With an astonishing 163 million individuals working on short-term projects in Europe and the United States alone, the gig economy is predicted to grow and become the driving force of the future.

Over the past 10 years, the number of people engaged in the gig economy has significantly increased. Thanks to the recent technological advancements and the rising popularity of online platforms such as Uber, Airbnb, and Fiverr, new forms of freelance work became widely available to people worldwide.

While creating unique working opportunities and providing people with improved work-life balance, the trend also helps organizations to cut office-related costs and tap into a pool of highly-skilled professionals. Many greet the ongoing change with enthusiasm but others see the gig economy as a potential threat to work security and stability.

So, will the system take over traditional employment or it will remain just another available job option? Let’s find out.

What Is the Gig Economy?

Source: www.edu.gcfglobal.org

According to TechTarget, a gig economy is a free market system, where workers engage in short-term projects (daily, weekly, or monthly). The system is made of three components: independent workers, consumers, and companies that serve as a marketplace to connect gig workers with consumers in a direct manner.

Providing a number of benefits to both employers and independent contractors, the system has gained tremendous popularity all over the world, especially in developing countries of the APAC region. As for the U.S., the gig economy there is catching up and is believed to grow from 34% in 2016 to 43% in 2020.

The State of the Gig Economy

In just a few years, independent workers grew from a small minority into a hefty crowd. As of now, the gig workers represent a whopping 31% of the global workforce. If before being a freelancer meant something obscure, now many people are seeking opportunities where they are free to choose their own workload.  

With the gig economy thriving, more and more talent managers are hiring freelancers in order to save cost, drive innovation, and leverage competitive advantage. Recent studies show that 62% of global talent managers see gig workers as the workforce of the future, while 65% think that the gig economy is rapidly becoming the new normal. According to Kelly Services, 84% of talent managers in the APAC region hire/use gig workers, followed by 80% in EMEA, and 40% in the U.S. Keeping those numbers in mind, we can safely assume that the trend is gaining popularity across all regions and is unlikely to slow down.

62% of global talent managers see gig workers as the workforce of the future, while 65% think that the gig economy is rapidly becoming the new normal.

Factors Aiding the Rise of the Gig Economy

Continued technological advancements and the increasing popularity of job platforms are the two main factors facilitating the gig economy growth. However, there are other aspects that affect the popularity of independent work:

Culture: With our culture constantly evolving, new generations of workers emerge. Tired of corporate jobs and inflexible working environments, more and more individuals prefer jobs that provide them with a higher degree of freedom. The Internet, especially Social Media, also contributes to the change by showcasing success stories of digital nomads and freelance workers who have full control over their working hours.

The Great Recession: After a period of general economic decline during the late 2000s and early 2010s, companies had to come up with new strategies in order to stay afloat. One of the solutions was to reduce the number of full-time employees and to hire on-demand workers instead.

Seasonal Spikes: Many companies don’t need full-time Graphic Designers, Developers, and Marketers in their teams. That is why they turn to job platforms to hire gig workers on demand and at short notice.

Advantages of Short-Term Working Arrangements

Source: fabrikbrands.com

When speaking of the gig economy benefits, we tend to think about one in particular: lower business costs. Without the need to accommodate and train short-term workers, companies can save a vast amount of resources and time. As found by Kelly Services, 43% of companies that use gig workers are able to save up to 20% in labour costs, while hiring a full-time employee can be 30-40% more expensive.

On the other hand, for workers, flexibility plays a key role. 33% of workers say that keeping work-life balance is difficult and the gig economy gives them more personal time. One of the freelance artists who participated in the gig economy study said:

“When I think of myself, I think of an animal that has been free his whole life and it could never be happy being put in a cage. I think of going to a regular job like being put in a cage. I feel free, I feel happy to be the way I am doing it, and because I started so young, that’s the way I got used to. I could never see myself working for somebody else.”

How About Downturns?

However, like anything else, the system has a flip side. One is the lack of Corporate Culture and Organization Environment. Without a company providing guidance, community, team spirit and support, gig workers might feel the lack of direction and, as a result, fail to produce long-term value and provide organizations with exceptional services.  

Another downturn is the lack of regulations: being an emerging trend, the gig economy still needs to be regulated by the policymakers. At the moment, the major concerns include the lack of paid leave, health-care insurance, and retirement plans. With no policies protecting gig workers, they can be affected by numerous circumstances. To make sure that they generate sufficient income, 63% of independent workers check their savings monthly as opposed to 20% of full-time employees.

But regardless of the current obstacles, the gig economy is here to stay. With the growing popularity of on-demand platforms and the increasing number of people engaged in gig jobs, it’s a given that the governments will have to put much-needed regulations in place and secure gig workers with solid benefits.

The World of Work Will Never Be the Same

Will the Gig Economy be the 4th industrial revolution, as Henry Ford started in 1908?

With millennials and generation Z dominating the working world, traditional employment will keep changing. The next few decades will witness a drastic shift from full-time employment to gig-based projects as more and more people value personal time over corporate careers. Jobs markets are unpredictable and even full-time workers cannot surely say that they will have a job in a year, making the gig economy a possible future for all of us.

However, to aid the growth of the gig economy, the governments will need to create a set of regulations to protect freelancers and provide them with more security and financial stability. But despite the lack of policies regulating short-term work, the gig economy will likely continue to thrive and dominate the working landscape in just a few decades.

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