What is a Gig Economy?
It’s a segment of the service market or an economy using a prevalence of freelance and or short-term contract work as opposed to a permanent job. This is an economy that operates flexibly, involving the exchange of labor and resources through digital platforms that actively connects clients and customers and facilitates buyer and seller matching.
In the gig economy, this labor market relies heavily on organizations for temporary and part-time positions to hire independent contractors and freelancers instead of full-time employees. It is because work is allocated on a temporary basis, not requiring a systematic schedule but have little or no job security. A similar arrangement can be seen in companies such as Uber and Airbnb.
Many employers save money and avoid paying benefits such as health plans and paid vacations. The result of a gig economy benefits workers and businesses alike. It produces cheaper, more efficient, and flexible services because it is solely operated through the internet. It also offers consumers a unique and fast alternative to regular, standardized business. In addition, it is an extremely popular choice for the younger generation. One third of the population is already in some form of gig capacity and the number is expected to rise as more organizations adopt this contractor work in order to save time and money. Since it has drastically risen in popularity over the last half-decade, it is now a very common way for individuals to earn a second stream of income.
Advantages of operating and working in a Gig Economy realized by both the business and the workers.
- Cost-Effectiveness
In this economy, people get paid only when their services are required. Costs and expenses are minimized. This is considered one of the major benefits of operating in the gig economy. Businesses are able to hire off-site workers paid only on providing on-demand work which significantly reduces the need to maintain expensive workspaces and large offices. Companies save money with some completely eliminating expenses such as employee benefits like paid sick leaves and retirement plans. Some of these savings may be passed on to consumers leading to lower prices. On the raw side, it can also leave workers worse off financially.
- Labor Force
The pandemic forced people to work from home and taught businesses that having staff work from home provides a huge employment pool. Using this labor force to directly match the company to the freelancer removes the hassle of dealing with a middleman throughout the hiring process, thus, making it easier to find the right people to complete the job.
- Output Production
Technology has provided and developed to a point that you don’t have to hire someone close to your proximity. Work done this way can be executed from anywhere in the world. An employer has the access to a wide range of talents and can hire the best talent. Workers in today’s society are beginning to value flexibility much more than compared to in the past allowing this gig economy to prosper.
Individuals who are interested in a flexible lifestyle will be attracted to applying for a position that offers such a unique work schedule. Creating Such flexibility directly impacts employee motivation, which in turn, produces a positive and favorable correlation to output production.
Shown below are some of these advantages realized by the workers:
- Independence
Independent contractors in the gig economy are offered greater flexibility in terms of working hours and are not required to work in offices, rather, they work in their own locations. These days it varies from someone working in a home office in the mountains or on the other side of the world!
- Flexibility
Workers operating in the gig economy are allowed to work any of the hours they desire. In most cases, a task will be given to a worker with an end date, but when they work on it is completely up to their discourse.
- Income
As mentioned above, this economy is an increasingly attractive market that allows individuals to earn additional income. You could be in a permanent 9-5 job and still do something else in comfort in the evening for any number of days or hours.
Disadvantages of Working in a Gig Economy
The gig economy also produces a wide number of disadvantages, some of the downsides tend to make the process difficult. Some of which are realized below.
- Worker Commitment
In general, gig companies are not known to give incentives to their employees. It is harder for individuals who work as freelancers to be wholly invested in their organization as if they were hired full-time. In contrast, full time employees find it harder to develop their careers because temporary workers are cheaper and more flexible to hire.
Some workers who prefer a stable, more secure career path are being crowded out in some industries making such an arrangement create loyalty issues and reduce motivation at work.
- Ethical Issues
In some cases, their employment being casual and flexible does not offer as good a benefit nor competitive wages. Some organizations that operate in a gig economy are eroding worker rights by the unethical practices they perform.
Shown below are the disadvantages realized by workers in the gig economy:
- Lack of Benefits
Most important benefits that come with permanent positions such as health insurance, sick leave and annual vacation pays are often non existent in a gig economy. Governments should intervene so that independent contractors are completely considered “employees” of the business.
- Isolation
There is also a mental health worry. Being an independent contractor is an extremely independent job. This flexibility can disrupt work life balance and daily activities. For some people, that means you have to be available whenever there is a gig regardless of other activities. This arrangement can either be a major motivation tool, or a feeling of isolation or loneliness. which can negatively affect production and mental health. Long term relationships may or may not suffer but whatever your motive is, this economy encourages you to investigate the benefits of multiple jobs, working from anywhere in the world and freedom of a specific job and the utmost flexibility in your daily life.