The gig economy is becoming the new normal in an era when workplace autonomy and flexibility are highly valued. The gig economy, sharing economy, contingent workers, on-demand workforce, and independent experts are all keywords that are related to the shifting tide of the modern workforce. The gig economy, driven by technology, has created a buyer's market for many job searchers while also providing the much-needed thrust for businesses to remain competitive.
The gig economy may have become familiar to you through part-time work offered through applications such as Uber, Amazon, and others. After all, with on-demand services that many of us utilize on a daily basis, these websites have become household names. However, in reality, the gig economy is significantly more complex than the on-demand business. It refers to a broad variety of services and the individuals who deliver them. Any idea who are these people and what exactly is the gig economy? This article dives deep into the fundamentals of the gig economy meaning, its history, and its progress. We will also discuss how startup businesses can make the most of it and remain ahead of the competition.
Let’s start with the basics then!
The Rise of the Gig Economy
The gig economy is a free market system wherein companies hire contract workers and freelancers instead of full-time employees, in most cases, just for short-term engagements. In this system, flexible and temporary jobs are more common. It is because work is assigned on a temporary basis and does not necessitate a systematic schedule. The name comes from the music industry, where musicians schedule "gigs," which are single or short-term engagements at multiple places.
A gig economy creates more efficient, cheaper, and flexible services that can provide consumers with a distinctive and quick alternative to traditional, standardised businesses. Furthermore, it is exclusively operated via the internet, making it a very popular choice among the younger population. The gig economy has grown in popularity over the last half-decade and is now a typical way for people to supplement their income. More specifically, it is projected that the gig economy employs 1.6 million people worldwide. In the United States, it is estimated that one-third of the population works in some capacity as gig workers. The figure is projected to climb as more businesses use independent contractors to save money and time.
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A short history of the Gig economy
Tina Brown, a journalist, created the term "gig economy" in 2009. Brown discussed how gig workers are pursuing a variety of free-floating projects, consultancies, and part-time work while transacting in a digital economy. However, despite the misperception that the gig economy emerged from apps, it is not a novel idea. Actually, Jazz artists are credited to have used the term "gig" to describe live performance jobs as early as 1905.
Before the industrial revolution and up to the Victorian era, people had to work multiple jobs to make ends meet. When industrial occupations became seasonal, the "gig economy" of irregular work patterns emerged. Some held a profession by skill and title (for example, a barber or blacksmith ) and performed extra jobs such as selling products, renting out a store, becoming a worker, or teaching. These people, like those who earn money through the gig economy today, lived in a world of work uncertainty.
They enjoyed independence but were regularly concerned about having a decent living or failing. Then came the Great Depression in the 1930s. Following that, Americans desired stability and security above everything else. We saw major conflicts between labour and capital during that decade. It led to workers organising themselves in new ways through the Congress of Industrial Organizations(CIO). Workers sought better lifestyles as a result, and the state obliged, resulting in the traditional workplace and labour rules we know today.
Cut to 1995, Craigslist is launched, serving as a platform for online classifieds devoted to jobs, wanted and for sale products, gigs, resumes, housing services and more. This reintroduction of gig work paved the door for other gig platforms such as Upwork, Airbnb, Uber, and others. Nonetheless, despite today's app-enabled technology, the gig economy mirrors a workforce in the pre-industrial age.
Gig Economy and India
Slowly but steadily, the gig economy is making inroads within the Indian diaspora as well. According to a Boston Consulting Group report, India's gig workforce includes 15 million workers in businesses such as software, professional services, and shared services. According to 2019 research by the India Staffing Federation, India is the world's fifth largest flexi-staffing market, trailing only the United States, China, Brazil, and Japan.
Gig economy businesses generate an estimated 56% of new employment in India, across both the white-collar and blue-collar workforces. While the gig economy is more popular in blue-collar jobs in India, there is also a growing need for gig workers in white-collar jobs such as salesmen, web designers, project-specific consultants, content writers, and software engineers.
