Rise in gig work during a recession unlikely with hot labour market, say economists
CBC
Economists say the expected economic slowdown in 2023 may not result in higher levels of gig work, unlike past recessions when levels of contract work and self-employment spiked.
They say the tight labour market, combined with a changing workforce and stubborn inflation, will make a possible recession this year different from those that preceded it.
"This is a confluence of factors we've never seen before," said economist Armine Yalnizyan.
Though gig work conjures thoughts of app-based work such as driving for Uber or finding clients through Fiverr, it has been around much longer. Taken more broadly, it includes contract, part-time and piecemeal work, or what Yalnizyan calls "just-in-time" labour.
And that kind of work tends to spike in times of recession, said Yalnizyan.
That spike happens for two broad reasons, said Sheila Block, senior economist with the Canadian Centre for Policy Alternatives. One is that recessions are normally characterized by widespread job loss, which means more unemployed people looking for work wherever they can find it. The second is that during a recession, employers are usually looking to cut costs and are more likely to hire contract or part-time labour instead of offering full-time, permanent positions.
According to Statistics Canada, the share of gig workers among all workers rose from 5.5 per cent in 2005 to 8.2 per cent in 2016. There were two sharp increases during that period, one corresponding with the Great Recession of 2008-09.
Statistics Canada data also shows that self-employment rose by 3.9 per cent in Canada between October 2008 and October 2009 — an increase of more than 100,000 self-employed people while the number of employed workers decreased by almost half a million.
Of course, 2023's downturn would be the first major recession where app-based work such as driving for ride-hailing apps is even a widely available option, said Yalnizayn.
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In fact, the widely predicted 2023 downturn will be different from past major recessions in several significant ways.
Even as the economy shows signs of slowing, the labour market is still tight, said Yalnizyan. The unemployment rate remains low, at five per cent in December, and the market gained another outsized 104,000 jobs last month.
Employers in many industries are struggling to hire the workers they need. That means workers have more options for full-time work available to them.
Those two factors that normally lead to an increase in gig work during a recession are not present this time compared with previous recessions, said Block.
