The Canadian gig economy: Embracing the future of work

By Sherisa Rajah and Shane Todd, Fasken Martineau DuMoulin

Canada has been enjoying its lowest unemployment rate in nearly forty years.^[1] Despite that rosy economic indicator, a majority of surveyed Canadians are experiencing a “psychological recessions” — we feel that the country is experiencing a mild or severe recession.^[2] This economic anxiety may be a symptom of uncertainty about the modernization of the Canadian economy, and changes in the nature of work. The best treatment for our anxiety may be embracing the gig economy as part of the future of work.

What is the gig economy?

Investopedia describes a gig economy as one in which “temporary, flexible jobs are commonplace and companies tend towards hiring independent contractors and freelancers instead of full-time employees”.^[3] It is different than the historic model of full-time workers “who rarely change positions and focus instead on a lifetime career”.^[4]

In economically struggling communities and regions roiled by globalization and changing consumer demands, technology can create spontaneous work opportunities that may not have otherwise been available. The gig economy can also provide more efficient services to consumers. This growth is, in part, based our dependency on the internet. Social media now allows service providers in the gig economy to connect with the consumer in real time via “work on demand” apps. For example, Handy — an app that allows users to retain people offering residential, cleaning, installation and other home services on demand.

The gig economy is not limited to new apps. Canadian employers are already using the gig economy for work that does not create fixed employment.

A workforce study conducted in 2017 estimated between 20% to 30% of the Canadian workforce already consisted of “non-traditional workers” — meaning contingent, consultant, contractual, part-time, freelance and/or virtual workers.^[5]

The social and economic benefits of a gig economy

Workers in the gig economy are usually independent or dependent contractors. A key characteristic is increased control over one’s own affairs. This may be one of the key individual benefits. One study found that approximately half chose work in the gig economy for greater autonomy and control, half said they were supplementing their income on the side, and over forty percent said they were balancing career with family needs.^[6]

The benefits of the gig economy to competition have also come to light. The Competition Bureau of Canada, whose mandate includes promoting the benefits of competition, published a White Paper in 2015 that concluded the gig economy impacting the traditional taxi industry was for the better and here to stay:

“[…] Consumers can expect to enjoy the benefits of this increased competition, including lower prices, greater convenience and availability, and better quality of service through improved technology. With the right balance of competition and regulation, passengers can expect that the industry will ensure safe, competitive, and innovative transportation options in the future.”^[7]

There have been fears that the gig economy will displace workers in traditional businesses. But, preliminary studies in the taxi industry have shown there may be more complementation (that is, working in both traditional and gig models) rather than displacement.^[8] Some loss of market share may result from competition, but the pie can still grow and benefit everyone. Entrepreneurs, for example, can benefit from the multitude of professional services available to their business without the onerous employment obligations.

In addition to benefits from increased competition, gig economy platforms may have equitable effects. Ride-sharing services, for example, have becoming a preferred option for women due to stronger accountability features that make women feel safer accessing them over traditional enterprises.^[9] There is also anecdotal evidence of enhanced consumer access for racialized minorities and traditionally underserved communities.^[10]

The gig economy may also lift people out of the underground economy by giving them legitimate, flexible work opportunities with low entry barriers. Vulnerable members of society — like the disabled, or those with cultural, language, or social barriers to finding employment — can avoid the traditional burdens of the hiring and employment process through gig economy platforms. After all, the only thing they need is an Internet connection and a willingness to work.^[11]

Embracing the future of work

A worker in the gig economy is free to manage their own output, deliverables, and earnings. They have no obligation to work, but if they choose to do so, they can work from wherever, whenever, and for whomever they choose without exclusivity.

This in stark contrast to the presumptions of the traditional employment relationship. What we have are a number of economic opportunities for gig workers to earn a living that are being frowned upon because there is no conformity to traditional employment models. The vexing question is why these commercially negotiated relationships have to be boxed in as employment relationships at all.

As Canadian companies look to optimise operations and streamline costs, it has become clear that businesses, entrepreneurs and unemployed citizens alike may have to embrace the gig economy despite the muddy regulatory waters may be. The focus should be on encouraging gainful economic opportunities through better protections for gig workers, rather than quashing models that have the potential to empower the workforce.

Footnotes

1. [1] By the end of 2018, the rate had fallen to 5.6%: “Labour Force Survey, December 2018“, Statistics Canada (4 January 2019), online.
2. [2] “Economic Outlook 2019: Canadians In Psychological Recession “, Pollara Strategic Insights (13 January 2019), online.
3. [3] “Gig Economy “, Investopedia (24 May 2018), online.
4. [4] Ibid.
5. [5] “Workforce 2025: The Future of the World of Work “, Randstad Canada (18 April 2017), online.
6. [6] “The Gig Economy: Achieving Financial Wellness with Confidence “, BMO Wealth Management (30 July 2018), online; see also Elaine Pofeldt, “Why Older Workers Are Embracing the Gig Economy “, Forbes (30 August 2017), online.
7. [7] Competition Bureau, “Modernizing Regulation in the Canadian taxi industry “, Government of Canada (26 November 2015),  online.
8. [8] Sunil Johal, Sara Ditta & Noah Zon, “Taxi and Limousine Regulations and Service Review – Emerging Issues in the Taxi and Limousine Industry “, Mowat Centre (22 October 2015) at 7-8, online.
9. [9] See “City of Ottawa – Taxi and Limousine Regulations and Services Review: Customer Experience”, Core Strategies (14 October 2015), at 8; Ashley Csanady, “If the Uber debate is really about safety, why are women’s voices being sidelined? “, National Post (26 April 2016), online.
10. [10] Gene Demby, “Apps Make Googly Eyes At Riders Tired Of Being Snubbed By Cabbies “, National Public Radio (21 October  2014), online.
11. [11] See Steve Hawk, “What an economist learned by driving for Uber”, Quartz (5 March 2018), online.

Authors

Sherisa Rajah Partner Johannesburg	Shane Todd Partner Toronto, ON

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