The Economy of Tomorrow: Gig Economy

by Smriti Vohra

Particularly over the last decade, the global economy has undergone persistent revamping, and the lifestyle of people has evolved significantly.



With the changes in work culture, a growing number of individuals are witnessing a shift from traditional job arrangements to an unconventional work arrangement known as the gig economy.


What does Gig Economy mean?


A gig economy is characterized by short term contracts for freelance work. It’s a type of labor market wherein companies and businesses employ workers to complete specific tasks and projects, and a large pool of people work part-time on a contractual basis.


The work arrangement, nature of jobs, and legal classification of workers in a gig economy are enormously different from that of a traditional or conventional work arrangement.



Organizations hire professionals for a limited period of time, with pre-specified terms and conditions, to meet their short term commitments. It highlights the concept of on-demand services. The gig worker can specify the amount of time they wish to dedicate for a project or the “gig job.”


After the termination of the desired project, they can move on to the next project, with a different organization. This non-traditional workforce can encompass a wide range of individuals - from freelancers who focus on need-based requirements, to part-time professors teaching in academic institutions.


Why the Gig Economy?



In the modern-day world, the prospect of a gig economy is becoming increasingly attractive to some groups. There are numerous reasons for this, the paramount one being flexibility. 9-5 jobs are becoming increasingly unpopular amongst the younger generations.


In order to facilitate a healthy work-life balance and to obtain the benefits of flexible and convenient schedules, people opt to work as gig workers.


Companies who employ these services are able to gain the advantage of a professional workforce without having to undergo the cost of maintaining the staff. Therefore, corporations often find it much more reasonable to hire independent contractors rather than permanent employees.


This may, however, prove to be disadvantageous for the gig workers themselves, as they may not be entitled to the same benefits as a permanent employee such as a regular salary or medical insurance.


There is also decreased job security for the workers, which poses a huge threat, especially in the current unstable economic environment. Thus, aspiring gig workers must learn to strike a balance between security and flexibility.


Shamrock Organizations

An organization need not consist of only permanent or temporary workers - it can also be a mindful mixture of both. This is commonly known as a shamrock organization, a name inspired by the three-leafed structure of the shamrock plant. The term was coined by Charles Handy, Irish academic and management expert, in his book “The Age Unreason.”



He believed that there were 3 essential parts of an organization - core workers (full time, permanent staff), peripheral workers (flexible, part-time workers), and contract workers (hired for a specific period of time).


He considered all 3 units to be an integral part of any organization, because the core workers consisted of the highly trained professional workforce who operated the daily, routine functions of the business, while the contractual workers helped bring about specialization, along with the peripheral workers, who ensured that the work was complete and of good quality.


How popular is Gig Economy?


From construction and commerce to telecommunication and hospitality, the concept of a gig economy has become one of the most sought after solutions to staffing problems, meeting the needs of both employees and employers.


Since there is ambiguity regarding who and what exactly constitutes the part of the gig economy, it is difficult to predict the accurate percentage of the workforce involved. With the rise of companies like Uber and Amazon, more and more people are now partaking in part-time work.


Steve King, the owner of Emergent Research, conducted studies whose reports concluded that 36% of the population of the USA are employed as gig workers. The reports predict that by 2027, 50% of the population of the US will be a part of the gig culture.


Even though the US gig economy is currently larger than that of any other country, developing countries like India, with their large, untapped populations, possess a great deal of potential in this regard.


With unprecedented advancement towards technology and constant development of human capital, the gig culture is bound to grow at an accelerated rate in emerging economies like India.


The Rise of Gig Economy


The leap towards digitalization has played a huge role in facilitating this trend. People from any part of the world are able to render their services seamlessly, and the workforce is becoming more mobile. Be it healthcare, manufacturing, or logistics, companies are embracing themselves with digital devices.


All employees have instant access to any information they need, from anywhere in the world, at any time of the day. Virtual collaborations from people around the globe have become customary. The flexibility of work schedules accompanied by freedom and personal fulfilments has driven people to be a part of the gig culture.


Technology platform companies such as Uber, Urbanclap, and Airbnb have been a major force in expanding the gig culture as they run primarily on a contractual basis. This business model ensures a direct interface between service providers and consumers, thereby making it more efficient and convenient.


Despite its benefits, the gig economy is bound to face some major challenges. Such a significant shift in working culture and practices could make it hard for full-time employees who prefer a traditional career path to find a stable job.


Too much flexibility on the part of the gig workers could also hinder the efficiency of the organizations due to a lack of consistency and stability. As aforementioned, gig workers are, by definition, deprived of a stable source of income and job security.


The rise of the gig economy has made unparalleled alterations to the global economy. Recognizing and adapting this change, while striking a balance between its demand and supply, will further create opportunities for employment and economic growth.


References


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