The gig economy has been gaining traction for quite some time now, and it appears that many experts agree: the future of work lies increasingly in freelancing and short-term projects.
We are seeing growth in the number of freelance professionals in virtually every sector; from marketing to web design and even legal services, and an increasing portion of global labor is becoming part of the “gig” culture. While there are clear benefits to this trend – most notably flexibility and personal control over one’s career – there is a lot to be discussed as gigs continue to gain popularity among individuals, and businesses are increasingly embracing the practice of outsourcing small jobs to independent contractors.
In this blog post, we will explore both the advantages and potential pitfalls of the concept. For those interested in starting their own freelance businesses or taking advantage of freelance opportunities, our insights will be invaluable.
What does the gig economy mean?
The gig economy is a recent trend in the workforce that has seen a lot of popularity. It’s an umbrella term that describes any type of work that is contract-based or temporary in nature. Gigs might range from delivering food for a restaurant or performing tasks from your laptop from the confines of your home.
Furthermore, this arrangement works great for people who want to be active and efficient in their work life but may not have the time or energy to commit to a traditional 9-to-5 job. Such workers can find sustainable ways to earn a living while accommodating their other priorities or responsibilities.
In many countries, the gig economy is undergoing rapid growth due to the number of online platforms and companies that offer such opportunities.
Examples of the gig economy
The gig economy is a model where jobs are exchanged between individuals or companies mainly through digital platforms that directly connect suppliers and workers on a short-term basis. A few roles following the gig economy model are:
- Freelancers (software designers, developers, etc.);
- Independent contractors and professionals;
- Temporary contract workers.
The modern, connected economy is revolutionizing the way we go about our daily tasks. Apps are making it easy to call freelance drivers for rides, book vacation rentals around the world at competitive prices, order food delivery with a few taps on a smartphone, or even buy handmade items advertised online. In these increasingly connected marketplaces, both suppliers and customers benefit from better access throughout their exchange journey.
Customers generally pay as they go and don’t have to commit to a long-term contract. This arrangement is often cheaper than hiring a full-time employee and can be more flexible because the worker is temporary.
Difference between formal and informal gig workers
Here are the most significant differences between formal and informal gig workers:
Formal gig workers
- Formal gig workers are those who are contracted by a company and are working under specific duties and regulations.
- They commit to work for a set amount of hours per week and receive benefits like paid holidays and sick days.
- International MNCs and big tech companies are always looking for talented content creators and software developers, where formal gig workers come into play.
- These contractors usually have comprehensive knowledge about their respective fields, which makes them ideal for developing new products or creating rich user experiences.
Informal gig workers
- Informal gig workers provide their services as independent contractors without any contract or a formal arrangement with a company.
- They do not have mid to long-term contracts or set hours, but they also get paid less than regular employees or formal contractors.
- It is easy for startups to incorporate these individuals into their teams as required.
- Most informal gig workers do not need any prior experience or training to be hired.
Pros of the gig economy
There are several benefits of the gig economy, but the following are the top ones:
Better work-life balance
For many people, work-life balance is among the top priorities in their lives, and the gig economy offers greater freedom when balancing daily tasks and errands. Gig economy workers can therefore prioritize their personal interests or obligations they deem essential. Taking care of family members, pursuing hobbies, and traveling are all examples of activities that gig workers can schedule around their flexible work hours more readily.
The gig economy has allowed many people to pursue self-employment opportunities and control their work lives better. Freelance workers can accept or decline specific projects or tasks as they prefer. This also allows them to set their rate rather than having management dictate it. They also don’t have to report to a traditional manager daily, which can be liberating. However, freelancers must still abide by the terms and conditions set forth by the companies whose digital platforms or applications they use to find work.
Extra source of income
Gig economy jobs offer flexibility to college students as well as full-time employees in their work schedules, with the opportunity to bring in supplemental income. With “side hustles,” full-time workers can make extra money from additional sources of employment. By specializing in a specific activity or industry, gig workers have the opportunity to land contracts or freelance work that they wouldn’t normally be able to find.
Cons of the gig economy
These are a few disadvantages of working in the gig economy:
No workplace protections
The gig economy does not provide an ideal workplace environment for full-time employees. There are no human resources teams or legal consultants to ensure gig workers receive minimum wage or have a retirement plan. Furthermore, flexible jobs rarely offer health insurance access, forcing gig workers to seek out private health care plans.
Less job security
In a traditional job, you’re guaranteed a set salary and benefits every week, no matter what. With a gig economy job, your income is solely based on your time worked. So if business slows down or jobs get harder to find, your income may be drastically reduced. Furthermore, most gig employment is in low-skilled professions with high turnover. As a result, it cannot provide the same level of security as a full-time position.
So, there’s no doubt that the gig economy is the future of work. With changing demographics, shifting employee expectations, and fluid workforces, digital platforms that connect companies with freelancers are transforming the way we think about employment.
As the gig economy matures, businesses should capitalize on its many advantages. By breaking away from geography-based hiring and embracing skill-based hiring, businesses can tap into a massive talent pool. This way, they can stay competitive and retain their best talent.