Gig Economy: The New Face Of Work In The Emerging Digital World
The global financial crisis of the late 2000s opened up various opportunities. The economic meltdown changed the way the hired relate to hirers. With the popularization of the gig economy, thinkers see the crisis as a sort of blessing in disguise.
The once little-known gig economy is leading the way out of the job market quagmire. Thanks to the pressure of the recession. Employers have learned how to get their jobs done through a new category of workers.
What Is Gig Economy?
It is a free job market system in which flexible and temporary jobs are replacing full-time jobs. Companies and organizations prefer hiring independent contractors and freelancers to perform certain duties. Freelancers don’t hold down a lifetime career. They prefer to change positions and work on a contract basis.
The word “gig” means “a job for a specified period.” You can trace this to a musician’s performance at different places at different times. It has now come to represent all sorts of temporary jobs. The workforce in the gig economy includes independent contractors, project-based workers, and freelancers.
There are three basic elements that aid the functionality of the gig economy. The first is the independent worker who is not willing to take up a full-time job. He or she prefers to get paid for a task or a project known as a gig. The second is the consumer who needs the service but doesn’t want or isn’t able to hire a full-time worker. The last element is the company that provides a platform for both the seller and the buyer to meet. Airbnb, Etsy, Fiverr, Lyft, Upwork, and Uber are examples of such companies.
The list of jobs that categorize as gigs is endless.
Virtual assistants: Those that render administrative services to a business or an individual. They do this from home or an office.
Subcontractors: A subcontractor takes up part of a project from the main contractor. A contractor may go for the gig economy to meet the deadline. He may also outsource a percentage of the job to a vendor out of technical considerations.
Voice actor/talent: These help in the production of audio or voice-over videos. Employers hire them as their brand voice for as long as they’re working together.
Chauffeur: These people work with companies through an app to pick up driving jobs. They work for clients who don’t want to hire a full-time driver. Instead of going to a bus stop or train station, or driving themselves, some prefer them. Lyft and Uber are examples of companies that create platforms for these types of hirings.
Copywriters: Many companies across all industries are hiring freelance writers per gig. They prefer this to employing a full-time in-house writer. Freelancer, Upwork, and Fiverr are few of the platforms that connect employers with freelancers.
There are other works requiring high skill, licensing, or both that the gig economy is taking over. These include:
- Software development
- Various mechanical, nautical, and aeronautic engineering
- Tax consultancy and financial advisory services
- Attorneys and paralegals
- College and university teachers
- Performing musicians
Facts and Figures about Gig Economy
The following statistics will show how gig economy is shaping the world in recent years. They are products of research and surveys by various groups and publications.
Some 86 percent of professionals are freelancers by choice. —The 2016 Field Nation Freelancer Study
In 2017, 57.3 million people of the U.S. workforce representing some 35 percent worked as freelancers. —Freelancing In America, 2017 survey by UpWork Freelancers Union
About 20.9 percent of full-time independents earn more than $100,000. —MBO Partners State of Independence In America 2018 Survey
By 2027, about 58 percent will have had some experience as independent contractors. —MBO Partners Looking Forward: What Will the Independent Workforce Look Like In 2027?
By the year 2020, almost 7.6 million Americans will be working in the on-demand economy on a regular basis. —Intuit Investor Forecast
Only 30 percent of U.S. employees see themselves as engaged at work. —State of the American Workforce Report, Gallup
About 51 percent of U.S. workers are seeking a new job or are on the search for openings. —American Workplace Changing at a Dizzying Pace, Gallup
About 32 percent of U.S. workers changed jobs in two years. —NPR/Marist “Picture of Work” poll
Some 94 percent of workers will take non-traditional forms of work. —Gig Responsibly: The Rise of NextGen Work, Manpower Group
About 69 percent of the millennials wish they had chosen a job that allows a better work-life balance. 44 percent wish they had chosen a job more enjoyable to them. —2018 Better Money Habits Millennial Report, Bank of America
It takes about 23 months for the average freelancer to reach their financial goals. —State of the Freelance Nation 2018 Survey, WiseBrand
Why Gig Economy?
In their bid to cut down costs, employers are looking for temporary workers. During economic crises, most companies that need workers can’t engage full-time workers. They also have a lot of projects. The way out is to outsource those projects to people who are willing to work with them on a part-time basis.
More freedom for employees
There is a need for people to keep moving and take up more jobs to support their lifestyles. A full-time job boxes them into a corner. Employees who want to be independent have the opportunity through the gig economy. This is because it opens them up to limitless opportunities.
It’s hard for most full time employees to learn skills outside of their area of specialization. This is because of the commitment to their employers. But, gig economy allows people to diversify their talents and skills into other relevant niches or industries.
Digitalization has made it possible for people to work remotely. In fact, employers and employees do not need to meet in person to conduct interviews. Online job descriptions are enough for the willing and qualified freelancers. It is also possible to make and accept offers online.
While commenting on a survey conducted by her group, Judith Wallenstein, senior partner and managing director of BCG Henderson in Europe, said: “Digital freelancing has emerged as a significant source of primary and secondary employment in all major industries, giving all companies access to new freelancers.”
Many people in the U.S are running their own home-based business, which is, in a way, a gig economy. The number of people working from home is increasing. Mobility gives the employer an opportunity to select the best among many gig workers.
