Gig Economy: Disadvantages Apart from Advantages
What are the pros and cons of Gig Economy? What can employers do to help gig employees? Find out from this post.
21st century has been remarkable for so many things including social media, disruptive innovation, IoT, a period of recession, geopolitical surprises and above all the rise of the gig economy. The gig economy in a simple word represents the state of the modern market. It refers to the rising trends of part time employment where more and more people are using their skills to pick up and fulfill gigs rather than getting employed full time in traditional jobs. Most often the gig economy is appreciated for the higher level of autonomy it brought for the workers and the cost advantage it generated for the employers. The recession hit us at a period when either the millenials were having education or entering jobs. One important factor that supported the growth of the gig economy was the internet. It helped create new connections that could be exploited to generate employment for people who would otherwise find it difficult to get a traditional full time job. However, the data from current sources shows that the gig economy has continued to grow larger. The gig economy is supported by computer and internet technology and could reach more given some obstacles can be overcome.
The rise of Uber and Air BnB is also a testimony to the fact that gig economy holds immense potential and it is favouring people. There are many advantages, but overtime a downside has also been noted to these short term arrangements which we will discuss in this article. Since the world has been through a period of bitter recession, in its light the advantages offered by the gig economy seem to far outweigh its disadvantages. It has brought some legal challenges too which are being very difficult to answer because of the different nature of these jobs and still the gig economy is advancing. There are some grey areas that need to be understood to better explore and exploit its potential.
Even the US labor department has kept struggling to understand the shape and size of the gig economy and failed to quantify it. It may release new data this year but if we go by the data presented by Emergent and Intuit then there are already 4 million working for the gig economy and the number could touch 7.7 million in 2020. This number is much higher according to McKinsey which reports that jointly in US and EU-15, there are more than 16 million freelance workers. In US alone the number of independent earners could be between 54 and 68 million (McKinsey, 2016). However, a thing that came forward in its research was that a very large number of people do it of their own choice rather than of necessity and those who do it of their own choice are also more satisfied.
Data from McKinsey’s report suggests that the gig economy has provided financial support to a very large number of people globally and the role of the digital platforms like Uber, Upwork, Air BnB and Etsy have played a major role in establishing networks and connections that are faster and more direct. The digital platforms expanded the ambit of tasks that could be done independently. These tools and platforms can reach a very large pool of both workers and customers. They establish real time connections and they are effective at what they are doing, producing results not possible otherwise. However, the pace at which these platforms have expanded is only the teaser and the entire movie is yet to unfold. There are several forces that are fuelling growth of these platforms like their ability to connect and create large marketplaces, increased aspiration of modern worker for higher autonomy, large number of unemployed people and growing demand for freelance work across business organizations. Digital technology is also allowing the businesses to utilize external talent more efficiently. While on the one hand these factors have continued to fuel the growth of the gig economy, a few grey areas have also come to light including legal rights of the gig workers.
Advantages of Gig Economy:
Apart from money, independence is the most important factor that has drawn millenials towards the gig economy. They want more flexibility and higher independence in their jobs. As gig workers, they do not just enjoy more control over their jobs, but also have more freedom over choosing the kind of work they want to do. In traditional employment, they had to work for set hours whereas in the gig economy, they have a relatively higher degree of flexibility where they can work as long as they wish. Moreover, the people who want to learn new skills and explore new avenues can find great new opportunities in the gig economy. Apart from independence, the gig economy provides variety where you find options to try new jobs and juggle between several roles. This is good for new as well as experienced workers. It is also a main reason that a very large number of people do it of their own choice and are satisfied with the results. To some people, it is just a method of earning extra money. They may have other regular resources of income but since they have skills they can earn extra income as freelancers.
– Large Scale Employment :
The gig economy has generated employment on a very large scale. The recessionary period had changed the employment landscape and people were retrenched in large numbers. The economic hardships born of the recession were an important factor that gave rise to the need for paid gigs. Globally, it has created new options and helped people connect with new opportunities and exploit their skills which would otherwise remain unused. The digital platforms bridged a major gap bringing customers and workers closer and helping fill a large gap in employment. As the data from McKinsey’s report shows that there are more than 160 million employed as freelancers in US and EU-15 nations. These figures show that gig economy has grown at a fast rate and not all gig workers are working to explore new possibilities in career but a large number of them took it up for they needed money. Air BnB has helped several pay their housing loans and so has Uber. These numbers are expected to grow further in the coming years. The digital platforms like Uber, Air BnB , Upwork and Etsy are growing and have played a very important role in creating large scale market places and generate employment at an unequalled rate.
– Cost advantage for businesses:
A large number of businesses have also been able to utilize external talent since the arrival of the gig economy. There are many odd jobs inside companies hiring a full time worker for which would be costly. In such cases, businesses can hire a freelancer online and get its tasks completed. This is a major cost advantage which is helping both the companies and workers. Workers can find jobs as per their preference with reasonable payments. Hiring a full time worker with payment and benefits for the same jobs can raise the HR costs for a business. Even programmers and developers can be hired online for short periods and on a per job basis from platforms like Upwork. These short term relationships between workers and customers are an important and remarkable feature of the Gig economy. The accessibility and affordability accorded by these digital platforms is also a great feature of these digital platforms. Businesses can access a very large external talent pool and get good quality service at mostly affordable rates. Sometimes market changes occur so fast that you may need to hire people with new skills and there is no better place to go than these online platforms like Upwork and Taskrabbit.
