Gig Economy : A Detailed Definition

Gig Economy is the ruling business model that is pushing the world economy to another level, by individually growing on its own. Working at own will, gives freedom to workers, empowers them as the more you work, the more you gain.

Exploitation is minimal as a person involved as a worker in this model, isn’t employed to anyone else, but to him/herself. If you have heard phrases like “be your own boss”, these are becoming true in the world of Gig economy today.

If you have ever ordered food from GrubHub or ridden an Uber, you are supporting the gig economy. This industry is supporting a lot of independent workers who are self-employed. The best part of gig economy is that it doesn’t restrict a worker with location or time.

You can accept tasks/deliveries mostly online and work whenever you want or as long as you want. This way workers can earn as much as they want by working in multiple shifts, besides their permanent employment and maintain a good work-life balance. As more and more independent contractors can be involved in this system, it is supporting many livelihoods.

However, there are cons to every pros that we talk about. With the advent of an unconventional employment source, it is challenging the existence of traditional job market. It may also affect the interests and profits of organizations that support regular permanent employment with beneficial stock options for their employees.

As more and more people are finding themselves with the benefits of gig economy, they are shifting away from time-bound employment frame, and this is affecting customer base and delivery deadlines of big and small companies. This can also be a blow to start-ups who may not be essentially a part of the gig economy.

Another dissociative order of gig economy is its uncertainty. Employment at free will doesn’t ensure employment next day, i.e. if you have requirement today doesn’t ensure you will have any requirement tomorrow. As workers are available on their own time, work is also available as per the momentary requirements in a self-employment mode.

Moreover, there can be technological challenges as a huge part of gig economy today is based on exploration of technology. Apart from that, consumer attitude towards independent contractors can also sometimes be a barrier. It is never possible to analyse something as complicated as gig economy without looking into some cases in detail.

What is Gig Economy?

Definition of Gig Economy

Let us understand the basics first. How can we define a concept makes it what it is. “Freelance” and “Work-at-Will” are terms that can define gig economy easily. People working in the gig economy are “gigs”; i.e. they are independent contractors who are self-employed. Some people are employed full-time in a gig economy, but most of them are part-time contractual workers providing services based on time availability and professional and economic requirement. Many engage in gig economy besides their permanent employment as well. This is how we define gig economy.

How did all this happen?

In the 2000s, the digitization of economy and industry happened with growth of information and communication technologies. Internet brought the world closer and suddenly everything was available on the web.

Smartphones became popular along with on-demand platforms based on digital technology opened new employment avenues that did not require a physical location or presence of the worker. Such jobs were clearly differentiated from mainstream offline model of working.

Job requirements on a digital platform ensured that people could work from any location at their own time, as much as it voided the culture of desk jobs which usually makes employees stagnant technically and intellectually. 36% of U.S. workers join in the gig economy through either their primary or secondary jobs. In Europe, 9.7 percent of adults from 14 EU countries participated in the Gig economy in 2017, according to the survey.

It is estimated that Gig Worker’s size, which covers independent or non-conventional workers, is 20% to 30% of the economically active population in the United States and Europe.

The gig economy jobs also change overtime, so there is no chance of day after day repetition of the same tasks which can also be challenging for employees and employers. As technology is developing each day, the requirements from independent workers are also changing so one has to keep upgrading in order to survive in this economy.

Let’s take the example of game development for mobile phones. This mostly happens in the gig economy by developers who are passionate about video games, animation and automation. But we cannot deny, that video games have changed hugely over a period of twenty years.

We no longer use the special tablets designed only for video games, where tiny brick formations slid down a dull grey screen. Games moved to computers first, but today games like Roadrash doesn’t exist in terms of development techniques, playing facility and space consumption on the device. Currently, we play on the mobile phones; even that is changing each day as smartphones are giving way to Android phones and then to Apple Phones and games designed have to be compatible with these models.

Video games today, are brighter, much more colorful and interesting; they have improved themselves way long in terms of graphics and animation. Today games are meant not only for playing but also consumerism, thus they feature commercials and other things that support other parts of economy, so developers have to design them that way.

That’s how we can explain that independent workers will have to change with the changing situations.

 

Advantages and Disadvantages of the Gig Economy

Advantages:

  • There is a lot of flexibility in terms of place and time.
  • Income can be innumerable
  • Self-employment ensures autonomy that is you are your own boss
  • There are challenges (which is good if you love your work)
  • Better work-life balance.

Flexibility– Since most of the tasks or deliverables are accepted through online platforms and the things that need to be done, rarely require any physical presence of the worker, gig economy offers work-from-home facility which can be beneficial for most.

You do not waste any time in the traffic, you do not stress yourself with location compatibility and you can accept jobs from anywhere in the world. This is especially helpful in strange situations of curfew and lockdown like the present time of COVID-19.

