Werner Eichhorst, IZA

Verena Tobsch, INES Berlin

OECD Paris, September 12, 2016

How big is the Gig?

Preliminary evidence from Germany and Europe

2

Outline

INTRO: CROWD WORKING

NON-STANDARD EMPLOYMENT

FINDINGS ABOUT THE GIG ECONOMY

CONCLUSION AND DISCUSSION

The Gig Economy

3

self-employment without

employees

freelancing

second (side) jobs

occasional jobs

sh

ort

-te

rm jo

bs

gigs

single contractors

Microtasking contract for work and services

crowd working

outs

ourc

ing

on-d

em

and

on-call

Crowd working and „on-demand economy“

Outsourcing of business activities to the „crowd“ in order to increase

productivity (reducing fixed and overhead costs) and flexibility (e.g.

flexible use of high potentials)

NEW: online platforms offering „micro tasks“, operating as a market

place and providing the handling of payment:

Self-employment or dependent employment?

Competitive vs. collaborating approach

Low transaction costs

Easy access to self-employment (without employees)

Global network

4

Source: Leimeister (2013), Arnold et al. (2015)

Potential impact of online platforms and crowdworing

on the labour market

Better matching between supply and (latent) demand

Potential splitting of jobs into tasks, and contract-based

arrangements

Rise in side jobs (secondary jobs) and in self-employment without

employees (or combinations of activities)

Growth of a segment of employment outside traditional social

protection focussed on dependent employment → social insurance,

in particular old-age pension insurance

Potentially global competition, also on wages

Potential distortions in competition between different business

models

5

6

Standard and non-standard forms of employment

Composition of employment by types of contracts in

main activity in Europe 2014

7

full-timepermanent59%

part-timepermanent7%

marginalpart-time9%

apprenticeshiportraining2%

fixed-term7%

temporaryagencyworker1%

freelancer11%

self-employedwithemployees4% EU28Total

Source: LSF 2003, 2008, 2014, own calculations.

General changes in the composition of employment

by types of contracts in main activity in Germany

8

45% 45% 45% 43% 43% 41% 41% 41% 41% 41% 39% 39% 38% 38% 37% 39% 40% 41% 40% 40% 41% 40% 40%

8% 8% 7% 8% 8% 8% 8% 8% 9% 9% 10% 10% 10% 10% 10% 11% 10% 10% 11% 11% 11% 11% 11%

4% 4% 3% 3% 3% 3% 3% 3% 3% 3% 4% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%

5% 4% 4% 4% 4% 5% 5% 5% 5% 4% 4% 4% 4% 4% 4% 5%

6% 6% 6% 6% 7% 7% 7% 1% 1% 2% 2% 2% 2% 2%

2% 2% 2% 2% 2% 2% 2% 1% 1% 2% 2% 2% 2% 1% 3% 3% 3% 3% 3% 3% 4% 4% 4%

5% 5% 5% 4% 5% 5% 5% 6% 6% 6% 6% 6% 6% 6% 7% 7% 7% 6% 6% 7% 6% 7%

7% 6% 7% 7% 7% 7% 7% 7% 6% 6% 7% 7% 7% 8% 7%

6% 5% 6% 7% 7% 8% 8% 8% 7%

6% 7% 7% 6% 6% 6% 6%

26% 25% 26% 26% 26% 27% 27% 26% 26% 25% 25% 24% 24% 23% 23% 21% 20% 20% 19% 20% 19% 19% 18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Permanent full-time Permanent part-time Vocational education Fixed-term contractAgency work Marginal/ irregular Self-employed Unemployed with jobUnemployed Inactive

Source: GSOEP 1992-2014, own calculations.

Employment change by occupations (ISCO 88) 1996-2011 (in

percent), sorted by median full-time gross wages in Germany

9

7x: crafts, skilled workers

83: drivers etc.

51: personal/protect.

services

91: sales/services

elementary

occupations

32: health ass.

prof.

33: teaching

ass.

24: professionals

34: assoc.

professionals

81: plant

operators

21: science prof.

22: health prof.

Source: Microcensus, own calculations; wages taken from SIAB.

