial establishment of the state. These include the Hours of Work and Rest Law, the rights to annual leave, sickness allowance, minimum wage, severance pay, and more. The importance of these systems is enormous, and for many years they watched over the rights of the weak employees versus the powerful employers. And we are all better off for them.

But the direct result of this process is that we have learned to treat the full-time salaried position as the preferred form of work. That makes it difficult for us to see, as the world of work evolves, the full potential embedded in the ability to match the right person to the right work at the right time, new possibilities for people, organizations, industries, and economies. Think of populations who were previously excluded from the traditional employment market because of gender, sector, age, or even geographic location; people who could not enter the classic full-time work structure during certain periods in life, perhaps because of circumstances, religious or social expectations; or organizations limited by their surroundings, location or budget.

An alternative way to view the question of whether the new forms of work turn into an opportunity or exploitation is not to mandate the form of the contract but rather to revisit the laws in charge of protecting those doing the work. And redefining them so that they protect the worker for doing a job and not only the employee for holding on to a salaried position.

We cannot simply ignore the growing sector of people working in forms of work contracts, driving the growth of the new economies while not protected by the various laws around workers’ rights that have been tailored here for the last two hundred years. But that also does not automatically mean we simply extend the existing workers’ protection schemes to anyone and everyone in all forms of work.

In the coming years, governments and labor organizations will have to deal with the need to redefine protective laws, to adapt them to a world where need and for work and ability to do that work are being matched in various ways. And yes, I deliberately did not use the words ‘jobs’ and ‘employees’, so we would not get confused with work as we think of it today, a job held by a salaried employee. The need for work tasks and projects, big or small, and the people who can complete that work, include every form of contract where the two find each other and connect to get the work done. It can be a direct connection through a platform, like the Uber driver who meets your need for a ride. But it can also be a much more complex connection between a freelancer in need of advertising services, administration, account management, etc., who connects to another freelancer, who provides such services. It could even be a giant company like Amazon, who needs automated robots in their warehouses and instead of hiring employees to develop such robots, publishes an annual competition and calls capable people around the world to offer solutions for an excellent pay which we then called a reward instead of a salary.

In all of these cases, and many others, there is a growing economic activity around us, which does not make use of salaried employment. This process is reflected in what is defined as “jobless growth”. According to the 2019 United Nation’s report on Asian economies, only in 10% of the cases did each 1% of GDP growth generate a matching 1% in job growth. In 90% of the cases, the percentage of jobs created was smaller than the GDP growth, and in almost 50% of countries, almost no jobs were created.

At the same time, the data also shows us the growth in non-salaried types of work. These  traditionally include business owners and self-employed, but also more and more people who earn full or partial income for working through different platforms, either uniquely or on top of a main source of income. The International Labor Organization’s 2019 Trends Report claims that 34% of global workers work ‘on their own account’, while 52% of employees worldwide are salaried-employees. The Gallup Institute’s gig-economy study agrees with the data that Upwork has been providing on the rise of freelancing for several years. According to that data, in the US, one in three people is working in new forms of work as their main job. And maybe even more interesting is the fact that a quarter of them are full-time salaried-employees, and half are part-time salaried-employees, all doing additional work in the gig economy.

The ‘copy-paste’ method is not enough

Thus, the real issue at the heart of public policy for the new world of work is the need to redefine workers’ rights and protection within the new paradigm of work. It is not these new forms of work that are the problem, but the absence of any worker protection around them. In many countries today, the automatic response is to try to force the old, salaried-employee work structure, as a solution to these issues. Such is the California legislation that requires companies such as Uber, Lyft, and the like, to treat the people working on their platforms as salaried employees. There is no question that we must figure out a way to ensure working people are protected. But this will not happen through laws such as this one, which try to enforce the old, familiar, forms of work to do that.

We are in the midst of a fundamental change in the world of work, a change that breaks down the traditional structures of economies, industries, organizations, and workplaces, as well as the labor relations systems. The free economy can create opportunities here, but only a supportive public policy will give that economy the competitive edge. And that requires an in-depth discussion that begins with the acceptance of the fact that workers are not just salaried employees and continues to deal with how to turn this from a disadvantage to an advantage.

Published by Globes, Israel business news – – on February 5, 2020

Nirit Cohen

Nirit Cohen is an expert in the future of work, bridging the gap between emerging trends and practical solutions, providing valuable insights for careers, management, organizations, and broader societal systems.

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