There are many benefits to finding work in the Gig Economy, including greater control of your own schedule and the ability to set your own work rates.
However, the downside to working for an employer that pays in gig hours is poor compensation.
The need to increase income can be a huge motivator for gigs – especially if you are living a frugal lifestyle. The majority of Gig Economy jobs don’t offer full-time payment.
When most people think of the gig economy, they think of a generation of new entrepreneurs. They see millennials leaving traditional jobs to work on their own terms, choosing when and where they work, and learning to be self-reliant.
Today, we live in the age of the ‘gig economy’. It is an age where unpredictability is part of the everyday life of many workers. 40% of the US workforce now have nontraditional employer-employee jobs – and the number of these gigs is growing.
So Why are People ‘Gigging’?
Thanks to the gig economy, freelancers have access to ways to earn money through jobs that are flexible, remote, and often involve clients who care more about the quality of the work than the type of credentials the freelancer has.
As a result, we are in the middle of an economic revolution. For many, this means leaving behind the typical 9-to-5 desk job. For others, it means a step into the underemployed zone, as freelancing become the norm. Finally, some people simply choose this type of work as a hobby or a side income.
Millennial workers largely use it as an income gap filler and like that it offers flexibility and control over their work schedule.
And in exchange for demanding this free time, flexibility and more control over their work, they have had to forgo medical coverage, retirement benefits and many other securities that contribute to a social safety net that was spurred by the Great Depression.
It is an age where unpredictability is part of the everyday life of many workers. 40% of the US workforce now have nontraditional employer-employee jobs – and the number of these gigs is growing.
There will never be another workforce like the one that existed prior to the digital revolution. This trend has been going on for awhile now, after all the gig economy, freelancing, and the sharing economy have become wildly adopted by entire populations around the world.
Today’s economic landscape is like no other and it’s getting more complex by the day.
So is it a win-win for workers?
What are the real pros and cons of the gig economy anyway?
Advantages of Gig Economy
The rise of gig work has not only revolutionized the concept of 9-5 jobs, but it has also transformed the way we look at more traditional work. The past few years has seen the rise of the gig economy, which is where millions of workers have flocked to due to its flexibility and empowerment.
- Flexibility: Unlike traditional employees, gig workers are free to choose what types of jobs they do and when and where they do them. The ability to work from home helps in balancing work and family schedules and demands.
You can choose to remain in the normal full-time employment route – but don’t you dare complain about the predictability of your workload. Your colleagues are doing whatever it takes to work for themselves in the gig economy.
- Independence: For people who like to be left alone while they complete an assignment, gig work is ideal. Not hindered by traditional office interruptions like staff meetings, progress reviews, and water cooler gossip sessions, gig economy workers are typically given almost unlimited independence to do their work when and how they think it should be done.
- Variety: The old office problem of monotony is rare in gig work. There’s little motivation, little variety, and little learning on a daily basis. This isn’t the case with the gig economy.
A wide variety of tasks and clients every day keeps the work interesting, helping gig workers be more enthusiastic and creative in their work. You can be the master of how dull or interesting you want your day to be.
Gig economy workers are typically given almost unlimited independence to do their work when and how they think it should be done.
- Modest Pay: Without the protection of minimum wages, unions, or salary scales, and health insurance, gig workers are often forced to reduce their fees in order to secure a job – at least to a level that makes them a more attractive proposition than their competitors for the same job.
The gig economy is not a true solution for financial security. While it may come across as appealing, the idea of replacing your full-time job with freelance gigs is not all that it seems. Most people fail to realize how much it takes to achieve financial security via the gig economy.
- No Benefits: Very few gig jobs come with any sort of health or retirement benefits. While some long-term contracts may come with limited benefit packages, even this is rare.
- Taxes and Expenses: Since contract gig workers are not legally classified as “employees,” their employers do not withhold income tax or EPF contributions from their pay. As a result, gig workers must make estimated tax payments and set aside their own savings safety net. In addition, most gig workers are responsible for buying their own work-related equipment like cars, computers, and smartphones. While some of these expenses can be deducted from taxes, not all can be.
- Stress: All of the above, along with the need to constantly be looking for their next gig and dealing with changes in their current contract can make for increased stress—an undesirable tradeoff to the greater flexibility of gig work.
For employers, however, the gig economy is mostly a win-win proposition. Businesses are able to quickly contract with experts for individual projects without the overhead costs like office space, training, and benefits.
From the manager’s viewpoint, the key advantage of the ‘gig economy’ is flexibility. As a result of the flexibility created, he or she can switch labour on and off, almost at will.
As a result of the flexibility created, he or she can switch labour on and off, almost at will.
There are two downsides.
First, most managers are, understandably, disinclined to develop the skills of a freelance gig worker. They must come ready with skills and knowledge.
If the manager’s firm needs increased skill and knowledge, the manager must cancel the freelancer’s contract and find someone of greater competence. Few freelancers bother to develop themselves – that, after all, would mean downtime and zero billing for the duration of the training activity.
At any rate, most freelancers are in it for the money. The relationship is purely economic, and there is little loyalty due to the temporary nature of each gig.
Second, don’t expect commitment from a freelancer. Just as the manager can switch labour on and off, the freelancer can leave at will – or at least giving notice within the terms of the contract.
The relationship is in balance and this does build respect. The relationship is, however, precarious. If something untoward happens or if the freelancer gets a better gig, they’ll be off.
Don’t expect commitment from a freelancer. Just as the manager can switch labour on and off, the freelancer can leave at will.
Is the Gig Economy Really a Game Changer?
It can work well for people seeking a little extra cash. But it has major drawbacks for those who want solid, predictable income and some protection from the ups and downs of the economy or for employers who need a reliable, collaborative workforce. As the gig economy matures, it is becoming clear that every trend has its limits.
Nonetheless, with the rise of startups like Grab and Uber who depend on an increasing supply of freelance gig workers, there is an ever-increasing need to understand the nature of the gig economy and the workers that support it, and to learn how to tailor your HR department and organisation as a whole in order to realise its full potential.
In the gig economy, the average worker isn’t a 22-year-old with tuition loan debts. The average worker is a 43-year-old with families to support. The average gig worker is not looking to avoid traditional employer responsibilities. They already have that. They’re looking to make their employer responsible to them.
To learn how we can help you do that using smart data analytics and technology, visit us at Accendo.