12: corp.

managers

11: legislators,

officials

Share of non-standard workers by occupations (ISCO 88) 1996

and 2011, sorted by median full-time gross wage in Germany

10 Source: Microcensus, own calculations, wages taken from SIAB.

Share of self-employed and freelancers (ISCO 88) 1996 and

2011, sorted by median full-time gross wage in Germany

11 Source: Microcensus, own calculations, wages taken from SIAB.

Secondary jobs in Europe

12

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

12,00%

14,00%

Share of employed persons having a second job

2005

2015

Source: EU LFS, own calculations.

Share of adult population with regular side jobs by

labour force status in Germany 1992 - 2014 (in per

cent)

13

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

20142013201220112010200920082007200620052004200320022001200019991998199719961995199419931992

Gesamt Erwerbstätig Nichterwerbstätig

Source: Socio-economic Panel Survey (SOEP, v31.1), all adults 17 years or older, cross sectional weighting (own calculation).

total employed not employed

Share of adult population with occasional side jobs

by labour force status 1992 – 2014 in Germany (in

per cent)

14

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

20142013201220112010200920082007200620052004200320022001200019991998199719961995199419931992

Gesamt Erwerbstätig Nichterwerbstätig

Source: Socio-economic Panel Survey (SOEP, v31.1), all adults 17 years or older, cross sectional weighting (own calculation).

total employed not employed

15

Solo Self-Employment and

some preliminary findings about platforms

Freelance employment outside agriculture in the

EU, as % of total employment

16

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

12,00%

14,00%

16,00%

18,00%

Share of Self-employed persons without employees, agricultural workers excluded

2005

2015

Source: EU LFS, own calculations.

9,4

11,010,5

1 376

2 456

2 344

1 666

1 861 1 848

0

5

10

15

20

25

30

0

500

1 000

1 500

2 000

2 500

3 000

An

teil

de

r Se

lbst

än

dig

en

an

alle

n E

rwe

rbst

äti

gen

(Se

lbst

än

dig

en

qu

ote

) in

%

An

zah

l in

1 0

00

Anteil der Selbständigen an allen Erwerbstätigen

Solo-Selbständige

Selbständige mit Beschäftigten

Development of self-employed persons without

employees, self-employed persons with employees,

and share of total self-employment on working population

(1991 - 2014)

17

Source: Eurostat zit. in

Brenke/Beznoska (2016)

Share of self-employed persons on working population

Self-employed without employees

Self-employed with employees

Num

ber

of pers

ons in 1

000

Sh

are

of se

lf-e

mp

loym

en

t o

n w

ork

ing

po

pu

latio

n in

pe

r ce

nt

Development of self-employed people

without employees

18

Strong increase since mid 1990s, esp. for qualified people, women

and part-time employed

Between 2002 and 2005: New start-ups promoted by the Federal

Employment Agency („Ich-AG“) as well as liberalisation of trade law

in 2004

Since 2012: Decrease of self-employment without employees, also

for those not promoted by the Federal Employment Agency

Share of self-employed people without employees increases with

age, esp. for those who have reached the statutory retirement age

Share of women increased slightly above average compared to self-

employed people with employees

High mobility regarding employment status, increasing transition to

dependent employment after 5 years (currently about 20%)

Source: Brenke (2013 & 2015)

Social structure of self-employed persons without

employees 2014

19

38% female

Share of part-time: 31%

12% with foreign citizenship

Age distribution: 25-39 J. 23%, 40-49 J. 28%, 50-54 J. 15%

49% vocational education, 45% tertiary education

Top 5 jobs: 1. trader 2. agricultural jobs

3. teacher 4. visual artists 5. agents, broker

Average net monthly earnings: 1.664 € Lowest 10% 616 €, highest 10% 3.158 €

Self-employed with employees ⌀ 3.129 €

Wage earners ⌀ 1.718 €

Source:

Brenke (2015: 795) Source: Brenke/Beznoska (2016)

Self-employed people without

employees with low and high income (hourly gross income adjusted for prices in 2013 )

Share on total self-employment in per cent

below 8,50 Euro

25 Euro and more

Development of insured persons at artists’ social

insurance fund (Künstlersozialkasse)

20

0

10000

20000

30000

40000

50000

60000

70000

1991 1992*)

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

 Wort bildende Musik  darstellende

Source: Künstlersozialkasse – „KSK in Zahlen” (own graph)

Total in 1992: 59 000 2014: 184 000

text visual arts music performing arts

Assets and old-age provision of self-employed

persons without employees

21

42% of self-employed persons without employees are unable to make

savings from their monthly income For comparison: 30-32% of wage earners or self-employed with employees are unable to make

savings from their monthly income

Average net assets of self-employed persons without employees in 2012

(SOEP): 220 000 € (median: 65 000 €), including assets related to business Self-employed with employees ⌀ 460 000 € (median: 175 000 €)

Wage earners ⌀ 70 000 € (median: 21 000 €)

Old-age provision 2013: 280 000 insured self-employed people ≈ 7% of all self-employed persons (Deutsche

Rentenversicherung Bund)

One third of self-employed persons without employees stated to pay contributions to the German

Federal Pension Fund, share of self-employed persons with employees is about the same

(Mikrozensus).

