IN LOCKDOWN: THE IMPACT ON THE GIG ECONOMY IN CANADA
In Lockdown
devonvipond
It’s well known that constraints breed creativity. Make those constraints financial – a weakened economy, looming job losses, underemployment – and people turn that creativity into income. A global pandemic and our current lockdown poses the most unique constraint to financial viability yet. And for the 1.7 million Canadians who participate in the gig economy, they are hustling more than ever.
As COVID-19 ravages not only the health but the livelihood of the nation, we can learn from history to predict Canadians’ response. Here, we see a rise in joblessness tied to a rise in self-employment, and the gig economy. We saw new business emerge in the ‘90s during weaker labour markets. When paid workers decreased by nearly half a million by mid-2009, more than 100,000 self-employed workers emerged. Now, estimates suggest one in three are managing their own side-business. And with a turbulent job market continuing to see tremors, Canadians are looking to diversify income streams.
But will Canadians weather an economic storm unchanged? COVID-19 has already shifted some of the country’s top side gigs, potentially permanently. Below, Research & Insight Director Devon Vipond explores some of the most lucrative businesses and platforms that underpin the gig economy, and their current and expected changes.
Rideshare Drivers: Uber
As of September, some 90k Canadians drove for Uber. Now, during lockdown, drivers face fewer fares while consumers are asked to limit nonessential travel. Uber itself has cut pool services to reduce exposure, while encouraging essential travel only. For those fares that are available, some drivers may face a decision between starvation or sickness. Income drops in Toronto have been anywhere from 80 to 90 percent – $150 a day – according to Jamal Said, the president of the Taxi Association of Toronto.
The onus is on drivers accepting fares to reduce the spread of the disease through cleaning and protective measures.
I put a clear plastic separating passenger in the back seat from me the driver in my car while driving uber https://t.co/cfrX6hS9gn
The company has reacted by offering 14 days of paid sick leave for drivers affected by COVID, and for the wider community, committing 10 million rides and food deliveries to healthcare workers, seniors, and people in need, free of charge.
While drivers may have seen reduced income from driving passengers, Uber Eats delivery is a means to diversify income. Uber Eats waived delivery fees and now offers contactless dropoff options. This may see drivers shifting to delivery – not just for Uber Eats, but for the wide range of retailers now offering delivery services – but that space is becoming crowded, too.
Vacation Property Managers: Airbnb
Home owners renting out portions or the entirety of their homes represent serious business in Canada. By April 2017, Airbnb had around 70k hosts managing more than 100k listings. That represents half a billion in revenue. In light of this, the company is facing ongoing criticism for restricting viable housing options – particularly in city centres – to tourists. With limited housing options there, this may be playing a role in inflating rents in an already overheated market.
Some of downtown Toronto’s most notorious Airbnb building hubs have become ghost hotels. They sit empty, with some hosts reconfiguring short-term rentals to longer-term listings to drum up interest. Others may be contemplating selling.
Some of downtown Toronto’s most notorious Airbnb building hubs have become ghost hotels. They sit empty, with some hosts reconfiguring short-term rentals to longer-term listings to drum up interest. Others may be contemplating selling.
Their model is toast. A lot of AirBNB sites may go back on the long term rental market or sale. The travel isn’t coming back soon. You may see a jump in rental vacancies & a drop in prices in some of the most expensive markets. Hope so. My son is apt hunting in TO. Good tenant.
While financial institutions are now accepting deferred payments for mortgages, we could see Airbnb hosts riding out the storm, but for those who shift to longer-term tenancy models, hotter markets like Toronto may begin to see a correction in rental markets.
Online Resellers: eBay
With physical stores closing, people are shopping differently. Data suggests global consumers are already delaying purchases and struggling with buying essentials. Meanwhile, consumers may be tempted to clear out storage and closets for extra cash.
Resellers may be stunted by limited inventory or low cash flow. For those who are, some people may turn to collections in their homes, trading off things like ‘Magic: The Gathering’ cards, sneakers, and other collectibles. With the decreased value of the US dollar in particular, Canadian resellers can effectively price drop inventory to spur further demand.
