How the COVID-19 Pandemic Impacted the Gig Economy Differently in the United States and Europe

In ways big and small, we have all felt the impacts of COVID-19 on the global economy. We have lost loved ones, we have lost jobs, we’ve seen reduced hours or extended furloughs, we’ve put off investments and larger purchases. These tremendous personal perils ripple across economies while we fight to retain as much productivity and financial activity as possible. 

The relentless spread of the pandemic across the world caused governments to impose lockdowns in an effort to slow the spread and give their health care systems a fighting chance to handle the volume of infections. This, of course, caused economies to be suspended and / or go into free fall. 

The entire global workforce was locked away in their homes. While many people were fortunate enough to be able to work remotely, many others felt the full brunt of the economic slowdown.

In France, for instance, the national economy shrunk by 5.8 percent in the first quarter, and a further 13.8 percent in the following quarter. Perhaps the hardest hit country in all of Europe at the outset of the pandemic, Italy, has seen its tourism industry hollowed out with expenditure down 99 percent. At the same time, retail and automotive sales have sagged 29 percent and 98 percent, respectively. 

Meanwhile, the United States saw record decreases in economic output with a 9.1 percent drop in quarterly GDP in the second quarter. Before this, quarterly GDP had never dropped by more than three percent since this record keeping began in the 1940s. 

The economic catastrophe precipitated a huge spike in unemployment. At the start of 2020 in the U.S., unemployment was as low as 3.6 percent. Once the pandemic hit, though, unemployment spiked with a peak at 14.7 percent — or around 20.5 million jobs lost. Plus, as more businesses stayed closed for longer, workers who had been furloughed started to become permanently unemployed. 

While some protections were introduced by the government, including foreclosure moratoriums and enhanced unemployment benefits, many Americans needed to find new forms of income. With many delivery driver and grocery store jobs deemed essential, workers turned to the gig economy in droves. 

According to data from gig economy experts Future of Work Institute and the U.S. Bureau of Labor Statistics, there was a notable correlation between the rising unemployment rate and the number of people applying for gig work. The data also seems to suggest that the highest performing gig economy verticals were in online survey work, freelancing and gigs that could be implemented while adhering to social distancing requirements. 

Other gigs that required closer proximity to customers, including household work, babysitters and rideshare work, saw demand remain stable or decrease slightly. 

In Europe, workers faced similarly bleak prospects in the labor market. In the United Kingdom, around 730,000 jobs are estimated to have been lost since March. In Spain, that figure stands at over one million. Even in the European Union’s largest economy, Germany, 3.7 million workers remain on furlough support programs, which provide around 70% of a worker’s normal salary if they are faced with reduced or no work hours. 

It is perhaps because of the social support programs like those found in Germany and the rest of Europe (particularly in the Nordics), that workers haven’t turned to the gig economy in quite the same way as in the U.S. 

While the AppJobs data does show increased applications in gig work, it is not as tightly correlated to the unemployment rate as the American workforce. 

The one economy that did see a strong correlation between the two figures was Spain. With this outlier removed from the data set, though, the rest of Europe saw minimal or no correlation. 

A through line between labor forces on both sides of the Atlantic, though, was the surge of laborers turning to gig economy roles that allowed them to work from home or in a socially distanced manner. Much like their American counterparts, Europeans turning to the gig economy sought out roles primarily in online surveys, freelance work and delivery services. Again, gigs that required closer interaction with customers like household work, per sitting and babysitting were markedly less popular. 

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.