Only life insurance: 6%;, already receiving pensions: 10% (Mikrozensus)

One half of self-employed persons without employees do not have old-age provision (Mikrozensus)

Source: Brenke/Beznoska (2016)

Crowd working platforms

22

Market places or merchants with platform character?

Market places offer communication and interaction between service

providers und consumers

Merchants interact directly as agents, e.g. price setting and coordination

Market place Merchant

Source: Arnold et al. (2015)

Example Clickworker

23

Source: clickworker business presentation (own graph)

0

100000

200000

300000

400000

500000

600000

700000

800000

2011 2012 2013 2014 2015

Mitglieder

Founded in 2005

Crowdsourcing and microtasking for E-Commerce applications

Ooffers text editing, SEO, Web search, product management,

surveys, collections of data

In 136 countries

In 30 languages

42% of Clickworkers are

between 25 and 34 years old

54% higher education entrance

qualification

25% university degree,

3% PhD

Members

The social structure of crowd workers in Germany

24

Average age: 35,5 years

56,5% male, 43,5% female

53,3% single (unmarried)

54,6% with higher education entrance qualification

51,4% with completed vocational training or university degree

37,9% freelancing or self-employed, 27,9% employees (in other jobs)

Active as a crowd worker average since 15 months on average

About one half is willing to change to regular (dependent) employment

with similar tasks.

Crowd working net income: 50% below 200 €, average net income as

side job: 326 €, as main job: 1 504 €

Average net income of crowd workers (excluding income form crowd

work): 1 082,50 €.

Source: Leimeister, J. M., D. Durward, S. Zogaj (2016) with friendly authorization by the autors

Number of cases: 248 persons with

German citizenship,

living in Germany

Crowd working in the UK

25

Online survey in the UK (2,200 +

respondents) About 11% have actually worked with online

platforms of different character

Mostly secondary income, but main source for

one third; concerning family income, crowd

workers are mostly the main breadwinners

Diverse types of tasks

More women then men, mostly young Source: Huws/Joyce (2016)

Gig Economy in the USA

26

RAND American Life Panel

Survey 2015

Rapid growth of the Gig-

Economy, but at a low level:

2015: estimate of ca.

0.4% of workforce/0.5%

of workers via online

platforms + larger

number of offline

contractors

Source: Harris/Krueger (2016),

Katz/Krueger (2016)

A crowdworker survey by the ILO (Berg 2016)

Two complementary surveys of Amazon Mechanical Turk and

Crowdflower workers in 2015, about 1,200 / 660 responses, mostly

US and India

Mostly highly educated, main motivation: additional income, work

from home

37% of respondents see crowdwork earnings as main source of

income, in particular Indian AMT workers (49%)

Relatively low hourly pay in these forms of crowdworking (median

US AMT hourly wage: 4.65 USD)

Diverse combinations with other labor market statuses, but having a

dependent (main) job (and related social security) is widespread

(Lack of) Social security is a main issue for those doing crowdwork

as their main job

27

28

29

30

31

To summarize…

Gig Economy: Magnitude and outlook

32

Evidence on crowd working or gig economy is patchy, often

anecdotal, based on small online surveys

Traditional indicators such as the share of side jobs and self-

employment without employees drawn form representative surveys

do not indicate e.g. an increase in self-employment in the gig-

economy in Germany – far from it!

This is possibly due to problems of measurement:

Crowd working is either a second (side) job, that is not properly stated

Or crowd working platforms are used by fulltime self-employed additionally to

traditional (offline) sources in order to acquire clients

By means of available data an estimate of the status quo and future

trends in the gig economy is hardly possible, but it does not seem to

be a mass phenomenon

Additional indicators (to be included in current national surveys) are

needed in order to (dis)cover new forms of employment

Assessment

To date no reliable evidence on a (measurable) massive increase in

gig economy type of activities – impact on European labour markets

might be limited ---- but there are measurement issues.