It also gives the gig workers the chance to select from gigs. Experts believe that this number will rise. The gig economy provides a window to incorporate such workers. Proximity is no longer a big deal when considering applicants for certain positions. Employers can choose any applicants regardless of where they live.
Benefits for Employers
Gig economy helps employers save their resources. They do not have to spend on an office space for everyone that works with them. They are free from complex labor laws that compel employers to incur extra costs on their staff. They don’t undertake benefits, health insurance, severance packages, and other allowances.
The hiring freeze is another benefit. This is an opportunity to suspend unnecessary hiring to reduce costs. This is also desirable during production downtime to avoid overcapacity. Employers don’t need to lay off any worker because of redundancy. Gig workers will take up the available jobs. And when there is termination or natural attrition, there is no urgent need to fill up vacancies.
Gig economy helps employers get rid of coastal workers. A coaster worker is an employee that coasts along with others through their duties. They have low ambition and productivity. They fulfill the least assignments and love to do the easiest task. They may miss deadlines and may be unreliable. Coasters no longer have a space in organizations as gig workers get paid for work completed. Their performance puts them in positions to get more jobs.
Benefits for Gig Workers
The flexibility of schedule is one of the main reasons for this current drive toward gig work. According to a report, freelancers who choose gig works don’t lack better offers. It is because they want greater autonomy and flexibility. The jobs on gig platforms provide them with this opportunity. The publication Gig Economy: How Free Agents Are Redefining Works states that 61 percent of Gen Z professionals in APAC countries say that job seekers are searching for flexible jobs. They also want these jobs to be contract-based.
The 9 to 5 system is taking a great toll on both family and private lives of workers. But, the gig work gives them the independence of working at their pace. Gig workers are free from managerial supervisions and corporate dos and don’ts. They reserve the right to accept or decline any job. They have the freedom of choosing assignments that help them to make the most of their talents. They’re also able to express their real interests. They don’t submit the patent of a product or service to an employer. They take exclusive rights and responsibility for their achievements.
Gig workers have the opportunity of combining their works with other activities. Since they’re not tied down to a job, it’s possible for them to expand their horizon. They are able to explore different fields of activities and maximize their potential. Wallenstein, quoted earlier also makes the same observation in the report. She ranks high “the elements of self-directed work.” She highlights the ability to make a choice and the flexibility. She also praises “the ability to combine it with other activities and commitments.”
Challenges of Gig Economy and the Way Out
Unfortunately, the gig economy is, for now, an undefined category of work under the laws of many lands. In fact, U.S. policies have not given adequate recognition to it and it’s not regulated like other jobs. This poses serious challenges for counties and gig workers in a county.
For instance, some people are yet to see them as legitimate workers. They are skeptical about dealing with them. There is distrust associated with sharing vital information with an unknown virtual worker. Some feel concerned about identity theft and intellectual properties.
For one thing, the gig economy is changing the way Americans reckon with work. Gone are the days when workers were loyal to an employer and will do everything to please them. These days, gig workers perform only the task at hand to the best of their ability. They reserve their resources and energy for the next.
Most of the policies are outdated. They have been in use since the early 20th century. Americans formulated them when work culture was a far cry from what is obtainable now. The employees expected that they were to remain with one employer until retirement. The company was expected to pay all benefits since no one anticipated this change of jobs.
Counties are now struggling to cope with the new arrangements. Counties have to recognize that gig workers don’t have such things as health insurance. There’s no welfare package and severance benefits from any employer. They get their gig, get the job done, and it all ends there.
Counties also lose because of the misclassification of workers. Companies maximize their profits when they classify their workers as independent contractors. Using technicalities reduces their liabilities when they issue 1099 to a gig worker. This worker may actually classify as W2 due to the regularity of engagement. But, the gig economy allows the business an opportunity to use the situation to its advantage. So, they gain some advantage either in taxation or in employees’ benefits.
Counties need to recognize, record, and measure gig work. Until then, there will continue to be losses and gaps here and there. For instance, many gig workers don’t see their gig work as legitimate businesses. So, they don’t know the importance of getting a license or paying their taxes. Counties are losing a huge amount of revenue to this. By gathering inputs from gig workers, they can overcome this. It is possible to create modalities for assisting gig workers to have proper budgets. This will help them understand how much to remit as taxes and appropriate licenses to get.
Then, there’s another set of challenges for gig workers. They bear high financial risks. For example, where is the next job coming from? The gig economy doesn’t guarantee getting job offers regularly. This minute you have 3 clients, the next, they are all gone. There are no guarantees.
Another challenge is that gig workers depend on clients’ ratings. This may affect their reputations since clients decide their reputation through ratings. Some of these clients may be difficult to please. Their negative rating may damage the reputation and career of a gig worker. Without enough engagement, they may become irrelevant. To illustrate, a freelance software developer can’t continue to be in business if there are no new gigs.
They also face physical risks. This is common among low-skilled workers. Such people are usually called to do hard jobs. Others have had to drive passengers on illegal missions such as drug trafficking. They sometimes don’t know the difficulty of such jobs before signing up for them. They may realize the nature of the job after they have already started. Any attempt to back off may lead to physical assault or death. Some know this in advance but had to take these jobs because they’re in dire need. They could only hope that things would work out well.
The jobs in the gig-economy will only continue to multiply. Companies will continue to take advantage of it. And counties must continue to find ways to regulate it. This decentralization of work will drive positive changes across different sectors. The gig economy rewards competence, only the most qualified freelancers get hired.