“No, I am not a superman. I am just an ordinary human. Hang on a second. You did not mean Nietzsche’s Übermensch, did you? (smile) No, I am not a Uber driver.”

This would be the 2nd time of being recognized as an Uber driver in Waterloo. Perhaps I should not wait around for my friend in front my black car while wearing a dark coloured business suit on a Sunday morning.

For those who have read Nietzsche’s Thus Spoke Zarathustra, you would know what I am talking about here. The Übermensch means superman in German, and its pronunciation should be close to ‘u-ber-man’.

Anyway I am not writing this article to promote Uber at all but merely using Uber to briefly explain the ‘gig economy’ ,aka the ‘collaborative economy’ or the ‘on-demand economy’. In the gig economy, high-tech companies act as brokers between contractors and customers using online platforms to facilitate a pure, market exchange.

Independent contractors utilise their skills or assets to derive income by completing tasks or “gigs” during a defined period. An indication of the rapid growth and power of these online platforms is evident in companies such as Airbnb (accommodation hosting site), Uber (transportation network), Divvy (parking space finder), or Airtasker in Australia (https://www.airtasker.com/) These are the major players who are populating the ‘gigosphere’.

About 6 months ago I had a chat with a friend of mine who returned from the United States. He was not keen to look for a permanent full-time position because his preference is working as a ‘freelancer’ (aka a ‘contractor’ as they are very inter-changeable). Perhaps after 1.5 years of travelling around the world may have inoculated his cognitive function to realise how expensive and difficult to buy a property in Sydney now days. Nevertheless I respected his decision and wished him luck in his endeavour. As you probably expect, he became an Uber driver shortly after our conversation.

I met him again last week and he was crying about ‘unable to get a home loan to buy an apartment’. In the eyes of a lender (i.e. bank), traditional employer-employee relationship is always preferred as they are less risky. In other words, his occupation, Uber driver is recognized as high risk because there is no guarantee on constant income stream. Even though he has a substantial amount of cash holding for a deposit as well as the proven track record of his income for the past 4 months (and I was very surprised with the $$$ figures and I thought about changing my profession for a while), several banks have rejected his loan application on the ground that ‘unstable employment’.

The ‘gig economy’ has already started disrupting traditional employer-employee relationships. Many Australian businesses continue to look for ways to ‘outsource’ to cut costs. For example outsourcing accounts payable to Malaysia, payroll to Vietnam, accounts receivable to Philippines. A friend of mine who completed his MBA together with me in 2010, he is still hopping jobs from one law firm to another because he just cannot get a permanent full-time role as an in-house legal counsel. Why? Many businesses prefer not to have an expensive and under-utilised lawyer internally.

It is only natural to expect that the number of permanent full-time employees will continue to decline due to the result of the ‘gig economy’ and BPO. The duration of employment does not necessarily represent the stability of employment. If you are an employer, wouldn’t you prefer to hire someone who is younger (hence cheaper) and equipped with the latest technology and skills, rather than keep someone who is older (hence expensive) and equipped with the out-dated technology and skills? Old ‘pervicacious’ dogs with antiquated tricks would be the first ones to be eliminated.

Perhaps the banks should consider adjusting the risk assessment to align with the ‘gig economy’ because the equation of ‘contractor = unstable income stream’ should not be the ultimatum of the lending criteria any more.