Summary: A gig economy refers to a free market system where people are substantially engaged in freelance and side-hustle work.
In a gig economy, workers can help businesses save money on overhead costs. Here, we cover the benefits and likely future of a gig economy.
Gig Economy
The gig economy (GE) is a sector of employment in which participants provide on-demand services for temporary or fluctuating work. Rather than full-time positions with structured hours and guaranteed earnings, GE workers sign up to offer their labor only when required. The sector typically features freelancers and contract workers who are compensated for each task or each hour worked. Generally, there is no guarantee of how much further work will be offered once the contract is completed. It provides maximum flexibility for both employers and workers but a minimum level of security and protection.
Typical GE jobs include delivery and transport, copywriting and design, coding, tutoring, and other personal services in the beauty and fitness sectors. Hosts for short-term rentals, virtual assistants, and pet care providers may also be part of the GE, as might online tutors or academic lecturers.
Anyone who earns money by performing tasks like a musician is paid for each performance they give is a member of the GE.
Benefits of the Gig Economy
While the GE undoubtedly has its challenges and disadvantages, it can also bring a great number of benefits for both workers and employers. These include:
Workers
- GE workers have the flexibility to set their own schedules, work the hours they choose, and take the time off they wish. They can decide how much or how little of their time they wish to devote to earning.
- Opportunities to earn extra cash outside of regular employment. Unless prohibited by their employment contracts, employees with standard jobs can access the GE to boost their earnings through ‘side hustles’ and additional work.
- Control over work location. Many GE positions are remote or can be worked in multiple locations. This allows online workers to earn money wherever they are and those offering physical services to move to new locations where the earning opportunities are higher.
Employers
- The GE allows businesses to easily increase and decrease their workforce in line with demand. It removes situations in which an office full of staff must be paid even when there is minimal work and allows quick recruitment to handle surges when they occur.
- Remote and migratory work allows businesses to employ from a much wider geographical base. This means getting access to the best people for the job and not just the best people who live within a reasonable commutable distance.
- GE workers, in general, are not entitled to paid time off for vacations, sickness, or other personal days. They also do not demand benefits such as health plans or social security payments, which can make hiring GE workers significantly less expensive.
Challenges and Criticisms of the Gig Economy
Lack of protections for workers is a key ingredient of the GE. As a result, the sector has been subject to significant criticism for eroding workers’ rights and, in some cases, creating exploitative environments.
Without job security and other benefits that are afforded to permanent employees, the GE can be incredibly fragile and leave workers exposed to personal risk. It can also create challenges in maintaining a healthy work-life balance, establishing regular routines, and building long-term career paths. GE roles can be competitive and are often open to applicants from all over the world. While the most successful GE workers can generate high earnings, those at the other end of the scale are often forced to accept low levels of pay.
Another challenge of the GE is the difficulty in establishing proper regulations. This is partly due to the complexity and variety of the industry, partly due to its tendency to operate across international borders, and partly due to its sudden rise in popularity. While legal frameworks in many countries are slowly adapting to the needs of the GE, regulations, and protections in this area are far behind those in place for more permanent employment.
Future of the Gig Economy
Recent years have seen many case studies into the GE, often focusing on data from platforms such as Freelancer and Upwork which connect workers and employers. These, in conjunction with ongoing market analysis, have noted several trends and developments expected to shape the near future of the GE.
These include:
- An increase in the diversity and globalization of remote work.
- The growing impact of artificial intelligence (AI) and other new technologies.
- The need for individuals to educate and train themselves to meet the demand for specific skills.
- An appetite to develop regulation of the GE and protections for its workers.
- A focus on the mental health effects of the GE and how to ensure they are handling responsibility.
- A rethinking of the traditional structures of employment and the different possibilities of task-based work, subscription models, and hybrid arrangements.
Although it has been around in some forms for centuries, if not longer, the recent boom in the GE has put it center stage in much economic, sociological, legal, and academic thinking. The decade ahead is likely to see it evolve and grow in all the above ways and more.
FAQ
The GE offers an alternative employment option for both businesses and workers. While traditional permanent roles continue to be dominant in most industries, the opportunities presented by the GE are leading many companies and individuals to reassess their approach to the world of work. This is inevitably causing some movement away from traditional models while also reaffirming the benefits and security that they offer.
Legal frameworks regarding GE are evolving worldwide and across every industry. The key considerations revolve around how to maintain flexibility, which is a key attraction for both employers and workers, while ensuring workers are not exploited or unfairly compensated due to unchecked market forces.
Authors:
Marcel is an experienced journalist and Public Relations expert with an honours degree in Journalism and bylines with a range of major brands.