Upsurge: Gig Economy and Freelancing
Imagine being your own boss and having no higher authority dangling over your head like a sword to complete a mammoth task within a ridiculously short period. Sounds enticing, doesn’t it? Welcome to the gig economy. The gig economy is often referred to as the “new economy”. Examples of a gig worker could be a driver for Uber, Airbnb host, a freelance copywriter, musician, videographer, journalist, etc. It’s an industry that largely developed from the 2008 financial crisis. Recently, this has become a trend since many people either turn to solely freelancing or they have a full-time job and still work on the side to earn extra or work on their passion. A report by McKinsey states that about 20–30% of the workforce in developed industries belongs to gig workers. The top skills sought after in the gig economy are Strategy, Technology, Marketing, Finance, and Human Resources. This increase in demand for independent workers could be due to the shift of work to digital platforms, providing employers a bigger pool of talent to choose from due to lack of location constraints.
150 million people work as freelancers in North America and Western Europe, while in China, about 15% of the workforce is part of the gig economy. According to Statista, a German online portal for statistics, the global volume of the gig economy is expected to reach $455.2 billion by 2023.
Gig Economy in India
The gig economy in India consists of about 3 million workers and 70% of companies in India hired gig workers in 2018. Popular companies like Uber, Ola, and Zomato are all part of this economy through their driver-partner or delivery-men services. According to Flexing It, a gig platform, the gig economy in India has doubled in the two years 2018 and 2019 and is only projected to grow further.
Pros and cons of the Gig Economy
Pros:
- Free to undertake only those projects that align with your interests and make the most of your potential
2. A sense of ownership over the work you produce.
3. Greater work-life balance
4. A chance to pursue your passion
5. Flexible schedule
Cons:
- Unsteady work and pay
2. Requires a lot of self-discipline
3. No health benefits
4. No set vacation days or sick leaves. Every day you don’t work, you don’t get paid.
5. Lack of professional relationships
6. There is no moving up the ladder
7. Have to work out your retirement plan
Gig Economy and Coronavirus
“Due to changes in the way consumers buy things, there are going to be changes in the way things work.” -Stacy Brown-Philpot, CEO of TaskRabbit
Due to the current pandemic-induced economic downturn that has left millions unemployed, there is a surplus of people looking for jobs, while there is a shortage of positions available. Since many people are in search of jobs, employers don’t have to worry about fancy salary packages and benefits and wages slope downwards. As they too have to cut back on costs, instead of seeking out someone to make a long-term commitment with, they simply seek out someone willing to work for them for a fixed amount of time, with none of the benefits or compensations involved in full-time employment packages. This can probably be attributed to the fact that companies have to pay 30–40% more for full-time employees, as compared to freelancers. Hence, many of those unemployed are in search of gigs, being pushed into this unwillingly. Upwork, an app to connect freelancers with gigs, has seen a 50% increase in sign-ups by workers and employers.
“When you need to make big changes fast, a flexible workforce helps you.” -Adam Ozimek, Chief Economist at Upwork
Yet one cannot entirely predict the impact of the pandemic on the gig economy. Uber Eats grew 53% in the first quarter of the year while Uber has lost out as its business fell by a whopping 80% in April.
But with this increase in gig workers, there is a shift of the risks onto the workers, since they don’t receive any benefits, but do the same work for shorter periods and at a much lesser cost. Given the pandemic, these gig workers who work through services like Uber, Instacart, etc. are more at risk of catching the virus themselves, and also not having any safety net when it comes to paying hospital bills. And one of the biggest risks is the uncertainty of retirement plans. Research shows that when people have access to a retirement account- which is provided by employers normally- they are more likely to save. But this isn’t the case with freelancers. Employers tend to owe them no such benefit. Hence, many don’t end up having any retirement plans. Small Business Majority, an advocacy group, surveyed 500 gig workers and found that 4 in 10 don’t have a retirement account. This is a matter of concern amongst all freelancers. Many companies and organizations are now working to reform this. For instance, Uber offers retirement options to its drivers through a voluntary investing platform called Betterment. They offer flexible retirement accounts with no fees for the first year for their driver-partners in select cities across the US and are soon planning to expand. There is also something known as “Multiple Employer” plan, a retirement plan option sponsored by multiple companies for freelancers. Other policies have also been made by individual entities or states to provide a safety net to gig workers. California passed a bill last year to reclassify gig workers as employees. Oregon is working on a state-sponsored retirement plan for independent contractors through Oregon Saves.
Future of Gig Economy
The gig economy can contribute to the economy through increasing opportunities for the unemployed and increasing productivity. Companies also need to learn how to thrive with gig workers. They should also invest in mentorship and training opportunities to help gig workers gain more expertise and credibility. Many companies have embraced the whole gig economy concept and have taken various steps to support it by accepting the fact that their employees have gigs too, and by making use of freelancers to their benefits, especially when they are facing a sudden boost of activity at a particular time of the year. This way, the freelancers get flexibility and are happier, while complementing the rest of the employees and unburdening them of their workload. Directly, a software company, uses gig workers for customer service. The freelancers are customers who are passionate about their service and wish to contribute to improvement. And this can turn out to be quite valuable, since customers know the product well and what works and what doesn’t as they make use of it regularly. This also creates an interactive environment for the customers and helps the company understand their needs better.
“Customer expectations are through the roof, and the fixed and traditional customer service model can’t meet these rising expectations anymore. Customers expect answers in seconds or minutes, and companies are struggling to respond fast enough. Gig work allows a company to tap their product experts to answer support questions on products they use every day, and they can answer questions while waiting to drop off their kids at school, while grocery shopping, or from the comfort of their couch.” -Antony Brydon, CEO of Directly
The gig economy is here to change our perspective of the workplace. Seeing the influx of labor into the gig economy, the online marketplace infrastructure must be developed. We should also stop associating success with stability because many freelancers are successful too. So, despite all the pros, there are still many drawbacks that must be addressed to ensure that even freelancers have a safety net and can continue to work flexibly, and the increasing number of gig workers can easily assimilate into the workforce.
