What is Gig Economy?

A gig economy is a work environment where organizations hire temporary workers or freelancers instead of full-time long-term employees. Companies provide temporary positions to workers and the latter reaches independent, short-term contracts with them. The trend is very strong in advanced economies like the US where there is large volume of cases where firms engages in short term contracts with workers. Even the terms – employer/employees cannot be used here as it indicates a rather long-term identity.

What promotes gig economy?

Now what makes firms and workers led to short-term work contracts?

Main reason is the emergence of the digital age. Here, workforce is highly mobile and work can be done from anywhere, anytime. This means that you need not reach at the location of the organization to do the job. The distance indeed creates the distance in relationship as well.

Second propellant factor for the gig economy is that firms, in the era of disruption, when they provide short term contract will be safe as it avoids long term obligations like pension and other emoluments. The worker can be relieved at any time without any friction.

For the worker, the short-term engagements better fit to him to search for the best.

Software and technological changes taking away human efforts also contributed to the gig economy. Declining or uncertain financial conditions and necessity to cut workers at any time also promoted companies to go for short term contracts. Temporary nature of projects and greater specializations etc., added to this trend.  

Slow penetration of the millennial work culture into the labour market also encouraged short term contract engagements. Uncertain business climate and declining profits in the context of disruptive innovations also tempted companies to go for short-term labors.

In the US, colleges and universities recruit teachers and professors on contract basis. But the typical example is the digital sector workers like the Uber workforce who are having a short term and flexible contract with the organization.

The trend of short term contract and the emergence of the gig economy have created competition and efficiency among workers, at the same time, making the work environment uncertain for them.

In the gig economy, through short-term engagements, firms benefit from several angles. As mentioned, labour welfare emoluments like pension, gratuity etc., can be avoided. Similarly, they save training time and related expenses. The future work situation will be that of the gig economy- business analysts predicts.