Blog: Gig economy and the impact of COVID-19

Jun 1, 2020 | Blog, Poverty Issues

What is it?

According to Statistics Canada (2019), gig economy is defined as “unincorporated self-employed workers who enter into various contracts with firms or individuals to complete a specific task or to work for a specific period of time for which they are paid a negotiated sum” (p.7). Online platforms and crowdsourcing marketplaces are also included in this definition, such as: Uber, Lyft, TaskRabbit, Upwork, Guru, Fiverr and Freelancer. A portion of work being picked up also includes “office work” like computer programming, graphic design, and editing (Angus Reid Institute, 2019).

Major reasons for joining the gig economy include having extra income, control over one’s work hours and the type of work they take on, and flexibility. Other reasons include supplementing retirement income (for those who have retired from full-time work), difficulty finding full-time work, and making ends meet as they have no other choice (Bank of Montreal, 2018; Angus Reid Institute, 2019).

The downsides with gig economy include financial uncertainty and limited job security, inability to save for retirement, poor regulation, lack of benefits (medical, dental, disability), unprotected workers’ rights, burnout, insufficient or inconsistent income, a lack of profit, debt accumulation, no access to collective bargaining, the need to provide one’s own tools, and occupational health risks (Bank of Montreal, 2018; Angus Reid Institute, 2019).

Impact of COVID-19

Prior to the pandemic, 8-10% of all Canadian workers in 2016 engaged in gig work. About half of those gig workers did so to supplement their income, while the other half did so as their primary source of income (Statistics Canada, 2019).

The annual income of a typical gig worker is usually low. Generally, of those who entered the gig economy within a given year, only half continued gig work the following year; only “about one-quarter remained as a gig worker for three or more years” (p.6). The 2019 report also found that gig workers are overrepresented in the bottom 40% of the annual income distribution.

What was found from Statistics Canada’s 2019 report (Measuring the gig economy in Canada using administrative data) was that the number of gig workers increased twice between 2005 and 2016 due to two events: (1) the recession in 2008 and (2) the “proliferation of online platforms” around 2012 and 2013. The proportion of gig workers increased for both those who relied heavily on gig work and those who used it to supplement their current income. It is still unclear whether the impact of the pandemic would produce the same increase of gig workers, given how they are affected by the pandemic and depending on how the economy recovers.

Based on a recent report by Statistics Canada (2020), The impact of COVID-19 on the gig economy: Short- and long-term concerns, the non-standard work arrangements by gig workers make it very difficult to assess the impact of the pandemic on gig workers because they cannot be identified in any of the main sources of employment data. There is currently no method of tracking real-time data on the gig economy.

Unfortunately for a lot of these gig workers, they may not be eligible for Employment Insurance benefits, especially those who are self-employed (gig work as primary source of income). On the other hand, they may be eligible for the Canada Emergency Response Benefit if they earned at least $5,000 in 2019.

A considerable proportion of gig workers have occupations in arts, entertainment, and recreation (Statistics Canada, 2019). However, due to social distancing measures and other restrictions to flatten the curve, they may find it more difficult to maintain their work during the pandemic. Similarly, gig workers “in service industries that require face-to-face interactions with customers will have a harder time dealing with the economic fallout of the COVID-19 pandemic” (p.3). Meanwhile, those who are in professional, scientific, and technical services may be able to provide their services due to remote working.

You can read the full reports below.

Sources:

Jeon, SH. & Ostrovsky, Y. (2020). The impact of COVID-19 on the gig economy: Short- and long-term concerns. Statistics Canada. Retrieved from: https://www150.statcan.gc.ca/n1/pub/45-28-0001/2020001/article/00021-eng.htm

Jeon, SH., Liu, H., & Ostrovsky, Y. (2019). Measuring the Gig Economy in Canada Using Administrative DataStatistics Canada. Retrieved from: https://www150.statcan.gc.ca/n1/pub/11f0019m/11f0019m2019025-eng.htm

Additional sources:

Angus Reid Institute. (2019). The “Gig” Picture: One-in-three Canadians have done some kind of informal work in the past five years. Retrieved from: http://angusreid.org/gig-economy/

BMO Wealth Management. (2018). The Gig Economy: Achieving Financial Wellness with Confidence. Retrieved from: https://www.bmo.com/assets/pdfs/wealth/bmo_gig_economy_report_en.pdf

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