The digital and increasingly globalized gig economy, shaped by platforms such as UHRS, Amazon’s MTurk, Upwork or Fiverr, has experienced a remarkable development, especially in the last decade.
Who hasn’t designed a logo for a few euros, created a website, handed in small programming tasks or ordered content creation tasks online for a flat rate?
…and possibly not given any thought to how and under what working conditions the ordered result was ultimately achieved?

On the one hand, platforms that offer digital gigs offer flexibility and independence for freelancers and companies alike.
On the other hand, the offer often entails precarious working conditions and an imbalance between contractor and freelancer.
Incidentally, the latter is also a reason why we ultimately turned our backs on gig platforms and other providers for our own projects and opened our own office with stable and fair working conditions (you can read the whole story here at Legal Tech Verzeichnis).

In this article, we want to highlight a few advantages and disadvantages that we see in the platform/gig economy and shed some light on them.

1. Price war and undercutting

A central problem in the gig economy is the constant price war.
Freelancers compete for jobs worldwide on platforms such as Upwork and Fiverr.
This often leads to undercutting prices in order to remain competitive.
In the long term, this results in a downward spiral in which high-quality work is undervalued and poorly paid.
Freelancers from countries with a lower cost of living can offer assignments at much lower prices, sometimes as little as a few cents per task, increasing the pressure on freelancers in countries with a higher cost of living.

With regard to this argument, platform providers (and users) often state that they are merely providing a platform on which supply and demand can develop in the form of a free market economy.
On the one hand, this is true.
On the other hand, many countries around the world have minimum wage regulations for a reason.
By bypassing permanent employment, these regulations are circumvented and precarious living situations of gig workers are exploited.

2. Lack of social security

Another problem is the lack of social security for freelancers, which results from the fact that freelancers are defined precisely by the fact that they do not have a permanent employer who is responsible for them under the regime of labor laws.
The gig economy is therefore without traditional safety nets such as health insurance, pension insurance, sick pay or paid vacation.
This forces freelancers into a position where they have to take care of these safeguards themselves or do without them due to a lack of sufficient financial resources or access to affordable alternatives.

3. Insecure working conditions

The nature of the gig economy leads to insecure working conditions.
Projects and jobs can come and go unpredictably, leading to financial instability.
Even if the platform goes down due to technical problems, gig workers lose their income without a replacement.
It is also usually possible for the platforms to block the accounts of gig workers without them having a realistic chance of defending themselves against this.
This uncertainty can be stressful and has a long-term impact on freelancers’ life planning, particularly with regard to long-term financial commitments such as mortgages or family planning.

On the other hand, the non-binding nature of gig work is precisely the reason why many people choose this way of working.
Flexibility and freedom of time management are preferred over traditional 9-5 jobs.

4. Dehumanization of work

One critical aspect that is often overlooked is dehumanization in the gig economy.
For both clients and gig workers, the other side is often invisible and is only symbolized, for example, by a number code on the platform.

As a result, platforms that mediate digital work assignments tend to anonymize the individual skills, creative processes and personal efforts behind each job.
Freelancers are often reduced to their service, without consideration of their professional development, well-being or career goals.
In some cases, there is no interaction at all between client and gig worker, otherwise interactions are often exclusively transactional, leaving little room for personal recognition or professional growth.
Interaction between gig workers (although groups have now formed on other platforms, such as Facebook, to exchange ideas) is also not encouraged, leading to a less communicative working environment.

At this point, it should be added that de-humanization does not only have disadvantages.
If the person is not known or can “hide” behind the platform, it does not matter, for example, what religion, skin color, place of residence, sexual orientation or disability the person has.
For example, it doesn’t matter what religion, skin color, place of residence, sexual orientation or disability the person has as long as the gig is fulfilled.
Gig work therefore also offers an opportunity to people who, for a variety of reasons, have more difficult conditions in the traditional labor market.

Conclusion

While the gig economy undoubtedly offers opportunities for flexibility and independence, the challenges, particularly in the area of digital services, should not be underestimated.
Price wars, a lack of social security, insecure working conditions and the dehumanization of work are significant problems that need to be addressed.
Solutions could include better regulation of platforms, the introduction of minimum standards for working conditions and pay, and the promotion of communities and networks that recognize and encourage the value of individual work and creative expression.
However, as gig platforms are used all over the world, we believe that such regulation is almost impossible, as it would inevitably be limited to individual locations.

In our view, this does not mean that gig platforms are generally bad.
Just as an informed customer might take a look at the list of ingredients for some products in the supermarket and then decide not to buy them, we believe that when booking gigs on platforms, a critical look should be taken at how the platform works and the conditions under which the desired result is ultimately achieved.
The following presentation can only raise a few aspects of the topic.

For more information, I highly recommend the fascinating book “Ghost Work” by Gray/Suri.

By the way, Dr. Franziska Lietz will be speaking on 14.5.
at the legal tech trade fair “Legal Revolution” with her presentation “A digital world – How can we shape it in a responsible way?”.
You can listen to the lecture on the first day of the fair from 13.30 – 13.55 on the Mainstage.