The Curious Case of Gig Economy vs. Traditional Employment
What is the one thing that’s common between Uber, Fiverr, TaskRabbit, Lyft, PostMates, Instacart, 99Designs, and many other valley-born companies?
They all provide an ‘on-demand’ service and are a part of the “Gig Economy.”
The gig economy and on-demand services have replaced many full-time jobs into a one-time gig. From hiring a graphic designer for your book cover to dropping someone’s grocery at the doorstep, we all have been on either side of the spectrum at some point in life.
In this hyper-connected world, the future of work has evolved more than ever, and there is no second thought about the impact these companies have had on all of us. Over the years, the way we earn, live, and consume things have changed drastically, and, if you look back, it’s not been that long.
- The gig economy in the United Kingdom doubled in size from 2016 to 2019.
- Forbes suggests that 50% of the U.S. workforce will be freelancers by 2020.
- Reports from Payoneer Income Report show that more than 70% of the gig workers find work on freelance sites.
The New Era of Employment
The evolution of today’s employment has brought about many changes in how employers engage, seek, and hire their employees. The hiring process has undergone an overhaul, and traditional methods are not feasible or practical anymore.
The 9-to-5 requirement is slowly fading away, and the expectations are now replaced with terms like Flexible working hours, Work from Home (WFH), Remote work, Freelance, and Independent Contractors.
A global survey of 9,500 people in around 12 countries noted that a new era of work is on the rise. Individuals of this era prefer flexibility and balance rather than a traditional 9–5 job.
Through Gig Economy, people with in-demand skills, talent, and capabilities can gain access to countless opportunities from around the world. Organizations are building remote teams with diverse talent, skills, and culture for creating solutions to complex problems. Additionally, the quality of talent in freelance workers is often greater than those who work 9-to-5 jobs. It is because they have more room to grow, they are always learning and increasing their skill set, and they work on a variety of solutions and problems.
Did Millennials drive it?
These days any significant change that happens in the world, whether it is good or bad, is attributed to the Millennials. They have been credited with disrupting workplaces, housing, marriage, and now traditional employment. It is due to the adaptability, flexibility, and ease of Gigs. Millennials look for simplicity, comfort, and direct objectives. They are notorious for rejecting protocols, breaking processes, and revolutionizing work. And in this age of change, all this is necessary.
Eighty-four percent of millennials and 81% of Gen Z’ers said they would consider joining the gig economy.
Freelancing in the United States could triple to 42 million workers by 2020, and 42 percent of those people are likely to be millennials.
Numbers like these tell us two things: the gig economy is going strong, and millennials are absolutely leading it!
Is it for everyone?
The Gig Economy is not all sunshine & rainbows. Like any other thing, it has its own set of pros & cons. While the benefits mostly outweigh the drawbacks, it is essential to take both into account to see the complete picture. One of the best aspects of freelance work is that it is excellent for creatives or for those looking for a temp job to get by. Artists, designers, writers, and the likes can significantly benefit from this way of work as it can leave them open to pursue their passions, all while sustaining them financially. Other people who can benefit from this are homemakers, single moms, and caretakers. This mode of work will allow them to be present at their homes by working remotely. Individuals can also set their hours, dictate their workload, set their rates, and modify terms.
When talking about the Cons of Freelancing and Gig Economy, reliability is the main one. There is no confirmation that you will be able to get work every month of the year. There are going to be times when you are swarmed with opportunities and times when there will be no opportunities. There is also a lack of security and stability. If you are a middle-class individual who heavily relies on work to get your bills paid, then you can not afford instability or financial insecurity. There are no bonuses, retirement plans, benefits, insurance as well. There are a lot of unknowns and risk factors. You cannot predict when you will land your next gig. Fifty years ago, people spent their entire lives at a single company in the same position. However, in recent times this is not possible. Even in 9-to-5 jobs, things are not as stable or predictable as they used to be.
How Do Employers Benefit from the Gig Economy?
One of the most critical aspects of any business or organization is the ability to find the right talent at cheap rates. It is identified as a critical business risk by many studies and research. It is also very frequently discussed in the circles.
When talking about why employers go for the gig economy, most leaders and managers stated that one of the main reasons was the flexibility that this type of employment provides. The next drivers were access to expertise, efficiency, and cost. There are currently approximately 170 gig economy companies in the United States that only hire remote workers. This validates the fact that there is a high level of executive confidence in the durability of the gig economy.
