What Are The Pros And Cons Of Working In The Gig Economy?
What if you no longer had to bear a boss that fails to be a leader? If you didn’t need to be part of a corporate culture (with a formal dress code, for instance) that doesn’t suit you? If you could manage your own work schedule freely and work only with ethical clients or companies with a CSR strategy? As an independent worker, you might have the chance to make your own rules. Yet, all that glitters is not gold and being an independent worker in the gig economy has its downsides too.
The Sharing Economy And The Gig Economy
You might have heard about the sharing economy and the gig economy. You might even perhaps think of them as one and the same. However, and although they overlap and their differences aren’t crystal clear, the gig economy is part of the sharing economy. As EY puts it, the sharing economy, thanks to the power of digital platforms, encompasses the increased utilization of durable assets, as well as the recirculation of goods and the exchange of productive assets and services. Of all this, the gig economy stands for initiatives based on contingent work that is transacted on a digital marketplace, as the Journal of the European Union puts it.
In other words, the gig economy is the specific trade of short-term services, where there’s a high degree of autonomy, payment is done by task and there’s a short-term relationship between worker and client. Because your Ubereats delivery is indeed giving someone the chance of making some money, and your freelancer friend might really be collaborating remotely with this multinational company on a 2-month project.
The sharing and gig economies have been quickly developing as networks and communications via specialized platforms and apps become the new normal. Today, 20-30% of the working-age population (162 million people) in the US and UE15 are independent workers (using both digital platforms and temporary work agencies to find work). According to McKinsey, most (70%) independent workers do it as a preferred choice, while 30% do it out of necessity. As well, according to a study from BMO, the top 3 reasons to embrace the gig economy are making extra money, better balancing career and family needs, and having autonomy and control. Despite its benefits, independent work has its trade-offs too.
The Pros Of The Gig And Freelance Economy
Pros: Workers Get To Choose Where, When and What They’ll Work On
Enough is enough. When you’re working in the gig economy you can decide the jobs you’re applying to or taking, which platforms you’re joining, where you’re working from and under what schedule. In the world of freelancers and digital nomads, once you’ve built a strong reputation and market differentiation, if you have multiple recommendations you’ll be able to select and pick up the job offers that “best” suit your interests and gives you work-life balance. However, this isn’t always the case, because many people performing tasks that require less technical expertise and hard skills will likely pick any temporary gigs they can work on, often at not so interesting “salaries”.
Moreover, according to McKinsey’s study, people who do independent work by choice and have it as their primary source of income report greater satisfaction with their work than traditional workers. Furthermore, people working out of necessity (they’re not really picking up a job they like but one that allows them to pay the bills) have the same levels of dissatisfaction in their work whether they have traditional jobs or work in the gig economy.
Pros: Businesses Save Time, Money And Get More Agile Thanks To The Gig Economy
In a gig economy, organizations can reduce their costs with both time and money. Companies aren’t hiring someone for a long period and with all the privileges of a fixed-term employee (like paid vacations or health insurance, as is the case in some countries). This allows them not only to save money but also to get the best person on board for a short time, as (s)he could be too expensive for a medium-long period. This might be the case especially for jobs requiring technical expertise.
Furthermore, businesses also save time with long recruitment and selection processes. With today’s intuitive and smartly built digital platforms and apps, it’s easy to find the perform (wo)man for the job, wherever (s)he is working from. In this way, businesses benefit from scalability as they can keep their core operations while calling in external expertise when they need it. This allows them to be more agile and better respond to the market’s unpredictabilities. They can now quickly gather a team of different experts, like a mechanical engineer, a designer, and a lawyer, to work together in a short-term project.
Apart from their benefits for job seekers and companies, digital business models created “value” for consumers too. Thanks to them, transactions costs for consumers are lower, all types of products are delivered everywhere, almost at any time, and the idea of convenience is now at a whole new level.
As well, from a macroeconomic perspective, independent work brings many benefits too as it increases labor force participation and the number of hours worked in the economy. These flexible opportunities brought by the gig economy are suited for 100 million inactive adults in the US and EU-15 who want to work on part-time jobs, from students to retirees, caregivers or the disabled. For instance, 10% of Airbnb’s hosts are over 60 years old and 25% of Uber’s drivers are over age 50.
