A recent study by the US and UK-based business transformation consultancy, NewEdj LLC has highlighted the risk of critical downstream impacts driven by the use of the gig economy workforce model

The report concluded that there are critical issues surrounding healthcare, pension, and social support services driven by a lack of available funding and investment in pension funds today. Without intervention, the problem is seen to be an escalating issue with future service provision at serious risk.

Below is a summary of the observations:

We have an ageing population. The UK government updated their research in 2019 to discuss this (https://lnkd.in/euUaTJfQ) and we’ve seen the World Health Organisation share with us that the percentage of the population aged 60+ will increase from 12% to 22% by 2050 (https://lnkd.in/e_WNF88n).

An ageing population will only result in a higher demand for healthcare, pensions and social support and this demand has a price. It comes at a time when a reduced percentage of the population will be contributing to the social fund which in turn is backed by the effects of a falling birth rate (https://lnkd.in/ejJZ7qhK). At a time when fewer younger contributors are feeding the pot.

But, we also need to consider the impact of changing employment. The move of many digital service providers in using the gig economy through a need for workforce flexibility, lower cost, and agility conflicts with a growing number receiving lower incomes, facing instability of employment, and a dramatic reduction in employee benefits and pension contributions.

The gig economy meets the needs of today's employers but at the expense of future generations when society will see fewer individuals contributing to a higher-demand social care system at a time when savings and pensions are going to be at their lowest levels. It's sold to us as the opportunity to have the flexibility we need, to be able to work, when, where, and how we wish but there is no talk of the medium to long-term implications of this form of employment.

The IPSE has warned society that the self-employed community in the UK already faces a pension crisis with just 31% saving into a pension (https://lnkd.in/ebqdCZyh) which will drive a further nail into the coffin of social-care fund provision.

It’s time to re-examine the gig economy and the supposed benefits before it’s too late to avoid the damage. The push by Uber employees in seeking ‘employed’ status is a step in the right direction but it’s a growing sector. Back in 2018, we saw in a Department for Business, Energy & Industrial Strategy (BEIS) survey, that already almost 2.8 million individuals had worked in the gig economy (https://lnkd.in/exqviAfk). There are no figures of activity in the gig economy since the pandemic and the current financial crisis, but it is not unreasonable to perceive that number to be significantly higher.

We need innovation in the employment sector if we are going to minimise the impact on others and not further imitators making it worse.