You can maintain your employment while still being home for certain job profiles. You can work on your own time, so along with earning, you can also do other things that you like for self-development and hobby.

Innumerable income– Because time span is underrated here, you can finish a task in one hour or ten hours, the delivery is important. Thus, a gig worker can work in multiple jobs at the same time, and can earn as much as he/she wants, based on financial requirement.

Autonomy– When there is no one to dictate you, you have greater self-esteem and confidence. You report to yourself and no one can tell you what to do.

Good challenges– with changing times and gig economy model, new types of works are coming in each day. It can be interesting, not to get type-casted in something. It can be challenging and thrilling to work with fresh ideas and concepts.

Work-life balance– When you are working from home, you can spend quality time with your family, parallely. You can attend to household responsibilities; like you can drop or pick-up your kids to and from school if you are available for them, and your work-schedule permits that flexibility. You can also de-stress yourself when you feel overloaded and many more things come into healthy work-life balance.

Disadvantages:

  • More work
  • No employer provided benefits or protections
  • No certainty
  • Consumer/customer behavior and attitude
  • Legal unclarity

More work- Sometimes work from home can mean extraction of more productivity from a worker. According to a data, it was found that work-from-home IT technicians showed 4% increase in average daily time spent on their core work and an 18% decrease in time spent on communication (compared to office workers). No real-time appearance can be thus, hectic too.

No employer provided benefits– This means no contract, no job security, no health benefits and other protections that you receive from a permanent employer-employee contract. You are on your own. There are no mandate insurances given to you in terms of health which you can utilize in times of emergencies.

No certainty– When you are self-employed there is no certainty that you will keep working forever in the same way. You have to keep looking for jobs and employment to survive in a gig economy.

Consumer attitude– Often there are trust issues coming from your direct or indirect consumer. As an independent contractor you may or may not be registered with a company, so people using your services cannot trust you that you will deliver things on time and safely. For e.g. someone working with Uber has to face this distrust from his passengers because he is an independent contractor.

Legal Unclarity– There are several things which are blur for self-employed people. These jobs do not fall under most employer-employee laws or Labour laws’ (like Wagner Act of 1935 and Fair Labor Standards Act of 1938) definition, that were written long back, when this remote working idea was unimaginable. In terms of taxes, contractors do not receive W2 like most conventional workers do, which has its own benefits. But they still have to pay self-employment taxes.

The California gig economy law

According to a current law passed by the Governor or California in U.S.A, all gig workers, especially ride-share drivers working for Uber and Lyft will be considered as statutory workers. By a recent decision by the California Supreme Court, AB 5 will take effect on January 1, 2020, and make all ride-share drivers eligible for the full range of benefits available to full employees. This includes minimum wage, workers’ compensation, overtime pay, unemployment, and paid sick leave according to California gig economy bill.

Now apparently, this may seem like a good thing, but people do not agree that because it is totally toppling the concept of gig economy which is work-at-will.

The new law is actually making things more expensive for consumers. Ride-shares like Uber are much more convenient that old-school cab services. You need not wait at the sidewalks anymore waving hands at cabs to give you a paid lift. You just open the app on your phone, enter your location and there is someone to pick you up from your doorstep. This method is much faster and hustle-free but at the same time, it has been found to be cheaper than traditional cab services. ($5 to $10 cheaper than regular ones in US).

This may vary with geographical regions but on an average, this is the case. This has been possible for Uber and AIRBnb because people do it when and how much they choose to. They can accept as many or as little number of customers as they want. Most people working with these places use it as a side business and not their main employment.

Under AB 5, hundreds of thousands of independent contractors across the state will be forced into full employee status. And it is not only ride-share drivers who will be affected; independent health and psychology care workers, truck drivers, and even local musicians booking gigs will be swept within AB 5.

The flexibility part which has been the hallmark of gig economy will fall with regular fixed standards coming upon gig workers. Employees will be subject to rigid statutory standards, and the cost for each company to “employ” an individual driver will skyrocket. The eventual effect will be upon users of these services.Gov. Newsom and state legislators appear to have forgotten the first law of public policy-making: No matter how good your intentions, what matters most is results, and results of AB 5 seem disastrous for consumers and entrepreneurs.

Gig Economy Statistics

How Gig Economy Can Affect the Job Market?

The gig economy, along with the future of work, has become a popular topic of discussion.

Gig economy can affect the current the job market in both good and bad ways.

The good ways:

  • More work opportunities for talented people
  • Employment ensured when people are currently troubled about the falling economy due to a pandemic situation.
  • More profits for individual start-ups and entrepreneurs who function in this model.
  • Newer work ideas facilitated through gig economy.
  • Productive growth of overall economy as remote working will mean more profits for internet providers, phone network providers, apps and other technical suppliers.