Moreover, as McKinsey puts it, jobs from the gig economy are an extraordinary opportunity to lift up the unemployed. At the same time, they allow people to specialize in what they do best, making them feel more engaged and ultimately raising their productivity. So from a point of view of artists or creatives starting a career, it’s a good way to making a living while dedicating time to make their art and build up a career.
Cons: Less Social Protection And No More Perks In The Gig Economy
Traditional jobs often provide employees with a lot of protections and perks. From health benefits and a 401k retirement plan to unemployment insurance, the chance to use a company’s car and having paid fuel. Well, the sad news is that independent workers don’t benefit from any of this as they’re just performing temporary works. They need to handle their own retirement plan and health insurance and use their own car and fuel.
Moreover, paid vacations or sick days are over. Independent workers are paid per assignment and they’ll only get all their money once the job is over and delivered. So if they’re not working, they’re not being paid. There’s even the risk of not being paid for work that was already performed, with all the regulatory bureaucratic costs involved. And also of being paid ridiculous amounts of money, like less than £2.50 an hour, depending on the industry and the employer. As for all the other perks, those are up for independent workers to manage too.
Cons: The Gig Economy Can Bring Loneliness
People often complain about their boss or their colleagues, whether for professional or personal reasons. However, being an independent worker, depending on the type of job, can be very lonely and perhaps even make people regret those complaints from the old days. This isn’t the case for people working as drivers or caregivers for sure. But imagine someone doing pickups and deliveries across long distances and spending all those hours alone.
This might also be the circumstance for designers, developers or copywriters working on their laptop from home. They can spending a whole week working at home without real-life interactions. However, as long as there’s internet access, this problem isn’t hard to solve. Because as the number of freelancers grows, so does the number of co-work spaces. That’s why today there are even co-work chains spread all over the world such as WeWork or the Impact Hub.
Cons: Independent Workers In The Gig Economy Need Discipline And Resilience. Lot’s Of It
Being able to make your own schedule, where you work from or on what it’s definitely great. Except when it is not. All this freedom requires a lot of discipline. Discipline not to wake up late, convince clients that you’re the one, keep up to the deadlines agreed, be on time, pleasing clients to have positive reviews, and above all, not messing up as it’ll be your full responsibility. And not everyone’s suited for all this autonomy. Some people only work well with a bit more of structure and someone setting the guidelines.
Furthermore, one also needs to be extremely resilient, i.e., resistant to adversity. If you’re a freelancer, the client you’re counting on might not pick you for the job or ask you for more than what was previously agreed. If you’re a driver in the gig economy, external problems like an accident on the road can happen. If you’re a caregiver there’s always to chance that you need to handle a kid or elderly person with a complicated personality. Or if you’re using a scooter and making food deliveries you might need to resist to an entire cold and rainy week or not getting paid that week if you choose to stay home.
Cons: The Need to Adapt To The Sharing And Gig Economies To Survive
Companies that operate by the gig economy’s principles also challenged previously established businesses, forcing them to adapt and to develop technologically. In some situations, the gig economy has actually replaced long-standing industries and their workforce. For instance, Airbnb is putting the hotel’s industry on notice, and the same happens with Uber and the taxi industry. If these industries don’t reinvent themselves, they won’t likely be sustainable enough to survive in the long term.
The Gig Economy Is Here To Stay
Having the chance to manage your time, your schedule, and putting your life first and your job second is definitely empowering. If you manage to have the discipline it takes, you’ll be able to have kind of full-time work in gig economy jobs. It’s also good for the economy as it increases labor force participation, especially when it comes to flexible, part-time job opportunities.
On the other hand, there’s never a steady paycheck, the number of worked hours is always changing and there are no company-provided benefits such as retirement pension plan or a health insurance plan. It’s also an economy that doesn’t suit everyone: only the ones that are disciplined and resilient. Or for the ones thinking either about using it as a side job to make some money as they grow a career in their area of interesting, or someone living the present moment without planning much ahead.
The forecasts are that jobs in the gig economy will continue to rise. National legal systems need to adapt to this new tendency and guarantee independent workers some kind of social protection. As for whether the gig economy is or not for you? You need to think about your profile and expertise, see if you could have a good fit doing it part-time or full-time and analyze what the market is looking for. One thing is for sure: there’s no need to rush. The gig economy is here to stay.
Image credits to home delivery on Shutterstock, caregiver on Shutterstock, isolated freelancer on Shutterstock, digital team on Shutterstock, laptop nature on Shutterstock, freelancer beach on Shutterstock and scooter delivery on Shutterstock