Changing contexts over the years, from emerging conflicts to climate change to global pandemics, have meant that how people create wealth for themselves has undergone various changes as well. This is easily seen in the changes in the working world: remote work, hybrid work, and gig work, are all seeing ebbs and flows in catering to the varying needs of an extremely complex market. The rising costs of living, together with the increased financial literacy of the working force driving them towards achieving financial freedom (think today’s side-hustle culture) is especially seeing a rising popularity in the gig economy. But what is the gig economy? And does it deserve its own title of being an economy unto itself?
With regards to the last question, the gig economy becomes an economy unto itself since gig work almost functions as a free market for labour. Gig work is almost exclusively temporary work, where businesses hire people for temporary or short-term commitments. The word ‘gig’ is quite simply slang for this: ‘temporary jobs’. The word emerged from the music industry, where temporary engagements for musicians or bands are referred to as a ‘gig’. Gig workers beyond the music industry nowadays include independent contractors, freelancers, temporary hires, part-time workers, project workers, and the like. The recent trend in gig work is attributed, in economic terms, to two different factors:
- The increased mobility of the workforce
- The rise in remote work is due to the sophistication of modern-day digital work platforms.
These two factors have essentially separated employment from geographic specificity – which simply means that people are free to accept work from any employer anywhere in the world. It means that work commutes, and work apparel, all become irrelevant with the convenience that digital work platform offers. This is particularly important when it comes to full-time workers who choose to accept supplementary work in their free time. The gig economy is not alone in recent work trends: it shares its popularity with trends such as the barter economy (arguably the oldest work trend of all), the gift economy, and the sharing economy. These trends economy are to a great extent an opportunity for most who take part in them. It helps people to earn a little more, save a little more, and elevate their quality of life in general. However, it is important to note that the gig economy also presents its own set of challenges when it comes to wealth creation, both on the societal and individual levels.
The pros of gig work and the gig economy are both evident and almost self-explanatory. For one, it is more flexible than regular employment. Shorter engagements allow people to participate in their personal lives in a way that may be more satisfactory for them, rather than tying up their waking hours to a singular organisation for five days per week. Shorter work engagements or shorter work hours also make gig work particularly suited to people who are trying to supplement their income somewhat. The nature of gig work allows people to balance it with other commitments, be it other employment, family, or anything else. Facilitating work for everyone, at the scale to which they are willing to commit, however, also makes employment more inclusive for everyone. This inclusivity also fosters entrepreneurship among participants. The democracy in gig work is such that it allows people to monetize all sorts of skills, be it writing, drawing, graphic designing, carving, mechanical work, and so on. Everyone is empowered to build their own brands and client bases, ultimately leading them to greater financial freedom.
As with most things, however, the gig economy and the gig work it facilitates is not without its drawbacks. There is no stability in gig work, and engaging solely in gig work cuts people off from the benefits – such as insurance, retirement funds, and paid leave that regular employment offers. This type of uncertainty, coupled with the lack of benefits makes it difficult for individuals to actually accumulate wealth or plan for it concretely. Income in the gig economy is also very volatile. While gig work is perfect to supplement a more consistent stream of income, it may be difficult and quite stressful to rely on it in day-to-day life. Without strong financial management skills, gig workers would find it extremely difficult to manage their income to sustain them between work engagements. Budgeting and saving are essential to avert a financial crisis between jobs.
Another factor that affects gig workers along with a lack of benefits is the lack of representation for their rights as workers. Gig workers are all independent contractors, which means that they don’t have the legal safeguards that the state provides for traditional employers and employees. These include safeguards for fair wages, safe and equitable workplace conditions, and collective bargaining or union representation. The lack of these safeguards can make life complex and expensive for gig workers. This also makes it extremely difficult for them to create any sort of wealth for themselves. Despite better work-life balance being an apparent pro in gig work, it can also pose a significant challenge for the same. Project-based gig work may pose challenging deadlines, which workers can find disruptive to their daily lives to meet. Inexperience may also result in some gig workers not being well aware of the workload they can manage, leading them to accept more work than they can manage, leading to overwork and burnout.
Gig work therefore is a double-edged sword, with its own pros and cons. On the one hand, the empowerment it provides people allows them to carve out their financial freedom. On the other, it severely limits people by not offering them financial stability, and even not providing for their worker rights. The world only progresses forward, not backwards, however – which is why it is important that the world now evolves to suit the needs of gig workers. Regulators, businesses, and workers should all come together to cater to this work paradigm and the challenges it poses workers and employers alike. It is only then that the gig economy becomes a viable option for wealth creation for its participants.
(Theruni M. Liyanage)