The gig economy can generate up to 90 million employees in the non-farm sectors in India with a huge potential to add 1.25% towards its GDP over the "long term". As India strives to become a USD 5 trillion economy by the year 2025, the gig economy will be a critical component in closing the gap between income and unemployment.
What are the advantages provided by the Gig economy?
Working in the gig economy provides numerous benefits to both businesses and workers.
- Advantages for businesses
One of the primary advantages of working in the gig economy is the ability to minimise costs and expenditures. This is because businesses can recruit off-site staff, which minimises the need for pricey workspaces and huge offices. Furthermore, choosing independent contractors eliminates big expenses such as retirement plans, employee benefit packages, and paid sick leaves.
- Produces better output
Modern workers in recent times are beginning to place higher importance on flexibility than in the past. This is why the gig economy is so successful. Individuals who want to supplement their income are drawn to opportunities that provide a flexible work schedule. Such adaptability has a direct impact on employee motivation, which has a favorable relationship with output productivity.
- Easier to find workers
The gig economy offers a worker pool that may directly link a business to a freelancer. This eliminates the inconvenience of dealing with an intermediary throughout the employment process, thus, making it easier to acquire qualified candidates.
2. Advantages for employees/workers
- Provides Flexibility
Those who are working in the gig economy are free to work at whichever hours they want. In most circumstances, a task will be assigned to them with a deadline, but when they work on it is entirely up to their discretion.
- Greater independence
In the gig economy, independent contractors are not obligated to work on the premises of their employers; instead, they operate in their own spaces. It ranges from someone working from home writing articles to someone driving for Uber using their own car.
- Provides additional income
Individuals who want to supplement their income are drawn to opportunities that provide a flexible work schedule. Because of the sheer freedom that allows workers to generate extra revenue, the gig economy is becoming an increasingly appealing sector.
- Help balance home and work
Part-time work and flexible working hours enable women to balance their traditional obligations (homemakers and careers) with employment. Work-from-home (WFH) and technology have solved the issue of safety during travel and night shifts, particularly for women employees. In addition, as a result of the new gig structure, work prospects for women in India's tier 2 and 3 cities have increased.
What are the disadvantages of working in a Gig economy?
While the gig economy provides numerous benefits, it also has some drawbacks that make the process tough for both businesses and workers.
- Disadvantages for businesses
People who work as freelancers may not be as committed to their company as those who are employed on a full-time basis. Furthermore, gig economy businesses are not known for rewarding their employees. Such a structure can create issues with loyalty, decrease the possibility of future work and reduce overall motivation to work.
- Ethical issues
In some circumstances, organisations that participate in the gig economy are criticised for their allegedly unethical behaviour. As per the critics, their employment is temporary, without benefits, and does not provide a fair salary.
2. Disadvantages for employees/workers
- Personal expenses
Businesses in the gig economy are not always compelled to reimburse personal expenses incurred by the workers.
- Lack of benefits
Organizations in the gig economy do not offer benefits to their employees. Independent contractors are not regarded as "employees" of the company at all.
- Biased against women workers
Because of their "on-demand" work schedules and reward mechanisms, the gig platforms seem to be biased against women. Domestic and childcare duties sometimes prevent women from taking advantage of peak hours, when both the demand and income are high. Furthermore, the combination of paid and unpaid work results in a longer working day for women than for males, contributing to their time constraints.
Being an independent contractor is an incredibly independent job. For some, the structure is a huge motivator, but for others, it can generate a sense of isolation. This can have an adverse impact on production and mental health.
- Perpetuates already-existing labour-market problems
The gig economy presents major impediments to female participation in India. This is because it perpetuates the pre-existing labour-market issues such as gender stereotypes, the gender wage gap, discriminatory algorithms, and the digital divide. The gender digital divide is a key barrier to women's engagement in gig employment in India. According to the GSMA Mobile Gender Gap Report 2020, barely 21% of women in India utilise mobile internet, resulting in unequal access to digital technologies required for participation in the digital economy.
What are the best ways to take advantage of the gig economy?
