12 Jul 19 Future of work – II

The rise of the individual entrepreneur

Some weeks back, while chatting with my son’s friends (all in their mid-20s), I got around to asking what they were doing (typical father question :))!

At some point, it hit me that none of these youngsters had a job – even though they were all working! With occupations ranging from film editor, legal consultant, tour guide, psychologist, yoga teacher, musician… they all had work, but none had jobs.

Even more interesting, this was from choice – not because they weren’t able to get jobs, but because they preferred to be independent.

Welcome to the gig economy!

There are many definitions of the “gig economy”, usually based on the nature of the contract, or legal classification of workers, or nature of work. One simple and clear definition from the Cambridge Dictionary is: a way of working that is based on people having temporary jobs or doing separate pieces of work, each paid separately, rather than working for an employer.

We often mistake the extent of the gig economy by equating it to work (or income) gig economygenerated on new-age, digital platforms like Upwork, Uber, Airbnb, YouTube, eBay, etc. But the off-line gig economy is much larger and not restricted to any geography, domain, specialization or anything else. Most of India’s agricultural workforce don’t have regular jobs. Similarly in the construction sector, employment is temporary and on-demand.  The same applies to many creative professions like musicians, designers, make-up artists, actors and such like.

Obviously, many of them are not doing this out of choice, but necessity. An excellent report by the McKinsey Global Institute classified gig workers into four groups: Free agents, casual earners, reluctants and financially strapped. Each group has differing motivations for choosing independent work. What’s notable is that most of the gig workers in the US and Europe are doing it out of choice, not compulsion. This of course, will be different in a poorer economy like India. However, there are more and more people choosing to work independently, and this applies to all age groups, not just millennials.

The same report found that from 1900 to 2015, the ratio of gig workers (to total) declined in developed countries – from close to half to less than 15%. This was largely a result of industrialization and the resulting nature of employment in the corporate world. McKinsey’s study suggests that the ratio is rising again.

Interestingly, the employment pattern in developing or poorer countries today resembles that of developed economies in 1900. But manufacturing is not going to create the same number of jobs it did in the 20th century. The share of manufacturing to GDP is shrinking globally, and growth in employment is being driven by services, including the tail-wind from the Internet and digital revolution. Suddenly there are new opportunities – driving a taxi in your spare time, renting out your spare bedroom, etc. – that didn’t exist earlier.  Also, the ease of finding work or workers has improved dramatically, as has access to a global market.

This has huge implications. In India we’re desperately trying to “formalize” our economy. However, the future of work (or a significant part of it) will be informal, gig-like – and driven by services. Manufacturing jobs will be created, but not enough to make a significant dent – given the extent of automation and threats from 3D printing.

How do we prepare for this?

First obviously is relevant skills. The gig economy disproportionately rewards the highly skilled versus the moderately skilled.  Several traditional skills or professions are being threatened by artificial intelligence and tech. Read The Future of Work – I  for some thoughts on this.

However, one critical aspect to skilling outside of core abilities in say programming or design or yoga or whatever – is the ability to sell.

In my conversation with youngsters (mentioned at the start of this blog), I learned that each of them were active on social media and online forums/platforms – with a clear focus on brand-building and selling their services. Work doesn’t just come to you – you have to work at it. And gig workers know this.

In a sense, all these people are actually entrepreneurs. They have to market and sell, get the work, deliver it (if needed by collaborating with other gig workers), manage the client, collect and chase up for money, keep accounts, and so on. They also see their work as a longer-term business, and not just a means to earn money today.

It’s no longer about mere “freelancers” – welcome to the age of the independent entrepreneurs!

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Arun Jethmalani
Arun Jethmalani

Arun is one of the founders of ValueNotes. Apart from trying to build a high-quality research business, he has spent the last 27 years researching, analyzing, and dissecting companies and industries. He has worked with clients of all shapes and sizes, from all parts of the world – in providing them insights that make a difference to their business.
Prior to ValueNotes, he was an equity analyst/advisor, and wrote extensively on investing – including a column titled “Value for Money” which ran for 10 years in the Sunday edition of the Economic Times. To this day, he remains an avid “value” investor.
He has also been published in several other publications, and is a regular speaker at events related to technology, investing, competitive intelligence, business process management, Internet, etc. See: Valuenotes Events
He has been instrumental in developing a community of research and intelligence professionals in India, and is the founder and current chairman of the SCIP (India) Chapter. Arun holds a B Tech from IIT, Bombay and an MS from Duke University, NC, USA. LinkedIn Profile

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