What is the gig economy and is it a good thing or a bad thing? What will its short and long-term impact on employers be?
For the last decade, entrepreneurship remained the economic champion. After two of the worst downturns in the history of global economy, people started to take matters in their own hands. However, there is only so much room for new businesses in any industry. As competition rises, so does the chances of failure for new businesses. We have seen the most lucrative of niches getting too saturated over the years. And that is when, the economic trend shifted towards the gig economy.
In actuality, nothing that we call “new” is actually new in the economic world. The term ‘gig‘, itself has been around for a long time and was commonly associated with actors, photographers, artists, and people working on contract. The definition of the term hasn’t changed much, it is the scope that has exponentially expanded. The gig economy has become one of the biggest banes of digitalization, as more sectors are now able to utilize freelance resources and more people are choosing to work as independent contractors. In many ways, the gig economy is a direct consequence, if not an extension, of entrepreneurism.
Therefore, by definition, the gig economy is an environment where better and more flexible economic opportunities are created through short-term engagements between organizations and workforce. The gig economy is the not just the next big thing, it is an age-old giant that is suddenly having a growth spurt. According to a survey by Freelancers Union, 38% of Generation Y has given up their day job to work as a freelancer.
One question that arises here is whether the gig economy is just a result of rising unemployment, or does it really has real and long-term benefits for the employers, employees, and the economy.
One of the main reasons such questions arise in the first place is because the term ‘freelance’ has suffered from negative stigmatization over the years. There are many people, to whom ‘freelancer’ sounds like a person who is not capable of getting a “real” job. The term implies a career with no future growth, no retirement plan and no financial security (none of it is actually true).
Before we begin to count on the benefits and how they will sustain over time, let us clarify the misconception that unemployment is the actual reason behind freelancing. The surge is actually fuelled by digitalization and mobility. Technologies such as the cloud computing have given way to trends such a BYOD and overseas outsourcing. The jobs as well as resources are now decoupled and factors such as location are no longer a constraint.
With employers now having an access to a bigger pool of resources all across the world, it is possible to hire the services of a high-level expert whenever needed. Companies can even hire more than one individual on a project to meet deadline without any permanent burden on the payroll. Also, they save additional expenses such as space, supplies, and training.
From freelancer’s point of view, the gig economy brings them more control over their work, life, and earnings. They can work with employers across the globe and choose to be paid in a currency worth more than that in their own country. They are living a life without any fear of losing their jobs. Job and financial security, therefore, is no longer a concern for the modern workforce.
As for the economy, it tends to move where the employers and workforce is moving but there are some obvious advantages it can gain from the gig culture. Short-term employment opportunities mean a higher number of opportunities over a given period of time, which in turn means more people will be able to earn. While it may or may not impact the employment rate, it is definitely helping individuals become more financially independent.
In conclusion, we can say that the gig economy may be more than just a trend. It is more of an inevitable shift powered by changing trends, technology, and demands. It is growing and will keep growing until it evolves into yet another form.