Toronto-based sneaker reseller Netmagnetism shared on his blog his point of view: “Cash flow has always been the biggest factor for any successful business and it’s an even bigger factor today in times like these where everyone is looking to hold cash and not sneakers. If all your cash is tied up in deadweight inventory, you can’t take advantage of price drops without selling your own inventory.”
Consumers buy differently in weaker economies. According to the subreddit /flippers, the last recession saw a boom in nostalgia products like puzzles. During lockdown, we’re now seeing a rise in interest related to not only online entertainment but offline goods like paint brushes and yoga mats to support new hobbies.
Platforms like eBay are adapting their policies to protect their sellers during the crisis, allowing deferred payments from resellers, and pausing adjustments on seller rankings. They’re also taking a stance against profiteers who are inflating costs for things like hand sanitizer, face masks and toilet paper.
As we look to the future, sellers can use social feeds to drum up interest and potentially bypass fees for platforms like eBay and Etsy altogether. Shopify extensions on Instagram allow people to click on items and see prices, connecting to their storefronts. TikTok shop now buttons can drive to microsites. But with some users like @funkyythrifts drumming up bids without any seller platform whatsoever, resellers may move away from the traditional model altogether.
We may begin see those who may have gone full-time with their online stores taking a more balanced approach to their careers. They’ll keep this side gig on the side, for example, and abandon plans to become full-time resellers.
The Future of The Gig Economy
Each industry has been impacted differently by the crisis, but there are a few notable implications for the future for giggers, born from the first few weeks of lockdown.
With workers forced to be at home and isolated, self-employment may be the only way to bring in income.
How can brands help?
Anxiety and tension is high and people need support both financially and emotionally, in equal measure. Consider Molson’s Virtual Happy Hour initiative. If people come together for a Virtual Happy Hour, they can get a $25 gift certificate to support a local restaurant. This support’s people’s social needs AND local businesses. Consider how your brand can do something similar at a more personal level.
2. A push for self-employment rights
COVID-19 has thrown into light how vulnerable gig workers are. They’ve become a new classification of employees that to date, have not been entitled to company benefits or government assistance. Industries may be expected to work harder to protect them; rejigging benefits and insurance schemes, for example.
While side hustlers will have to continue to be creative to supplement income streams, many are now looking to the Canada Emergency Response Benefit that provides income assistance for everyone – including the self-employed – who have lost income due to the virus.
How can brands help?
Shopify is shouting out merchants to support them on owned feeds. FreshBooks and Mars Discovery District have compiled resource lists for freelancers and small businesses and startups, respectively. Through these educational and promotional acts, they’re finding ways to reduce uncertainty for vulnerable workers.
Brands can consider how their business can educate self-employed individuals and communities with their own resources, skills or services. Consider what constraints workers now have: limited access to office supplies, machines and shipping, reduced income for advice, limited exposure – and find your value proposition.
3. Upskilling for Self-Employment
As people stay indoors, they’re more active on social media. Facebook reported a 50% increase in messaging app use, Zoom has been a top video conference app download, and video chat app Houseparty became a nearly overnight success, ranking in 2m downloads in one week, compared to 130k the previous month.
As people congregate on social we’re seeing businesses offer tutorials – dance classes, yoga sessions, makeup how-tos – for free to support audiences. Canadian chefs and foodies alike have bound together to create an open source cookbook. Looking online more broadly, Kevin Wu, a Toronto-based educational consultant, is giving away 100,000 hours of free tutoring sessions to support parents and school-aged children in lockdown. People get one free lesson before fees begin.
With this new relationship communities are forming with local brands and personalities, we may start to see a new form of influencer emerge – one based on proximity, interest, and a shared isolation experience.
In many instances, what once cost a premium is now effectively free. This begs the question: Will we start to see more freemium service models from small businesses and the self-employed? This could accelerate the direct to consumer business model we see enabled by Patreon – with people who pay a fee unlocking exclusive access to content and perks.
How can brands help?
New entrants into the self-employed world – particularly skills-based workers – will need to balance more than ever the need to promote and also make a profit. The Accelerator Centre is offering free mentorship digitally for entrepreneurs, for example. Consider how your brand can support through marketing, platform access or financial knowledge.
