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The impact of the gig economy

At a glance

  • Whilst there has always been a market for freelance and self-employed work, the rise of the gig economy has been well documented
  • With 4.7 million gig-workers in the UK, a number that has doubled in size over the last three years, the world of work is rapidly changing
  • We take a look at the benefits and pitfalls of working in the gig economy, including the impact on mental health.

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Whilst there has always been a market for freelance and self-employed work, the rise of the gig economy has been well documented. Working for companies such as Uber, Deliveroo and Airbnb have freed some from the stereotypical 9-5 office work, and for others have allowed an alternative way to earn money alongside another job.

With 4.7 million gig-workers in the UK, a number that has doubled in size over the last three years, the world of work is rapidly changing. The benefits of such work are clear to see, with flexibility a key driver in the rise of the gig-economy. Instead of having contracted hours and needing to report in at a certain time and leave at a certain time, workers can clock in and out when suits them and when they believe work will be at its peak – certainly an attractive proposition. In addition to this, the variety of work that can be done is enticing, as is the ability to self-manage and be more independent than in other industries.

Research conducted by the government delves deeper into the experiences of working in the gig economy, and by interviewing 150 such workers found that experiences are due to vary depending on the necessity of the job – for example if a worker uses gig working as a main source of income or as a supplementary job.

The downside of working in the gig economy

Whilst there are unquestionable benefits to being self-employed and choosing what hours to work, there are several downsides to working in this format. As mentioned above, the experience of workers will vary from person to person depending on circumstance.

The ability to work self-determined hours is potentially very appealing, however with that comes a lack of financial stability. If a worker is unable to work, simply there will be no money coming in – unlike sick pay or holiday pay in more structured work environments.

Furthermore, such workers don’t receive the same level of benefit as other workers. As mentioned above, sick pay will be missed, as will potential benefits such as healthcare and pension contributions. Again, this is likely to have a differing impact depending on the reliance of the job, some who are using the work to earn a little extra alongside studies or other work are less likely to experience as many negatives as those who rely on it as a sole income. There is also the increased responsibility of self-taxation and keeping track of all work done.

The impact on mental health

With pressures that come with being a gig-worker, dealing with fluctuation in pay and an increasingly competitive landscape, it’s to be expected that this will take its toll on mental health. As said in this Healthline article, ‘Gig workers take on similar challenges as small business owners – but without many of the benefits’.  The pressure to maintain a good reputation is no different to those reaching for stars on comparison websites, and with the requirement to drive for companies such as Uber and Lyft being a minimum customer rating of 4.6/5, one or two bad experiences could result in being deactivated from the apps and effectively losing your job.

Working longer hours, worrying about the next pay check and working through illnesses are all issues within the gig economy, and issues that are likely to highlight the importance of regularly surveying mental health. In 2018, 28% of income protection claims paid to Zurich customers in the UK were due to mental illness, and 1 in 4 people in the UK will struggle with mental health issues at some point each year.

The importance of the broker

With such varied demands for workers in the gig economy, there is increased importance in ensuring that they have the correct cover in place to suit their individual needs. For example, cover usually reserved for larger companies, such as business interruption, could be key for an individual who is unable to work for some reason – lack of transport perhaps. Additionally, personal injury is something that should be considered, with a lack of sick pay for workers meaning that any injury or illness not covered will result in no pay for a length of time.

For brokers, it’s important to be aware of the intricacies of insurance required for any clients considering gig-economy work as well as being able to advise them on policies that will include mental health support.

For more information on the topics discussed in this article, please get in touch with your local Zurich contact.

Image © Getty

Leave a comment

Tom May

February 14th, 2020 at 3:31pm