As the world is all set to galvanize digitization in a few months, amid the pandemic fear, there is a high hope on the horizon for both customers and entrepreneurs.
According to the survey, the gig economy will take a front seat to fulfill the rising needs of customers and bring modifications to business models.
The gig economy, also sometimes known as the "shared economy," is defined by freelance and contract work rather than appointing them on permanent bases. The term "gig economy" is novel to you, but there are high chances that you are already a part of it and contributing the most to get daily things done.
If you have ever used a ride-sharing service like Uber or Gett or have ordered food online using popular apps like GrubHub, Doordash, and Zomato, you have contributed some portion to the rising gig economy. Along with digitization, people's evolving preferences are also a reason behind the logarithmic growth of the gig economy.
The rise of the digital age has changed how we live and work, communicate, and exchange information. For example, we can now watch movies, order groceries online, and consult doctors residing outside of the city. It adds so much flexibility and comfort to our daily lives. So it is not surprising that people are now choosing that same flexibility with their working style.
Here, technology plays a vital role. Employees who work in programming and development only need a laptop or desktop and a stable internet connection to work from any corner of the world. Platforms like Upwork and Fiverr help workers get projects and ensure that they get paid and clients are satisfied.
Independent workers or the "gig economy" are at the center of a global debate, but what is it? Working nine to five for a single company or being on the payroll is no longer compulsory for millions of people. Instead, they can work for various employers and maintain a work-life balance. So now you must be curious to know the gig economy and why the scope of this sector across the globe is enormous.
What is the Gig Economy?
You are probably engaged in this economy segment if you have ever called a taxi, rented a vacation rental, ordered food, or bought a handmade craft using an app. As stated by the U.K. government, the "gig economy" entails the exchange of labor for money between individuals and companies via digital platforms that facilitate a short-term, pay-by-the-job matching between providers and customers.
From driving a taxi or delivering packages to editing documents, providing technical support, to performing arts, gig workers come in many shapes and sizes. In the gig economy, people do not differentiate themselves based on their education or chosen field but rather by doing short-term projects rather than working as long-term employees.
Gig economy jobs are also possible for employees who have contract jobs. For example, if you have a full-time job, such as a teacher or secretary, you might supplement your income by working a gig-based job like bartending in your spare time. The responsibilities of a gig worker often vary significantly from those of a full-time employee.
In a nutshell,
- The gig economy uses online or digital platforms to connect users with suppliers to provide short term benefits
- Real-life examples are ride-hailing apps (drivers), food delivery apps (delivery providers), and rental apps such as Airbnb
- It is a booming segment, offering many economic benefits and generating employment globally
- The only challenge is to balance innovation with a fair deal for service providers
Source: Mastercard Gig Economy Industry Outlook and Needs Assessment
Hence, a report released from Mastercard said that global gig economy transactions are projected to grow by 17% a year to around $455 billion by 2023. Today, more and more people are turning to the gig economy to make extra cash. On the other hand, businesses are also hiring workers based on their needs as it saves additional fixed costs and helps them grow amid this challenging time.
For instance, food delivery providers. Amid the restaurant shut down during the lockdown, neither the restaurant nor the food delivery company is responsible for paying any amount as the salary is decided based on the number of successful deliveries of the orders.
Gig Aka Shared Economy: The Decent Push
The gig economy has grown for a number of reasons. Due to its flexibility and independence, freelancing seems to attract more workers than full-time employment. It has made it easier to find more work across the globe, and it has made work more flexible so that it can adapt to changing lifestyle demands and needs. Gig makes it possible for freelancers to choose a lifestyle that conventional jobs would not allow. In addition to determining when and where they will work, they will also determine the price of their services.
Flexibility leads to a lower cost of training and recruitment, no medical coverage, and the ability to replace employees more quickly if they need to. Small and medium-scale businesses benefit from hiring remote workers because they are more cost-effective, and employers have a more comprehensive range of applicants to pick from. Furthermore, they do not necessarily need to hire someone close to them.
In addition, many employers are trying to respond to the changing needs and appetites of workers in Generation Z, as they prefer gig work to full-time employment in a more conventional office environment. Additionally, gig work can have the following advantages for the individual:
- Work-life balance
- Be your boss
- Digitization brings more opportunities
- Better exposure
- Generate extra source of income
To validate the above statement, here we can consider Uber drivers. Amid the lockdown, they were occupied with food deliveries. So it means they won't stay unemployed for a long time. Indeed, on-demand app development services have been helping a lot as entrepreneurs can boost business growth and withstand global contingencies.
It is essential to understand that the gig economy is still nascent and is plagued by several challenges. The oncoming of Uber, Doordash, Fiverr, Ola, and GrubHub, has changed how businesses are done. The successful transactions also indicate a strong consumer market presence, and this consumerism is the backbone of the strong growth of the future economy.
Major Drivers Behind This Unprecedented Growth
To augment their income or perhaps make a living, people increasingly turn to the gig economy. But where did this explosive growth come from? A variety of factors aided the gig economy's accessibility. Let's look at the leading causes behind the gig economy's rise.
The 2008 Economic Challenges
Many people were unemployed or underemployed in the 2008 financial crisis. As a result, the demand for temporary work skyrocketed as people sought methods to supplement or replace their income.
Many people found themselves working many part-time or freelance jobs simultaneously or combining fixed contract employment with a flexible side gig. Gig labor became increasingly accepted on a bigger scale as more people became familiar with it.
The Rapid Adoption of Digital Technologies
A gig worker can work from anywhere globally, thanks to the internet. So, whether you're a freelance illustrator looking for an author or an agency looking for an SEO expert to assist with a large project, distance is no longer an obstacle to finding the right people to work with.
Furthermore, cutting-edge technology has resulted in the emergence of digital gig economy platforms, which are typically app-based and connect consumers with workers directly. For example, consider Uber, which connects drivers with passengers in need of transportation, or GrubHub, which shows nearby restaurants to diners looking for food delivery.
And The Novel Pandemic
Gig economy employees have become critical in the face of the global COVID-19 pandemic, providing a feeling of normalcy and keeping services operating that would otherwise have succumbed to the catastrophe. Gig workers have provided much-needed support during lockdowns worldwide, from essential contactless food and medical supplies to online educational services. Furthermore, as people's employment was lost or their hours were decreased, many went to the gig economy to augment their income.
Even establishments that would have closed their doors for good during the lockdown have benefited from the gig economy and kept their business competitive. While traditional employees such as servers and bartenders are not required to work during the lockdown, delivery people have stepped in to help supply meals to hungry customers.
This keeps chefs working and allows restaurants to pay their rent so that, hopefully, they will be able to reopen their doors once the lockdown is lifted. It also generates business for delivery drivers due to apps such as UberEats, Doordash, and Wolt.
Let's summarise the above benefits in points,
- Employees in traditional employment situations must work a set number of hours. However, other people want a flexible work schedule, fueling the gig economy's growth.
- People are forced to work in the gig economy as unemployment rates rise. The gig economy is frequently a win-win situation for both employers and employees.
- Companies can save money by not having to recruit full-time employees. On the other hand, workers will not be enslaved by their employers. They can work with other people after the gig is completed.
Ensure Business Continuity Amidst the Pandemic with Gig Economy
We now use the gig economy to book rides, get goods and services delivered, stay at home instead of a hotel, earn extra money for other expenses, etc. People of various ages are participating in the gig economy for multiple reasons.
To summarise, Covid-19 has been a further driver of an already existing rising trend in the labor market, such as the rise of freelancing and gig jobs and the rise of remote work and labor internationalization, all of which have been propelled by technological advancements.