- For businesses
If you are a growing business and are trying to reap the benefits of the gig economy, here are some of the best practices you may consider-
- Identify your needs and improvement areas
Take some time to assess your forthcoming initiatives and workload for the upcoming year. Consider what has changed as a consequence of the Covid-19 pandemic. Consider whether certain skill sets and strengths exist among your team or whether you need to search elsewhere. Also check what market knowledge, technological talents, or strategic expertise you will require. If your existing team is unable to handle these issues, it may be time to consider using a freelancing platform to fill these skills gaps without adding the extra headcount.
- Build a proper business case
When it comes to comprehending the significance of outside talent, everybody on your team may not be on the same page. Establishing a case for why you should hire outside talent is critical in this situation. According to an Accenture poll, 79 percent of CEOs believe that work is changing from traditional jobs to project-based work. Another 84% feel that excellent talent, innovative ideas, and expanded skills may be found outside of business borders. In a nutshell, on-demand talent is the future of the workforce.
- Work with a reputed platform
Managing an ad hoc contingent workforce can soon become daunting. Fortunately, many opportunities in the gig economy are made possible by well-managed, venture-backed technology solutions that make it easier for businesses to collaborate with some safety net at a lower cost. Utilize a reputable on-demand outsourcing platform that retains consistent, validated talent. From there, it is simple to post a job, evaluate candidates and proposals. You can also manage project and payment logistics from one single interface.
- Move towards a blended workforce
This is all about analysing and preparing for your workload ahead of time. Consider how on-demand professionals fit into the equation, as you develop your hiring strategy in advance. Your leadership team can be more strategic regarding full-time recruitment and more flexible about project-based hires. You should chalk out your needs and decide on the availability of seasoned, independent specialists to use on a project-by-project basis.
2. For workers
When it pertains to making the transition to the gig economy, freelancers usually have the most to ponder about. It can involve a considerable amount of trial and error to find out what it takes to be a successful independent worker. According to a 2018 study on gig workers by Cornell SC Johnson College of Business, the most productive independent workers adopt common methods to get the most out of the gig economy. They establish four types of connections to help them negotiate the emotional turmoils of non-traditional work and find the energy and inspiration they need to succeed as a gig worker. These are- routines, people, purpose, and place.
Routines improve focus and performance and successful gig professionals recognise this. Certain work-specific rituals can boost productivity and focus. These mostly include following a to-do list, establishing a plan and beginning the day with the most difficult work or attending a client call. Others are more personal in nature, such as adopting self-care (nutrition, exercise, sleep etc ) into one's daily routine. All these can improve people's sense of discipline and control in uncertain situations.
Because people are social beings, loneliness can be detrimental to the success of independent workers. Research in corporate environments has proved the value of people in our careers. They can be role models who show who we may become eventually and also be peers who help us grow by sharing our route.
Workers may develop working relationships with helpful collaborators, contacts in related sectors, or like-minded professionals at a nearby co-working space. These people can drive the worker through difficult periods and encourage him to take chances that are important for the development of his work.
While the desire to set out on your own is a motivator for accepting freelance work, doing work that contributes to a bigger purpose is often essential for success. Purpose connects personal interests to a global need—it can be the difference between successful independent workers and those who are not.
The freedom to disconnect from the corporate headquarters is one of the most attractive aspects of gig employment. However, it may also be a disadvantage for many workers. Many people struggle because they do not create the space and time to accomplish what they must accomplish. The study referred above discovered that all the successful people got a space to work that shielded them from pressures and distractions. Because gig employment is frequently movable, setting a place for productive work might help reduce feelings of disconnectedness. It is also a driving force in the global spread of coworking spaces.
We hope the discussion above will help you understand what the term ‘Gig economy’ means and how your business can make the most out of it. We have also discussed the gig economy from the workers' point of view. From the entire discussion, you should be able to decide how to get the best out of the gig economy. For more information related to any topic in business and insurance, you may contact BimaKavach. Here, you can also get the best recommendation for any insurance product in just 5 minutes.