Hello ‘gig economy’
A newly coined term, the “gig economy,” has become a kind of buzzword in the United States. It refers to an economy filled with temporary jobs, or “gigs,” as they are called in the music business. A gig is the term for a short-term musical engagement of jazz musicians. The word became popular in the 1920s in America. A growing number of Americans no longer hold a regular job with a long-term connection to a particular company. Economists began to call the temporary hiring of staff a “gig economy” phenomenon. While other terms like part-time employment, freelancing, on-demand employment or even Uber jobs can be used to describe the situation, gig economy has become the favored phrase in the media. In Korea, it can be translated as day labor.
The gig economy is frequently mentioned when discussing employment statistics for the United States. Employment is a key variable for the Federal Reserve to finally increase interest rates. The present unemployment rate is 5.1 percent, close to full employment. In the past, an average of 200,000 new jobs was created every month under a similar unemployment rate. But the latest statistics point to 160,000 jobs being created. What happened to the rest? The gig economy is the answer. Independent workers who are working but not included in the statistics of the newly employed fill in that gap. They are workers who don’t belong to specific organizations and are treated as self-employed. Uber drivers are a typical case.
Economists say that temporary workers make up from 5 percent to 20 percent of the U.S. labor market today. Their share is snowballing. Ten years from now, they are expected to account for 40 percent. At this rate, full-time, regular employment will shrink, and temporary workers will likely become the mainstream. That’s a great paradigm shift in the labor market.
The situations that companies are in make the change understandable. In order to survive with global competition and weak economic growth, companies are working hard to cut costs. Aside from core technology development, design, strategy and marketing, other functions are being outsourced. Companies increasingly opt not to have their own factories. The spread of mobile platforms creates more odd jobs than quality jobs. Moreover, positions are constantly slashed as a result of mechanization, and that means AI computers, robots, drones and 3-D computers. Workers are competing against machines.
People who haven’t found a position at companies sell their labor on a daily basis. But they are not workers under the law and cannot enjoy the rights granted by labor-related laws or insurance and welfare benefits. It became a topic in the U.S. presidential race. Democratic candidate Hillary Clinton pledged that the instability and unfair conditions of the temporary workers should be improved. In contrast, Republicans argue that the gig economy helps companies lower their costs and adds more jobs.
Let’s look at the situation in Korea. Korea’s role model for a creative economy and regulatory reform is the United States. We can predict the future of Korea from the gig economy boom in the United States. The number of full-time jobs is not likely to grow, while irregular and temporary jobs are going to grow. In order to save the remaining quality jobs, regulatory reform must be implemented, and the environment for more jobs in the service sector must be established. In response to the unavoidable spread of a gig economy, the rights and welfare of temporary workers need to be systematically protected.
Reform of the education system is also desperately needed. The days of a college degree guaranteeing lifetime employment are over for good. Universities need to break away from the conventional method of mass-producing workers and educate creative talents. Reviving the high school admission system and urging young people to choose their careers based on their talents and interests early on should also be considered. Those with skills and talents can actually thrive in a gig economy. They can avoid organizational constraints, work hard and yet enjoy their leisure. For both organizations and individuals, the future belongs to those who read the trend and prepare for changes.
JoongAng Ilbo, Nov. 5, Page 32
The author is the head of the JoongAng Ilbo Sisa Media.
by Kim Kwang-Ki