The bad ways:

  • Competition for traditional organizations
  • Less profit for organizations who invest a lot on their permanent workers and work structures. (they can collapse under the growth of gig economy)
  • Lesser job security for individuals
  • Inequality in wealth distribution. Some have more, some have less. Some pay more taxes, some do not at all.
  • Increased rat race for more profits. Employment for some may mean unemployment for many.
  • Overall instability in the current job market

What is the role of Governments?

“The fact is these types of non-standard employment contract are becoming more prevalent, rather than less. In 2012, 11.8% of the workers in OECD countries had temporary contracts. This rises to 26.9 % in Poland, 23.6% in Spain, 20.7% in Portugal, and 13.7% in Japan. These temporary contracts typically come with less protection, fewer benefits and pecuniary discounts. Temporary workers in the EU earn on average 14% less than workers with open-ended contracts” says the World Bank.

It’s true that gig economy can employ more and more number of people into mainstream economy, even those who aren’t highly qualified or educated. But at the same time, the Government’s role can be to maintain a simple balance between the two modes of earning, so that taxes can be properly regulated, public income can be better utilized into public services, workers can be protected etc.

 

One of the key recommendations from a new report recently issued by the World Bank, in conjunction with the International Labor Organization (ILO), is that countries need to extend their social and labor protections to people who are working part time or in serial part time or temporary jobs.

Peter Bakvis, the Washington Director of the International Trade Union Confederation (ITUC), notes that since the global financial crisis of 2008-2009, 30 million people have lost their jobs and wages have not kept up with productivity growth. There has been a weakening in standards of work due to sub-contracting work and this has led to an inequality of wage distribution which is now hard to balance. But Governments can use the same technology, that drives gig economy, to provide protection to these independent workers and also strike a balance between traditional organizations and gig companies. The best way to ensure that society as a whole does not pay the costs of the gig economy is to extend labor market regulations to everyone.

Top gig economy companies

While talking about gig economy, its important to mention some companies who have set standards for independent worker set-up. So here is a list of gig economy platforms.

  1. AirBnb– This works for homeowners and apartment owners who can sublet their properties to tourists and cohabitants. This enables them to make money while still living in the property. The fun part is they can have one or many customers at a time and make more money. It has a massive full-time workforce (12,000+ employees across the world), and millions of homeowners listing their property on the website. In 2017, Airbnb raised $1 billion in funding, making it one of the leading gig economy companies across industries.
  2. Etsy– This platform is for artists and handicraft makers who can sell their items on this platform while still retaining total control on the sales, and making more profits. This is similar to Ebay, but where Ebay sells all kinds of products, Etsy specializes only in handmade stuff. Founded in 2005, it has built a solid reputation among the global artist community to reach out to high-intent customers.Selling on Etsy requires individuals to pay $0.20 per listing. Etsy also charges 5% for every shipping transaction and 5% of the total item cost.
  3. Fiverr– Specialized for professionals who work with technology or media products. It covers several areas of expertise, including design, software development, writing, video editing, music, social media marketing, and video voice-overs. Gigs on Fiverr range from $5 to $10,000, establishing an incredible scope of opportunity. Fiverr can also be used to brush up on sales skills, with the platform’s library of learning materials. Originally based out of Israel, Fiverr is accessible to freelancers across the world with no country restrictions.
  4. Amazon Flex– It is for licensed drivers interested in delivery services. Those who want to work as a part time delivery person, participate in this venture. Drivers can choose their hours, schedule ahead of time, or choose a block that best suits their requirements. Amazon Flex is available seven days a week and can bring an income of $18–$25 an hour – above the U.S. minimum wage.
  5. Uber– It is for licensed drivers who want to lift someone on their way. This ensures that any person can make some money while driving to home or office by sharing the ride with someone else. As per its website, it caters to 91 million consumers in 700+ cities, employing approximately 3.9 million drivers. It has inspired the creation of several competing gig economy companies like Bolt in the U.K. and Ola in India. Drivers can make between $8.55 and $11.77 per hour on Uber, excluding all commissions and fees.

10 Best Gig-Economy Apps

Airbnb
Fiverr
TaskRabbit
Upwork
Freelancer
YouTube
Instacart
Roadie
Thumbtack
Uber

FAQs

What does the gig economy mean?

Gig Economy means conglomeration of independent workers or contractors.

What is a gig economy?

Gig economy is the economy that is driven mostly by self-employed part-time or full-time service providers.

What are some Gig Economy Examples?

Gig economy examples can be from various fields. AirBnb, Uber, Youtube, Fiverr, Ebay, Instacart are some examples of Gig economy

What are some cool stats about the gig economy?

36% of U.S. workers participate in the gig economy through either their primary or secondary jobs. Nearly 40% of the American workforce now makes at least 40% of their income via gig work.37% of full-time freelancers, independent contractors and consultants are ages 21-38. Over 75% of gig workers say they would not leave freelance work behind for a full-time job.

 

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