How significant is the 'gig economy' in NZ?

Some contractors experience poor conditions of employment and lack of rights and benefits

How significant is the 'gig economy' in NZ?

There is considerable interest in contracting, particularly given the perceived trend towards a ‘gig economy’ where people increasingly work on short-term contracts or freelance jobs, according to Scott Ussher, labour market statistics manager, Stats NZ.

“However, the challenge in identifying how many people work as contractors is that the distinctions between employees, self-employed contractors, and other types of self-employed people are not always clear-cut.”

Indeed, research by Stats NZ has found that nearly 144,000 New Zealanders work as self-employed contractors, which is just over 5% of all employed people.

Stats NZ relied on people’s own view of their employment status instead of applying any legal criteria. The survey asked self-employed people with no employees whether they worked as contractors in their main job.

The survey also asked employed people about their work arrangements, employment conditions, and satisfaction with their job and work-life balance during the previous 12 months.

Even though some contractors experience issues such as poor conditions of employment and lack of rights and benefits that employees enjoy (particularly those in highly dependent relationships with a single client or business) the vast majority of contractors were satisfied with their jobs and wanted to remain in self-employment.

Nine out of 10 contractors said they were satisfied or very satisfied with their jobs, similar to the figures for other self-employed people and employees. Nine out of 10 contractors also said they would prefer to continue being self-employed rather than have a paid job working for someone else.

Men were nearly twice as likely as women to be in contract employment, with 7% of employed men and 4% of employed women working as contractors.

While those identifying as contractors made up a relatively small proportion of the total New Zealand workforce, they were more common in some industries.

The industries where they made up the highest proportions of the workforce were:

  • professional, scientific, technical, administrative, and support services (14%)
  • rental, hiring, and real estate services (13%)
  • information media and telecommunications (13%)
  •  construction (12%).

Even though self-employment has traditionally been regarded as giving people more independence than waged or salaried employment, this is not always the case with contracting.

Ussher said that some contractors depend on a single business or organisation for their work.

“Anecdotally, we know that some are treated much like employees, but without the benefits and protections of an employment contract.”

While the survey did not classify contractors as independent or dependent, it did ask several questions about how much independence and autonomy contractors had in their work.

Half of those who identified as contractors said they relied on one client or business for most or all of their work.

However, a larger proportion (73%) said they were usually able to work on contracts with more than one client or business at a time. Over two-thirds (67%) said they were able to sub-contract or employ others to assist with their work.

Most contractors reported a relatively high level of autonomy in their work:

  • 77% said they had a lot of control over how their daily work was organised.
  • 79% had a lot of control over how their tasks were done.
  • 66% had a lot of influence on decisions that affected their own work.

On each of these aspects, contractors reported less control or influence than other self-employed people, but more than employees.

Contractors tended to earn a similar amount to employees but more than other self-employed people.

Both contractors and employees had median hourly earnings of $25, with contractors tending to work slightly fewer hours than employees (with averages of 34 and 37 hours, respectively).

Self-employed non-contractors tended to work fewer hours (an average of 31) and had lower hourly earnings (a median of $16 an hour).

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