The gig economy has become a hotly debated topic along with the future of work.
The gig economy is not new. Contract work has existed since farmers hired temporary workers during the harvest season. In the 1900s, jazz musicians revived the word gig for their musical performances. In 2020, the definition of the gig economy included part-time workers and freelancers.
In this blog, we’ll explain what the gig economy is, who its participants are, and how the gig economy is revolutionising businesses to operate.
What is gig economy?
The spread of the Internet has already changed the traditional workforce significantly. Email and telecommunications have made work more flexible and brought people together in geographically dispersed locations. It also enabled the rise of the gig economy.
The gig economy refers to the global proliferation of freelance, contract, and flexible work replacing traditional full-time jobs. Companies like Uber and Airbnb are major employers of gig workers and are a big reason gig work has become mainstream today.
The Bureau of Labor Statistics estimates that in 2017 there were 55 million gig workers in the US, making up 36% of the workforce. Many economists believe that 80% of the workforce could fall into this category by 2030. The pandemic has fundamentally changed how companies deal with the burgeoning gig economy. Examples include the boom in freelance marketing and journalism jobs.
But why is the gig economy having such a big impact on the future of work, and what opportunities does it offer both businesses and workers?
Why are full-timers switching to gigs?
Here’s why more and more workers are turning to this model:
New dream: The 9 to 5 job lost appeal as workers increasingly preferred to choose their work hours with minimal supervision. They want to be flexible enough to meet their financial goals in whatever way they see fit.
Transitioning into a new career: Big businesses demand degrees and experience for employees who want to switch careers. In this regard, gig employers are more lenient.
Access to high-paying jobs: As remote work opportunities grow globally, gig workers will have access to higher-paying jobs anywhere in the world.
No choice: The recession and pandemic may have forced full-time workers to switch to gig work desperately.
Why is the gig economy growing?
The boom of gig work in the 21st century can be traced to the Global Financial Crisis 2008 (GFC) and the resulting recession. The growth of the knowledge economy and dot-com companies has made freelance and contract work more common.
While some traditional companies sank during the global financial crisis, the nature of others changed forever. There was a slowdown in the manufacturing sector and labour movement into service and knowledge careers.
Rising costs make people take up multiple jobs to maintain their living standards. Debt-ridden people often look for various income streams and engage in the hustle culture.
Increasingly, small businesses are being opened, and entrepreneurship is rising. Many collaborate actively with larger businesses and leverage social media to reach freelance and part-time specialists. All of this is fueling the gig economy.
Here are the ways the gig economy is impacting business.
Access to a large, global talent pool
Companies that can work remotely and efficiently benefit from access to a large global pool of freelancers. They can also hire qualified contract workers for short-term projects. Many professional copywriters work from the comfort of their homes for clients worldwide.
One of the benefits of the gig economy is that it allows workers to do low-intensity jobs while being trained to make their jobs more fulfilling. Freelancers can devote more time and energy to learning skills than full-time employees.
Some unique ways people use the gig economy to fuel their side hustle. Forbes ran an article about his Uber driver who used his cab to show off his jewellery designs.
In the modern business world, there is a shift towards design thinking. Rather, procure expertise when appropriate expertise is available and such skills are needed. A gig-based workforce can reduce the need for on-site customer support and travel-based engagements for project oversight.
Better customer service
Companies with global customer pools can take advantage of the non-geographic definition of the gig economy. You can hire employees in different time zones to meet customer needs as they arise. This is the perfect solution for endless night shifts that also affect the health of your customer-facing employees.
Increase brand awareness and reach
The gig economy can also help companies increase brand awareness by hiring temporary workers in the countries they want to operate in. For some companies, it may be possible to build a basic workforce to meet legal requirements.
Reduced delivery costs
Overhead costs can be reduced by hiring part-time or contract workers. It can be cheaper to hire for short-term positions than to train full-time staff in skills they don’t need. Onboarding costs can be expensive for a small business and nearly negligible when hiring gig staff. Also, gig workers do not receive unemployment insurance or retirement benefits.
More likely to survive a recession
Companies spend a lot of money training their employees, so laying off employees is costly for companies. A mobile workforce help companies weather the recession by reducing overheads.
The gig economy sounds like a pipe dream, but companies work best when they have a mix of permanent and contingent workers. Getting your gig workers invested in your business will take a lot of work. They lack the long-term benefits and career advancement incentives that salaried workers attract.
Many routine tasks are best handled by people with the know-how of traditional business processes and are there to go a long way.