This trust and confidence in the system make evident sense. As the pace of change in the business and technology sectors is rapid and unrelenting, so is the need for diverse and evolving talent. Organizations need quick access to individuals with the newest skills and tools to stay ahead of the game, unlike the traditional employment approach, where organizations train their employees on the latest technology in town. This is why the Gig Economy is backed by employers and top leaders.
The current pace of evolution in business is requiring teams to form at a higher pace. As well as enable the employees to adjust in teams and with the organizations more quickly. This is why, with the commoditization of certain services, the Gig Economy is making it efficient, more cost-effective, and easier to obtain the diverse skill set.
Who decides the worth of talent?
With the Gig Economy, the focus is mainly on ‘talent and cost”. However, as the services get commoditized, the cost of these services is mostly driven downwards. One such example is of Uber, by providing transport services as a commodity, they are focusing on driving the labor costs downwards.
However, the question is that is this the same for other services as well? Like that of software engineers, writers, data scientists, and finance professionals. How is their worth calculated in the freelance market? How does one service provider differ from the other, and on what basis would one decide the price? The answer is that most such service providers are differentiated through experience, skill, and talent.
In the Gig Economy, the platforms become the enablers of talent. Organizations can seek out the very best or the cost-effective service provider with ease. This is what will also ultimately drive all highly-skilled professionals and individuals towards agile work.
The Commoditized Side
While we can celebrate the gig economy with advantages like flexibility, additional income, freedom, access to opportunity, and work/life balance, there have been debates on the pressing challenges that come with this ‘freedom.’
Challenges include lack of stability, downward wage pressure, saturated opportunities, and cut-throat competition.
The rapid growth of the gig economy, on the one hand, tells us that this is the future of work, but on the other hand, it also raises the question of whether a lack of job security, lower pay and no health benefits is the future we want to build? A future where employers do not guarantee job security or any other benefit, and employees can no longer expect it as well.
With a deeper understanding of the challenges the gig economy presents, let’s analyze the things on a spectrum of how people engage in freelance work in different capacities. A freelance film-maker releasing a show on Netflix is not the same as a driver who drives around people for 20$/hour.
This brings us to a debate which has been a part of many circles in the industry, are there two gig economies?
One that is driven by the platform
One that is driven by talent.
In the Gig Economy, the platforms that hire freelancers decide the worth of talent around the world.
In the Talent Economy, the platforms only act as an enabler, and the talent decides the worth.
Is this the end of Traditional Employment?
To most, it may seem like the end of traditional employment and workplaces, but this is not the case. Traditional employment is resilient, and there is still quite sometime before the 9-to-5 jobs are completely eliminated. There are a lot of challenges that the Gig Economy must face before it envelopes the traditional form of employment. Some of the main ones being security, stability, dependability, benefits, bonuses, and more. The Gig Economy also calls for a change and implementation of workforce policies.
Then there are also the benefits of an organization set up, such as a sense of belonging, commitment, and loyalty. They enable interactions between employees, social gatherings, collective growth, and healthy competition. It allows employees to work towards a common cause, to share ideas, and to enable each other’s growth.
With an organizational setup, you can quickly ask your senior for help, go to your colleague for a quick chat, socialize, share ideas and solutions, and more. With freelance work, you are limited. There is no sharing of ideas or competition. There is a lack of community and support as well. All these points collectively ensure that the traditional workplace is here to stay. It will be a long while before we are entirely dependent on the Gig Economy. And by the time we do, it will have undergone a great deal of evolution as well.
Parting Note — The only strategy is: “Evolve.”
As non-traditional forms of talent and skill continue to grow, organizations and businesses need to formulate strategies and policies to attract and accommodate contractors, freelancers, and gig workers. This calls for the implementation of an entirely new approach of overseeing, communicating, and handling contractors. As the change of pace accelerates, employers will be accommodating more and more such talented individuals, and it will lead to an already ongoing decline in traditional employment. Workspaces will evolve, and so will teams.
To succeed, we must adapt to this change just as quickly. As non-traditional skills and talents take center stage, organizations shift towards welcoming freelancers and contractors. The flexibility and accessibility of freelancers and independent contractors are what attract employers.
Currently, several organizations are working to promote the Gig Economy. However, there are still quite a few cons of gigs as well, like lack of stability, benefits & bonuses, downward wage, and more. We still have to work towards overcoming these challenges to allow the Gig Economy to flourish fully.
