What is the Gig Economy?
Make way, remote and hybrid working. There’s a new work model in town – the gig economy. A unique blend of flexibility, opportunities, innovation and new-age technologies, this model is set to completely revolutionize the way we work. As more professionals get comfortable working from home (or anywhere else they fancy), organizations and businesses are taking note, and revisiting traditional work structures to revise their strategies so they can navigate this new business landscape with ease.
In this article, we will delve deep into the inner workings of the gig economy and talk about the pros and cons that this new world brings to workforce management. But first, let’s understand the gig economy.
What is the Gig Economy?
Unlike traditional employment models, where workers sign a contract with a single employer, gig economy workers operate independently and have short-term contracts with businesses, often with more than one business at a time. They sign up to perform a specific task or work on a predefined project, and upon completion of that, both parties are relieved of the contractual obligation. This allows the worker to maintain multiple streams of income simultaneously and also choose projects that better reflect their passion and talent. The business too benefits by getting to choose from a diverse pool of talent and hiring a person or a group of people to perform the task at hand.
In its nascent stage, transport platforms, like Uber, and food delivery services, like DoorDash, were the best examples of gig economy. Today, the scope has expanded, and the gig economy has emerged as a new way of collaborating, completely transforming how work is performed. From creative services, hospitality, transportation and delivery, retail, healthcare and even software development, the gig economy has forayed into multiple sectors.
Also called the ‘freelance economy’ or the ‘on-demand economy’, this work arrangement allows businesses and talented professionals to come together for a short- to long-term project, leveraging new-age technology to revolutionize the way work is done. The gig economy is making an impact on multiple sectors and this new change is being embraced by more businesses. However, as with any new idea, there are pluses and minuses, and businesses and workers must understand the gig economy pros and cons before entering the arena.
The Upside of Gig Work
Whether you’re a business or a freelancer, convenience is the biggest deciding factor in opting for the gig economy. But several other, significantly critical, benefits of gig economy are also making this model popular in the world today. Economic value stands as one of the main reasons to leverage the gig economy. Unlike in a traditional model, businesses don’t need to offer gig workers benefits, like paid time-off or sick leave. And with the added advantage of people working from anywhere, there is no need to even invest in renting office space or equipment. The resultant cost saving can have a significant impact on the bottom line.
The gig economy swings the other way to offer workers a certain level of autonomy when it comes to choosing projects, something they don’t get much of in a traditional office setup. They can make their schedules and achieve the perfect work-life balance. Once the shackles of the 9-to-5 grind are off, most workers notice their productivity soar. And with greater productivity comes greater income. Imagine being able to decide when, where and how much you want to work.
Perhaps the greatest plus of the gig economy is that a business can scale up or down as the market demands, working with as many or as few people as it needs. With people no longer restricted to geographies, businesses can tap into a rich, diverse pool of talent from around the globe. They can seek out people with specialized skills that match their current requirements and assign tasks to people with the most relevant expertise.
This has opened up markets like never before for gig economy workers as well. They get to explore new opportunities, something that’s not always possible in the traditional job landscape. This is especially a game-changer for those who struggle to find traditional employment. Imagine you’re a young parent, a retiree or have disabilities that limit movement. The gig economy allows you to capitalize on your core strengths and offer your specialized skills to clients while commanding the right price for that too – all while sitting in the comfort of your home.
The greatest benefit of the gig economy is that it gives workers the ability to pursue their passion. They already have the interest; if they build their skills, they can seek out projects that align with their talents, leading to better job satisfaction. Multiple studies have shown that when people are happy, it has a positive impact on the quality of output, paving the way for greater innovation within the industry. But as with any new idea, the positives come with their set of challenges too. Here’s a look at some of the pitfalls of the gig economy and how it can impact businesses and workers.
The Challenges of Gig Work
The flip side of flexibility is the uncertainty. And this is true whether you’re a business owner or a gig worker. If you, as a business person, work exclusively with gig workers, you must know that managing and maintaining a schedule can become quite a task. Since gig workers have fluctuating availability and commitment, scheduling, coordinating, and getting consistent work can be complex. This is especially concerning in today’s day and age when customers demand quality work, faster.
For gig workers, this negative aspect of flexibility usually means inconsistent work and income uncertainty. With fluctuating demand, gig workers cannot rely on a consistent income through projects or freelance work. Also, as more people get attracted to this economy, the industry gets more competitive, and negotiating fair compensation requires good negotiation skills. If you’re planning on saving for the future, the income insecurity from a gig economy can present quite a formidable challenge, leaving you financially vulnerable.
Another aspect of the gig economy that is not spoken of is worker protection. Since this is a temporary arrangement, the absence of job security and safety nets is glaringly obvious.
Gig workers are classified as independent contractors and they are responsible for their own benefits, such as health insurance, retirement plans, paid leave, business expenses, etc. But while we talk about worker protection, as of today, there are no systems in place for liability and quality control for businesses, and dispute resolution mechanisms are missing. Whether you’re a business owner or a gig worker, it is important to find ways to ensure fair treatment, transparency and accountability for everyone involved.
Also Read: Are You Managing a Contingent Workforce the Right Way?
Conclusion
Today the gig economy has established itself as a game-changer, impacting business, collaboration and the very essence of work management. Businesses and individuals looking to navigate this new way of working should consider the advantages and challenges to make an informed decision.
