We bring you a detailed look at the 6th trend which was highlighted in our 8 trends to watch out for in the 2020s article. In this article we talk about the Gig Economy – the concept of 9 to 5 and permanent employment is going to get an overhaul. The gig-economy is not a new phenomenon, freelancers have been around for a long time. What has made it a buzzword of the 21st century is the fact that technology has significantly lowered barriers to entry, making gigs easily accessible. So what is the Gig-economy? The “gig-economy” refers to a free market system where companies hire independent freelancers for a short-term project (referred to as a “gig”). The gig economy fueled by technology gives individuals the opportunity to become entrepreneurs, working part to full time, while using their own skills, capabilities and strengths. The new-age gig economy model involves 3 players: Providers (e.g. Uber), Gig workers (e.g. Uber drivers) and Clients (e.g. Riders). More and more startup providers are hiring gig workers into their workforce; TaskRabbit.com has a workforce of taskers to perform chores and errands the you don’t want to do; StyleBee.com brings make-up artists/salon specialists into your home; Swifto.com is a dog-walking GPS tracked app that allows college students and others to get extra work as dog-walkers.
Source: Adapted from Visual Capitalist Major factors attributing towards the rise of gig-economy identified in a study by Mastercard and Kaiser Associates include:
Evolving social attitudes towards P2P sharing
Increasing digitization rates
A cultural shift towards embracing “flexible” work-life environment
Rising cost of living compelling millennials to seek additional part time income through gig work
Why is it important? A recent survey commissioned by Upwork and Freelancers Union shows that the gig-workforce is growing three times faster than the overall United States workforce and by 2027, majority people will be working independently. More and more skilled workers are choosing to move to the gig economy to earn additional income or to have more flexibility in their work flow or simply to “be their own boss”. This implies that there will be a paradigm shift in how the workforce will look in major economies around, triggering a need for restructuring roles across corporates, developing new laws and legislation and building technology to embrace this change.
Source: Skill Quo
What are some of the facts and figures?
The following statistics indicate why we think the gig-economy will be one of the trends to look out for in the 2020s:
1 in 6 workers in traditional jobs would like to become a primary independent earner (Source: McKinsey)
20-30% of the workforce in the US and EU-15 countries is involved in the gig economy (Source: McKinsey)
57.3 million people freelance in the US and it is estimated to be 86.5 million by 2027. Currently 36% of US workers are involved in the gig economy (Source: Gallup)
The gig economy is expanding 3 times faster than the US workforce as a whole (Source: Forbes)
US freelancers contributed US$ 1.28 trillion to the American economy in 2018 (Source: MBO Partners)
20 to 30% of the working-age population in the United States and the European Union engage in independent work (Source: McKinsey)
The gig economy in the UK doubled in size between 2016 and 2019. It now comprises 4.7 million workers (Source: The Guardian)
84% of freelancers are living their preferred lifestyle compared to just 54% of those working in traditional jobs (Source: Upwork)
More than 70% of freelancers find jobs through online markets and gig economy websites (Source: Payoneer)
80% of large US companies plan to switch to a flexible workforce (Source: Intuit)
20% of organizations globally with ore than 1,000 employees have a workforce that is made up of 30% or more contingent workers (Source: EY, Workforce Study)
50% of U.S. jobs are compatible with remote work arrangements, and 80% of the workforce says they would like to work remotely at least part time. Yet only 7% of employers make flexible work available to most employees (Source: Global Workplace Analytics)
What opportunities does it bring out? The rise of the gig-economy provides the potential opportunities:
More gig economy startups: With rising numbers, expect more gig economy startups, websites and apps to come up that connect freelancers to employers. Presently, Upwork has over 15 million users.
Big corporations to use more freelancers: In the past, freelancers were mainly employed in smaller companies and startups. With the advent of technology, finding and hiring gig workers have become easier and cost-effective. Fortune 500 companies are slowly shifting non-core business functions to highly qualified gig workers.
Fully remote companies: Automattic, Invision, Toptal are the largest virtual companies with no headquarters and all of their team work remotely. More and more of such companies will come into existence, enabling them to hire highly qualified resources across the world without worrying about barriers such as work-visas and huge relocation costs. Companies can hire resources on a need-by-need basis and can save on fixed costs such as renting an office establishment, permanent employees on their payroll, etc.
Change in recruitment and HR processes: In the coming years, there will be major disruption in the job market with more and more skilled workers choosing to join the gig workforce. As a result the job market in general will become more competitive and there will be a need to re-define organizational roles and job descriptions, design a complete electronic onboarding process and find a better way to track attendance and productivity. HR and recruitment firms will need access to new tools and resources to improve processes and manage the gig workforce.
What challenges can come up? Gig workers do not get the same rights and benefits as full-time employees such as insurance and medical coverages. As Covid-19 rapidly spreads throughout the United States, it has exposed how fragile the gig economy industry actually is. Drivers for apps such as Lyft and Uber are finding it difficult to make ends meet as their work has dropped by as much as 50% in recent weeks. These issues are not just confined to drivers of Uber and Lyft – the entire gig economy operates in a model of lack of guaranteed wages, healthcare and sick pay. Gig economy companies often claim that they simply are marketplaces and their workers are “entrepreneurs” thereby avoiding costs of worker protection. Now, they find themselves struggling to keep both customers and workers on board. While Governments across the world are announcing economic stimulus packages to ensure employability is not jeopardized, what does it mean for gig economy workers? Many are not sure if they even qualify for the benefits. In the United States, Senator Mark Warner has proposed federal legislation to ensure the growing gig economy workforce is provided with benefits. Governments and businesses need to proactively engage in making suitable legislation and policies towards changing labour needs. One possible solution may be to introduce portable benefits – benefits owned by employees and contributed by employers based on prorated amount of work done. Go to link