Non-standard forms of employment, including side jobs and solo

self-employment are driven by many factors, societal, economic and

institutions --- not only digitization, but there might be more to come

in the near future.

Competition between (traditional) employers with regular workers

and platforms using formally self-employed might become an issue

– as platforms tend to reject responsiblity as an employer

Hence, a long-standing issue could become more crucial now, with

a potentially disruptive character.

33

Policy issues, both national and EU

Legal issue of defining dependent employment vs. self-employment

Social protection of solo self-employed people, i.e. crowdworkers

More universal social insurance would make definitional issues

regarding („bogus“) self-employment or „independent workers“

(Harris and Krueger) less critical

Potential (partial) opt-out if there is adequate alternative social

protection, in particular old-age pension coverage, either private or

via professional associations

Funding issues:

Contributions from crowdworkers and platforms or users/contractors

(as quasi employers) → see German artists‘ social insurance

Actual taxation of second jobs / side activities as part of total income

– with/without threshold values

International/non-European platforms → tax on transaction that have

some relation with the EU (similar to VAT)

34

References

Arnold, M., Pavel, F., Weber, K. und L. Wollny (2015). Auswirkung von Online-Plattformen auf Branchen und

Arbeitswelt. Kurzexpertise Nr. 12 für das Bundesministerium für Arbeit und Soziales. Berlin: DIW Econ.

Berg, Janine (2016). Income security in the on-demand economy: Findings and policy lessons from a survey

of crowdworkers. Conditions of Work and Employment (74), ILO.

Brenke, K. (2015). Selbständige Beschäftigung geht zurück. DIW Wochenbericht (36): 700-796.

Brenke, K. und M. Beznoska (2016). Solo-Selbständige in Deutschland – Strukturen und Erwerbsverläufe.

Kurzexpertise Nr. 13 für das Bundesministerium für Arbeit und Soziales. DIW-Econ (unveröffentlicht).

Broughton, A./Green, M./Rickard, C./Swift, S./Eichhorst, W./Tobsch, V./Magda, I./Lewandowski, P./Keister,

R./Jonaviciene, D./Ramos Martin, N. E./Valsamis, D./Tros, F.(2016): Precarious Employment in Europe.

Part 1: Patterns, Trends and Policy Strategy. Study for the EMPL Comittee. European Parliament:

Brussels

Eichhorst, Werner; Arni, Patrick; Buhlmann, Florian, Isphording, Ingo und Verena Tobsch (2015). Wandel der

Beschäftigung. Polarisierungstendenzen auf dem deutschen Arbeitsmarkt? Studie des IZA im Auftrag der

Bertelsmann Stiftung, Gütersloh: Bertelsmann Stiftung.

Eichhorst, W. und A. Spermann (2015). Sharing Economy. Chancen, Risiken und Gestaltungsoptionen für

den Arbeitsmarkt. IZA Research Report 69, Bonn: IZA.

Kalkhake, P. (2016). Plattformökonomie. In: BMAS (Hg.). Arbeiten 4.0 Werkheft 01. Digitalisierung der Arbeit,

S. 52-57.

Katz, L. F. und A. Krueger (2016). The Rise of Alternative Work Arrangements & the ‚Gig‘ Economy. 14. März

2016. (https://de.scribd.com/doc/306279776/Katz-and-Krueger-Alt-Work-Deck – zuletzt aufgerufen am

28.04.2016)

Leimeister, J. M., D. Durward und S. Zogaj (2015). Crowd Work in Deutschland – Eine empirische Studie zum

Arbeitsumfeld auf Crowdsourcing-Plattformen. Düsseldorf: Hans Böckler Stiftung (unveröffentlicht).

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Dr. Werner Eichhorst

IZA

IZA, P.O. Box 7240

53072 Bonn, Germany

Phone: +49 (0) 228 - 38 94 – 531

Fax: +49 (0) 228 - 38 94 180

E-mail: eichhorst@iza.org

http://www.iza.org

Institut für empirische Sozial- und

Wirtschaftsforschung Berlin

Anklamer Straße 38 · 10115 Berlin

www.ines-berlin.de

Dr. Verena Tobsch

Telefon: +49 30 484 921 97

Email: vtobsch@ines-berlin.de