Sat, Oct 31, 2020

For the past century since industrialization, we have all known that to hold a job means nine to six, Mondays to Fridays. This is also called full time job. However, the interest phenomenon of the gig economy emerged in the past 10 years and looks to reshape our very understanding of a full time employee. A gig economy is one where engagements between company and individual is on a temporary and contract basis, in some cases, even one-off. These people are contractors, not employees. They fulfill the scope of the engagement, which is also called a gig, hence the name gig economy.

The first time I came across this concept was 10 years ago. When I wanted to find help online to design logos or to write. Initially, I tried finding in craigslist, but it was rather disorganized and complicated. Then platforms such as Fiverr and Elance (now called Upwork) emerged. They are marketplaces where customers like ourselves find people to do basically anything online. Subsequently, these platforms start to connect online and offline where customers are engaging others to run errands such as shopping or deliver parcel. Task Rabbit is a perfect example. Gradually, the gig economy spreads to other traditional industries such as Food (FoodPanda, Deliveroo) and Transport (Grab, Uber). So why is the Gig economy so successful and is it really good for us?

Gig Economy - Agreement between Customer and Freelancer

What Contributed to this Phenomenom

It takes 2 hands to clap and in the gig economy it is that of the company and the contractors. Firstly, in the increasingly fast-paced tech driven environment. Many companies face an uncertain future and do not want to commit resources the short term. They prefer to hire experts for specific projects and move on to the next. Companies save the cost in terms of space, training and benefits accorded to a full time employee. The companies can dispose of the contractor if they are not satisfied. There will not be the legal implications or labor law to content with. So there is a real demand for temporary contractors driven by companies.

Other the other hand, the contractors, majority of which are millennials and Gen Zs. This group of working age adults have a very different mindset compared to the baby boomer generations. They grew up inspired by successful entrepreneurs like Steve Jobs, Bill Gates and Mark Zuckerberg. They want to create something of their own and be in charge of their destiny, the freedom to choose their work. They prefer flexibility, work-life balance and choose the type of work they want to do. The number of self-employed people will triple to 42 million by 2020, with 42 percent of them likely to be millennials.

The improvement in communication technology has also made it much easier for companies and freelancers to discuss and organize their work anytime anywhere. Skype, WhatsApp and web conference solutions are widely available and mostly free. The emergence of collaborative platforms such as Slack, Basecamp and Trello have helped all stakeholders keep track of the project deliverable. So be it for communications or project tracking, the gig economy has no shortage of enabling technology.

Social Implications of Gig Economy

While companies may benefit the most from gig economy because of the low cost and obligations. It may not hold true for the freelancers. As most of the contractors working in the gig economy are young and new to the business world. They are often taken advantage of. If clients fail to pay on time or have other tricks to delay payment, these freelancers are basically on their own. If it is an online engagement, it becomes even harder to track down the company. So who will fight for the freelancers’ rights?

Companies that have succeeded on the back of the gig economy are gladly gaining all their valuation and accolades. What they have exploited are these freelancers’ who have worked without social security. These workers are basically “naked” as they lack company sponsored insurance, retirement planning and no recourse against errant customers. Governments all over the world needs to recognize this and step in with relevant legislation to protect this expanding group of workers. New York rolled out “Freelance Isn’t Free Act” that lays out proper contract agreement between company and contractor. This is a step in the right direction in this new economy. Governments need to engage this group of freelancers and re-configure their labor policy to be all-inclusive, providing the necessary income and personal protection to them.

In summary, the gig economy is here to stay and will represent the new normal. An understanding between Government, organizations and freelancers is needed for this system to be fair to all parties. In the meanwhile, we just have to sail through this transition hoping to meet responsible customers or freelancers. Good Luck!