A woman works at her computer.  (AP Photo/Elaine Thompson)
A woman works at her computer. (AP Photo/Elaine Thompson)

In May 2016, Otto Kässi, a researcher at the University of Oxford’s Oxford Internet Institute, and his co-author Vili Lehdonvirta unveiled the first-ever Online Labour Index (OLI), a real-time economic indicator that examines how informal internet-based work — the core of the emerging “gig” economy — varies over time across countries, continents and occupations.

The data from the past few years shows that the number of informal work projects worldwide — for example, coding, graphic design, data entry, internet-based financial planning or accounting advice — is growing by leaps and bounds.

For years, regulators and policy makers have complained about a lack of critical data related to the gig economy, and it has been difficult to quantify the extent to which users around the world participate in informal work online rather than in more traditional work settings.

In that context, the OLI has emerged as a respected source of international data on the gig economy, providing valuable information about informal workers, the jobs they accept and where gig employers are located. Its real-time data approach — the OLI is updated daily — and cross-platform, global data-collection tools set it apart from other employment-focused economic indicators.

The OLI does not report on the absolute number of new vacancies but rather an index number (100) that is normalized to May 2016, when the indicator was launched.

Since then, the index has mostly climbed. This month, it reached 129 points, which indicates a significant spike in online informal jobs over the period when compared to more traditional indicators.  

The OLI tracks data from the five largest English-language online-job-posting websites — Upwork, Freelancer, Guru.com, PeoplePerHour and Fiverr — which represent at least 70 percent of the international online informal job market by traffic (at least 100 sites exist globally, including specialized gig websites for Russia and Spanish markets). The OLI also gathers information on labour supply — the workers who accept jobs on the sites. Anchor

For the index to produce real-time results a computer program is activated at midnight to collect the list of vacancies and hires on the platforms. “We collect vacancy data from the big online job posting sites and classify them in different jobs,” Kässi told CIGI. “We examine what type of job it is and where the demand exists globally.” 

Breaking Down the Data

The informal work reviewed is classified into six categories: software development and technology, such as coding; professional services, such as accounting; clerical and data entry; creative and multimedia, such as animation and video production; sales and marketing support, such as ad posting and telemarketing; and writing and translation. 

The largest segment of jobs, on both the demand and supply sides, has continued to be in software development and technology, followed by creative and multimedia tasks. According to Kässi, in Canada, as of 2018, the biggest share of gig jobs sought — about 30 percent — are related to software development, followed by clerical, sales, creative, writing and professional services. 

Not surprisingly, Europe and North America produce most of the labour demand. Roughly half of all vacancies are posted from the United States, followed by the United Kingdom, Canada and Australia.India also typically has a large number of vacancies posted. 

The vast majority of workers — roughly 78 percent — come from developing countries, such as India, Pakistan, China and the Philippines. The largest supplier of workers is India, where roughly 30 percent of all gig workers are employed. 

“It is very much a north-south phenomenon,” Kässi said. “We have countries like India that have a long history of outsourced work, where the going rate for a coder is a fraction of that charged in Silicon Valley. Cost plays a significant role.”

Kässi notes that gig workers often have access to specialized software for video and photo editing and other technology so they can complete labour-intensive jobs at significant cost discounts. “These are jobs that can’t be automated and often there is a lot of work to do,” he said.

In India, some labour suppliers often act as crowdfunding intermediaries that farm out a large coding project, for example, to multiple informal workers. 

“A lot of people in India become local clearing houses for gig jobs,” Kässi said. “They have strong reputations and they know the local market and who to trust. They may be more skilled at navigating the local marketplace than someone in the US.”

The gig economy is particularly strong in India, not just because of the long history of informal work for Western companies but also partly because workers consider it an honour to get jobs on the platforms. 

“The local market may be beset with nepotism and corruption,” Kässi said. “If you get hired online from someone in the West, based on your portfolio, you can say you got your job through meritocratic means. It is a source of pride to workers in India and other emerging countries.”

Some employers find gig workers on the websites but don’t use them to complete the transaction, thus avoiding the fees they charge. These transactions can’t be monitored by the OLI and so impact the overall results. However, there are significant deterrents to conducting transactions off the platforms, for both employers and workers.

“They send them requirements over email and pay using PayPal or bitcoin,” Kässi said. “However, the employer loses the buyer protection that the platform provides. And a good worker can get a high reputation score on the platform, which is an incentive to complete the deal there.” 

The Oxford Internet Institute has a few projects in the works seeking to build on the OLI. Kässi notes that he is studying the total revenues of the industry to get a sense of the competitive standing of the big five gig job websites. In addition, Kässi and his colleagues are trying to survey and follow gig workers, globally, over time, to get a better sense of their career progression. 

“We want to know if it is a full-time job, [or] something to supplement their income,” he said. “Are the gig jobs helpful to later land a full-time job? These are things you can’t do with the platform data.” 

The Oxford Internet Institute is also in the midst of examining how gig workers obtain the skills they need for their informal jobs. 

“Some suspect that there is no correlation between a formal academic education and how much one earns in a gig job,” Kässi said. “It could be that formal education is losing its value.”

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.
  • Ronald Orol is a senior editor at The Deal and writes about hedge funds and bank and securities regulation for The Street. He is the author of the book Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World, and holds a master's degree in business and economics journalism from Boston University.