Business Informative & Scope

The Gig Economy

by Nisha K

Gig economy is a temporary work system based on a short-term relationship between the worker and the company. Workers perform ‘gigs’ where they are employed for a specific time. Here, we take a look at the gig economy, the cost, quality and flexibility it brings about.

In a gig economy, temporary flexible jobs are commonplace and companies are keen towards hiring freelancers and independent contractors instead of full-time employees. According to Investopedia due to the large number of people who are willing to work part-time or in temporary positions, the results of a gig economy is cheaper and more efficient services like Uber and Airbnb.

There are many ranges of positions that fall under the category of ‘gig’. Part-time professors, for example are contracted employees and universities can cut cost by matching professors to their academic needs instead of hiring full time ones. This also means another thing – you can forget about building your career in a gig economy. Because there are so many freelancers and with its reduced cost, one wouldn’t be able to build a career or stay long in the same position.

Quartz says that the downside of this is that workers also can’t afford to be too picky, despite the supposed liberty of being your own boss in the sharing economy. Platform algorithms are designed to downgrade those who aren’t always available, making it ever harder to pick up gigs. All this ends up putting workers in dangerous situations, working for strangers without any protections from their employers. Uber, for example offer e-mail communications to drivers, a service that is not nearly as responsive as the taxi cab dispatcher.

Why Gig Economy?
There are many factors that contribute to the gig economy. America’s on its way to establishing a gig economy and estimates third of the working population are already in some gig capacity. In this modern digital world, it’s becoming common for people to work remotely or from home. This in return, facilitates independent contracting work as many of the jobs don’t require the freelancer to be present at work. Also, computers have developed to the point that they can take the place of the jobs people previously held.

Gig jobs will represent 40 per cent of all jobs by 2020.

Most times, employers can’t afford to hire full time employees to do all the work, so part-time or temporary employees can be in charge during busier times or for a specific project. For example, a startup company or a small business may have issues of funding for the person who asks for a full-time job that comes with a fixed monthly salary. At the same time, an employee may also move around to find something suitable. In current times, with millennials looking for a job – many in fact don’t work in the field they studied in. Hence, they move around to find something that excites them and makes them stay for a while. People also generally change careers throughout their lifetime and the gig economy is a reflection of this occurring on a large scale. Work life balance being another cause that employees like to work part-time. The gig system allows them personal time and to network better. Hence, they can quote the price on projects of their choice and at a time and place of their choice too.

Gig Economy in Different Parts of the World
According to TodayOnline a growing army of underemployed in Indonesia has risen alongside rapid growth in connectivity and e-commerce. More than 130 million people spread across the sprawling archipelago of 17,000 islands are now online, most of them via their smart phones. Less than a decade ago there were about two million people using the internet in Indonesia. Underemployment has been on the rise across the globe, as workers are forced from full-time jobs into part-time roles and independent contracting.

In Indonesia, Southeast Asia’s biggest economy, home to the world’s fourth largest workforce, the aforementioned rising trend is even more pronounced. Of the 127 million who are working, about a third are underemployed – working less than 35 hours a week, including more than 30 million Indonesians who are locked in part time jobs, according to official data. On the upside, a growing digital sector is creating new jobs, as well as improving the lives of ordinary Indonesians, that could deliver a productivity windfall worth USD120 billion a year within the next decade, according to McKinsey & Company, a consulting firm.

When Aditia Nelwan and his wife unexpectedly found themselves out of town for the night, they thought about their two-month-old kitten that had been sleeping in their garage. ‘He only likes to eat fried mackerel and we’d forgotten to feed him’, said Nelwan, who works for a consultancy firm in Jakarta. They reached out to Go-jek on their smart phones and arranged for a motorcycle taxi driver to pick up two pieces of fish from a roadside restaurant and deliver them to their darkened garage. The company, in addition to its ride-hailing service, offers access to everything from food delivery to cleaners and cream baths.

Researchers from the University of Indonesia’s Faculty of Economics and Business estimate Go-Jek contributes 8.2 trillion rupiah a year to the national economy through the income of its driver partners alone, while corporate partners are adding 1.7 rupiah trillion a year. The app has been downloaded more than 60 million times in Indonesia. The rise of digital-driven business models, and the part-time jobs they create, is changing the lifestyles of Indonesian consumers, but also its workers.

However, in Europe Financial Times states that Brussels is pressing European Union (EU) governments to provide more protection for workers in the ‘gig economy’. The European Commission recommended ‘irregular’ workers — such as Deliveroo bike couriers and Uber drivers — should have minimum levels of social security protection such as unemployment benefits and maternity leave. Brussels’ demands are part of a bid to create a level playing field across Europe on workers’ rights — wording that hints at fears the United Kingdom’s flexible labour market could lead a race to the bottom on employee protections after Brexit.

Unlike many EU member states, United Kingdom doesn’t provide maternity leave for those on irregular work contracts or insurance for self-employed people who are injured at work. UK also gives only partial cover for self-employed workers claiming sickness benefits. These are all areas where the EU wants mandatory coverage for all workers.

Forecast of the Gig Economy
Gig jobs will represent 40 per cent of all jobs by 2020. According to Positive Organizations over 50 per cent of millennials are already working in this style. Economists reported that all of the net job growth between 2005 and 2015 was in this type of work. Two factors seem to be enabling this trend: one, is companies are cutting costs wherever they can and it’s cheaper to have contract labour than full-time employees, and; second, is technology. More and more people can work from anywhere doing jobs that used to require an office and equipment that was only in the office.


Photos by Alex Kotliarskyi and Xtra Inc. on Unsplash.


22 Mar 2019
Last modified: 22 Mar 2019
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