These were the benefits offered by the gig economy that range from higher autonomy, flexibility and variety to large scale employment and cost advantages for businesses. However, this is just one side of the coin and there is also another aspect of the same picture. There are some grey areas too and gig economy has also given birth to compliance and worker benefits related issues as well as career management and stability related questions.
These are just some of the major advantages of Gig economy. If you carefully observe, you will find there are more advantages from it.
Disadvantages or Complications related to the Gig Economy:
– Compliance issues:
Gig economy has created jobs that do not fall in the traditional category and it is why it has also given rise to controversies and legal tussles. The rights of the gig workers are not as well defined as the traditional employees. The contractual agreements and legal definition of a gig worker may vary from country to country and market to market. In cases where the legal rights of the gig workers are not well defined, discrimination and discrepancy can occur. In October 2016, the Uber drivers in UK won a legal battle classifying them as workers rather than as independent contractors. Even Air BnB has found itself facing legal complications. Law has been unable to react fast to the rapid technological changes and changing employment landscape.
– Lack of benefits and gig worker friendly policies:
The traditional benefit model is designed for the regular employee. Organizational policies also favour the employees and not the gig workers. It can have a negative impact on the career of the gig workers who are not entitled to the same benefits as the regular employees. While on the one hand, it benefits the employers, saving costs, on the other it can make gig workers feel like being discriminated against. The gig worker can feel a lack of friendly policies since he is not entitled to the same health or other benefits like employees.
– Career management issues:
The gig workers are in short term relationships with the employers and therefore do not have a definite career. While the highly skilled workers may find better security because of high demand and low availability, the less skilled workers may often find it difficult to obtain suitable gigs and consistent employment. A gig worker does not always make a planned move or does not have a stable career as the traditional worker. Moreover, they do not have the same support available as the traditional employees. They do not have any support related to career management or performance review. The entire burden remains on the gig worker who can grow frustrated in seasons he does not find suitable gigs. So, if you are not a very dedicated and highly motivated worker, you may sometimes have to struggle with finding jobs and inconsistency and lack of full time work and fixed schedules can have a negative effect on your psychological health.
Sometimes the gig workers start expecting too much of themselves and from the gigs they are paid for. The flexibility offered by the gig economy may make them overwork themselves as happened in the case of several Uber riders who would fall asleep while on the wheels. In case of other gig workers too, during the peak season when the demand is high, the workers may end up doing more work than their physical and psychological health allows which may result in adverse effects in both short and the long term. Some psychologists call it a slow accident where job insecurity, low pay and isolation can m result in moments of heightened stress. You can start missing the social settings when you are employed as gig worker and on one of those virtual platforms.
– Lack of training and skill development opportunities:
Inside the organizations, training and skill development models are available only to the regular employees. The gig workers do not have such resources available to them. They can only find methods of self training and managing their career is also their own burden. Organizations provide their employees the chances for training and skill development. However, these opportunities are not available to the gig workers. There are no HR or line managers to take care of their skill development or advise them on career management. In such a case, many times the gig workers have to make do with their limited skills and chances of acquiring new skills remain low unless you are well paid and have access to great training and skill development resources. Moreover, communication and engagement are also difficult with the gig workers. The organizational values that apply to the regular employees do not apply to them even if some organizational rules apply. Communication is easier with the internal employees but not so easy in case of the gig workers. You can communicate face to face with your regular employees and engage them using new and better methods but when it comes to the gig workers a gap always remains because the relationship is very short lived.
Suggestions and Conclusion:
For the gig workers life is not as easy as it seems. The gig economy has provided employment to a very large number of people on a global scale but not every gig worker is happy and satisfied. It is because not all of them are highly skilled workers who have all the necessary skills to win in a highly competitive environment. A large number of them do it of choice and are satisfied. For them the gig economy has brought higher autonomy and flexibility which is good in most cases but several benefits that were available to the traditional employees are not available to the gig workers. The compliance created problems are already a trouble for the companies. However, they need to care for their gig workers too. Business managers must understand the needs of their gig workers and accordingly design their assignments and packages. They must also create an HR contact point and also consider the legal and tax implications by hiring consultants. Now, the gig workers are also an important part of the workforce and therefore their integration must also be a focus of the companies. However, the gig workers themselves must also remain cautious because the definitions of success in the gig economy have also changed. They need to find a balance between flexibility and availability. While on the one hand autonomy inspires confidence, stumbling blocks also abound and a growing sense of isolation at the end can cause you more stress than you can bear.
APA Citation for this article –
[ Pratap, A. (2018). Gig Economy – Advantages, Disadvantages and Suggestion. In Cheshnotes. Retrieved from https://notesmatic.com/2018/03/gig-economy-advantages-disadvantages-and-suggestions/ ]