Why The Gig Economy Could Be The Future Of Work

The gig economy is nothing new, but thanks to modern digitally-enabled tools, it’s transitioning from a very niche sector to something far more substantial. Getting work in the gig economy is often as easy as signing up to an app or joining an agency: it doesn’t involve many of the usual hurdles workers have to jump to become full-time employed in a regular firm.

The Benefits Of The Gig Economy For Employers

From the perspective of employers, the gig economy offers enormous benefits. The main advantage is the fact that gig workers aren’t considered “employees” of a firm, meaning that firms do not have to observe many of the regulations that regular firms do. According to a study conducted by Buffer, more than 57 percent of firms save money by using free agent talent and more than 20 percent make savings on labor costs alone. Hiring a freelance worker just isn’t as expensive as employing somebody full-time. Businesses can get the people they want, on-demand, use them as and when they need them, and then cease using their services as soon as a project ends.

The Potential Pitfalls For Workers

For some, though, the gig economy is a symptom of a broader concern in the economy. Returns to capital are now far outstripping those to labor and labor’s share of national income has been falling. There’s a worry that freelance work may accelerate this process, giving labor less bargaining power and creating a low-wage, low-demand economy that is both unjust and unfair.

Whether income goes to capital or labor depends a lot on whether the companies providing freelance work can generate network effects (like, say, Google or Facebook). If they can, then workers will be forced to use their platforms and may pay high prices as a result. If not, then competition will force platform overheads down, and more of the money coming into them will go to the workers themselves.

Companies Are Trialing The Gig Economy To See If It Works

Although corporations are not, as yet, moving en masse to the gig economy model, they are dipping in and out, as and when they need it. For instance, many firms are using the gig economy to supplement their labor force, buying in the skills they need as their operations dictate. By doing this, they can maintain a core team of people committed to fulfilling the firm’s objectives long-term while at the same time getting the skills they need for one-off projects at the lowest cost possible.

The Growth Of The Gig Economy Now And In The Future

The gig economy is slowly permeating into all aspects of the modern economy, but there are still areas in which it lags. So far, the gig economy has extended to taxi drivers, bicycle couriers, freelance engineers, and freelance writers, but there are many other ways in which on-demand labor could serve the overall economy. For instance, it is likely that the gig economy will begin to move hard and fast into the education sector as students demand more bespoke, tailored tuition. We’re also expected to see the gig economy pop up in seasonal industries, like the retail sector, allowing retailers to get the staff they need at peak times. In 2017, Amazon hired an extra 120,000 workers to meet demand during the Christmas holidays.