In the 2000s, the digitalization of the economy and industry developed rapidly due to the development of information and communication technologies such as the Internet and the popularization of smartphones. As a result, on-demand platforms based on digital technology have created jobs and employment forms that are differentiated from existing offline transactions by the level of accessibility, convenience and price competitiveness. In general, “work” is described as a full-time worker with set working hours, including benefits. But the definition of work began to change with changing economic conditions and continued technological advances, and the change in the economy created a new labor force characterized by independent and contractual labor.

With the world coming under the Covid clouds, employees and employers were getting familiar with remote work. In each group, some people doubted that telecommuting was not only a trend, but it was here to stay. Times have changed and working from home is not a benefit anymore. It has become a natural way of working for many of us because of circumstances. Now, we are experiencing another change in the labor market – the gig economy.

What is the Gig economy?

Gig economy term refers to a situation where an employee does not provide services in a full-time model but functions on the labor market by accepting temporary jobs and implementing specific projects.

 

Who is a Gig Worker?

Gig workers are independent contractors, online platform workers, contract firm workers, on-call workers and temporary workers. Gig workers enter into formal agreements with on-demand companies to provide services to the company’s clients.

Importance and impact on the labor market

Gig working culture became more popular through the business model of such companies as Uber or Airbnb, who offer people worldwide the opportunity to increase their income by working mainly on their own terms.

However, today the phenomenon of contract work concerns all sectors of the economy practically. According to the analysis of the Morgan Stanley bank, as much as 35% of the working population in the U.S. (over 55 million people) may engage in temporary work to a different extent.

So far, gig-economy platforms’ share of total employment is modest – ranging between 1% and 3% of total employment, according to the OECD, which also says the share is growing fast. Global gig-economy transactions are forecast to grow by 17% a year to around $455 billion by 2023, according to a report from Mastercard.

What does it mean for employers?

• In the IT sector, there is a constantly growing demand for software developers, and the company’s stable development often depends on whether or not the company has access to this type of employee.
• Skill-based management allows companies to place contingent workers in a team where their skills will significantly affect the progress of a given project. However, to fully use the potential of this workforce, managers need to better relate to their temporary employees.
• Another aspect companies should emphasize is ensuring that contingent workers have desired skills, so they can effectively and immediately support internal teams.
• Utilizing gig workers allows businesses to have a diverse pool of flexible specialists at their disposal and move projects forward without the necessity to invest in often time-consuming recruitment processes. But the cooperation will only be successful if an IT expert has needed experience and expertise.

The gig economy provides a unique suite of challenges and opportunities for established companies that seek workforce agility and expertise in competitive marketplaces. To get the most out of alternative workers, managers must communicate their organization’s mission and values quickly and concisely. And just because workers are temporary, doesn’t mean they don’t have engagement needs. Employers should aim to be the first choice for a gig workforce that could easily choose to leave for a competitor

 

The Disadvantages

Gig workers have high levels of flexibility, autonomy, task variety and complexity but the gig economy has also raised some concerns.

• These jobs generally confer few employer-provided benefits and workplace protections.
• Technological developments occurring in the workplace have come to blur the legal definitions of the terms “employee” and “employer” in ways that were unimaginable
• The mechanisms of control can result in low pay, social isolation, working unsocial and irregular hours, overwork, sleep deprivation and exhaustion.
• According to a 2021 report by the World Health Organization and the International Labour Organization the expansion of the gig economy can be seen as one significant factor for the increase in worker deaths for those who work over 55 hours a week.
• Work has also suggested poor mental health outcomes amongst gig workers.
• Legislatures have adopted regulations intended to protect gig economy workers, mainly by forcing employers to provide gig workers with benefits normally reserved for traditional employees. Critics of such regulations have asserted that these obligations have negative consequences, with employers almost inevitably reducing wages to compensate for the increased benefits or even terminating employment when then have no leeway to reduce wages.

 

So We See that, new opportunities will also support nimble freelancers, especially those with valuable skillsets. With the growth of segments like machine learning and AI, tech companies are looking all across the industry to find contractor/gig talents.

As we continue onto the next decade, we will see the gig economy increasingly become an efficient working model that challenges the traditional employer-employee arrangements that have lasted for the last century or so.

Tech companies will most likely be at the forefront of adopting this new way of working, especially those based in Silicon Valley.

Thus, this new way of working is here to stay and emerge.