Dual Labour Market Theory and the Casualisation of Work in the Age of Micro-Jobs

Dual Labour Market Theory, developed by economists such as Doeringer and Piore in the 1970s, distinguishes between two segments of the labour market. The primary segment (or "core") is characterised by secure wages, opportunities for career development, and institutional protections, and is therefore considered less risky in terms of employment security. In contrast, the secondary segment (or the "periphery") is characterised by instability, limited opportunities for upward mobility, and more precarious working conditions. The creation of micro-job platforms serves as a contemporary example of this segmentation of the labour force.

When individuals search online for ways to earn money with micro jobs, they are typically entering what economic theory would classify as the secondary segment of the labour market.

Micro-jobs are highly fragmented, short-term tasks that include activities such as tagging images, completing surveys, performing data entry, basic content moderation, or simple design assignments. Individuals working in the micro-job sector are typically paid on a piece-rate basis. There are no long-term contracts, no guarantees of working hours, and benefits are limited or absent. These micro-job platforms represent a formalised version of what has historically been informal and casual work. Prior to the emergence of these platforms, organisations lacked a clear mechanism to standardise or scale the performance of such tasks globally.

Secondary Labour Markets in Digital Form

Dual labour market theory views the second segment as being composed of precarious employment relationships and therefore offering workers little bargaining power. This situation is reflected in the structure of micro-task platforms, where workers are typically classified as independent contractors, paid based on performance rather than time worked or length of employment, able to enter easily but finding it difficult to move up.

Data from the International Labour Organization suggests that there are currently tens of millions of micro-task workers globally, with a large percentage working in lower-middle-income countries. Surveys of micro-task workers show significant variation in earnings, with many falling below local minimum wage thresholds when unpaid time spent searching for or waiting for assignments is taken into account.

The segmentation of labour markets seen in micro-task platforms reflects structural aspects of modern businesses rather than simply representing temporary anomalies in the current economic climate. In this context, demand for flexible work from companies continues to increase, while the supply of labour from workers is delivered in small increments. Through their mediation functions, micro-task platforms match the fragmented demand for labour with the fragmented supply of labour.

Flexibility Versus Risk Shifting

Micro-jobs are appealing because of their flexibility, since people can do them whenever and wherever they want. In particular, students, caregivers, and people in areas with few formal job opportunities benefit from this access to work. The elasticity of the supply of labour is very high at low wage levels because of the low cost of entry.

However, with flexibility comes the risk of transferring demand fluctuations from the employer to the worker. In traditional employment, employers absorb demand fluctuations through fixed wage obligations and contracts. Workers in micro-job markets face the majority of demand fluctuation risks, since they lose income immediately when no work is available. Unlike traditional employment, there is no unemployment insurance embedded in the micro-job market.

Understanding casualisation is fundamentally connected to the reallocation of risk between the employer and the worker. Employers treat fixed labour costs as variable labour costs, while workers take on income stability risks. Thus, the firm captures higher efficiency, while the worker assumes greater socioeconomic vulnerability.

Fragmentation of Traditional Employment

Due to the emergence of new technologies, complex projects can now be separated into smaller parts. For example, a large dataset can be labelled in small batches by many workers located in different parts of the world. Processes related to software development, design, and marketing can also be separated into smaller components.

As a result of this separation of labour, companies are relying less on internal labour markets by outsourcing granular tasks to large global labour pools rather than hiring permanent employees. This may create difficulties for workers, as employment opportunities become fragmented and it may be difficult for workers to identify a clear career path when there is no longer a traditional career ladder. In addition, if individuals are performing repetitive tasks of low complexity, skill development may be limited.

We can observe examples of this in the real world. Large-scale artificial intelligence systems use a distributed micro-task labour force for data annotation tasks such as data labelling and content review. The individual workers performing these tasks often have no formal employment status or long-term employment security.

Economic Forces Driving Casualisation

Micro-jobs are widening due to several different types of driving forces. Specifically:

• Increasingly low transaction costs for matching people to jobs and paying them for their work
• Globalisation and growth of international Internet access enabling workers in virtually every country to provide labour
• Increasing number of businesses wanting to maintain some flexibility in the costs associated with hiring labour
• Lack of clear regulatory systems for the classification of digital work
• Wage arbitrage based on large income disparities between countries

As the amount of digital infrastructure increases, ecommerce platforms will be able to synchronise and manage millions of small transactions economically (by managing with less cost) than was possible. What was once uneconomically expensive to arrange is becoming economically feasible.

Institutionalisation of Precarity

Micro-task platforms provide structure to informal work markets. Ratings, escrow payment systems, and algorithms help lessen opportunism and allow for greater volume to be accomplished. However, institutionalisation does not remove segmentation; it systematically fragments those segments.

Dual Labour Market Theory provides context for why micro-jobs continue to exist, with low wages or instability. Micro-jobs have structural value in modern capitalism as they allow for flexible labour to fill the void created by growing primary employment demands.

Flexibility vs. security is still an open question. Micro-jobs provide access points to other countries’ labour markets, while at the same time supporting the development of a second-tier employment characterised by insecurity, low levels of protection, and fragmented career paths.