During the covid pandemic, demand for gig workers surged, with people opting for the ease and convenience of speedy takeaway food and other services.
The gig economy is a rapidly growing sphere, with the growth of the global economy forecast to reach $455 billion in 2023. This rapid rate of change may invite many challenges for both gig workers and customers operating within the gig economy.
The gig economy is distinct from the sharing economy as it relates to the flexible work that’s fulfilled by freelancers or contractors, while the sharing economy refers to the sharing of assets or services between private individuals.
What is the gig economy?
It can be difficult to pin down the exact definition of the gig economy as there are many different variations of gig work. There are, however, some things that are unique to the system.
"A broad definition of the gig economy refers to a move away from the standard employment relationship towards increased flexibility—all contract work, contingent work, freelancing, and gig work,” explains Anne Keegan from Ireland’s UCD Michael Smurfit Graduate Business School.
Anne (pictured) is a professor of international human resource management and researches the challenges and opportunities of the gig economy.
She adds that the definition of ‘gig economy’ has become narrower, however, and it’s now often used to describe work that’s mediated by digital labor platforms.
Thomas Roulet, associate professor in organization theory at University of Cambridge Judge Business School, adds:
“The gig economy is about individual workers carrying out tasks for clients through the intermediation of a platform attributing those tasks and taking care of the transfer of payment on a task-by-task basis.”
Thomas has discussed the role of government in ensuring that the benefits of the economy are shared throughout the ecosystem in a Cambridge Judge podcast.
You might think of this online platform as the middleman between the gig worker and the client or customer, helping customers to find products or services and sourcing the relevant gig worker to fulfil the task.
NEXT READ: What is the sharing economy?
Types of gig economy jobs & workers
Gig economy jobs may look different across platforms, and there’s a variety of work out there that’s undertaken by these independent workers.
“You have gig workers who are entirely dedicated to their gig work, for example, taxi drivers doing this full-time, while others do this on a part-time basis, during weekends or evenings,” says Thomas (pictured) from Cambridge Judge.
You can also distinguish between gig workers who are participating in ‘app-based work’ or ‘crowd work’.
“App-work is work which is mediated by digital online labour platforms, but the services are on demand, in-person services and delivered on-site. Typical examples are ride hailing and food delivery services,” says Anne from UCD Smurfit.
Meanwhile, crowd work is posted by a requester online and delivered online.
“The requester and the worker don't usually meet face-to-face, and everything is mediated by the platform.”
Within crowd work, there’s a distinction between those who complete micro tasks, where workers might complete multiple small tasks in one day, such as photo-tagging or completing surveys, and macro tasks, which are longer-term gig economy jobs like translating a book or designing a logo.
Uber, Deliveroo & more gig economy companies
There are a vast range of gig economy examples out there. You’ve got your ride-hailing gig economy apps such as Uber and Lyft, carpool platforms like BlaBlaCar, food delivery apps, such as Deliveroo, accommodation services like Airbnb, and even co-working startups.
There are gig economy platforms that enable freelancers to offer their work on an ad-hoc basis. If you need some help designing your website or a quick blog post, you can more than likely find the right person for the job on gig economy apps like Fiverr, Freelancer, or Upwork.
“This on-demand access to a huge labor market is growing. Especially crowd work, where we’re witnessing millions and millions of crowd workers signing up to these platforms,” says Anne from UCD Smurfit.
Gig economy benefits for workers and customers
From avoiding rigid hours of work to being able to access a host of skilled workers at the touch of a button—there are many gig economy benefits for workers and customers.
For gig workers, Thomas from Cambridge Judge says platforms are often presented as an opportunity for entrepreneurship.
“Workers can be the master of their time and work flexibly.”
In a conventional employment relationship, an employee is contracted to work a certain number of hours on the days and times most suitable for the company. Whereas, within the gig economy, workers can work when they want, as well as choose the work they do.
“You can, in theory, check in and check out when you want,” says Anne from UCD Smurfit.
Meanwhile, customers can access on-demand services to use at their leisure and find the best price and service very quickly.
“Imagine you run a small business and you want a piece of software developed to do a very specific thing—with the gig economy, you have access to this unbelievable online workforce,” says Anne.
The speed and ease by which customers can access gig economy services, and workers can find gig economy jobs, fosters a mutually beneficial relationship.
The good, the bad, and the ugly of the gig economy
Although the concept of the gig economy sounds like all parties get a good deal, the reality is much more complex. There are potential pitfalls for those tapping into the gig economy and those providing the services.
On platforms such as Uber and Deliveroo, for example, workers need to keep accepting work to get good ratings. These rating systems are controlled by algorithms that determine whether the gig worker is going to receive more work or not.
“It’s not really as flexible as it looks because the platform wants to incentivize workers to be constantly available and delivering the best work,” says Anne from UCD Smurfit.
The gig economy platforms usually take a commission from each gig, so it’s in their interest to keep the work flowing.
Whether or not you believe gig economy platforms to be good or evil, they are necessary to track and oversee gig work.
In a 2016 landmark court case in the UK, Uber drivers won the right to be classed as workers instead of independent contractors, which means they can access paid holidays and earn the minimum wage in the UK. Yet, these gig workers do not earn the same rights as employees, who can access benefits like maternity pay and dispute unfair dismissal.
For customers accessing the gig economy, there are bad problems such as a lack of transparency when it comes to pricing. For gig workers prioritizing speed in pursuit of high ratings, the quality of the products or services can be impacted, too.
“There could also be security issues if gig workers are not thoroughly vetted,” adds Thomas from Cambridge Judge.
Gig economy trends for 2022
Despite the challenges, the gig economy doesn’t look set to stop expanding any time soon. There are almost 60 million Americans involved in the gig economy, according to Fortunly.
“With the rise of gig type services such as Twitch and OnlyFans, we might see a rise in luxury types of gigs, or very specialized and high value skills being sought,” says Thomas from Cambridge Judge.
However, for the gig economy to be a sustainable and innovative business model, there needs to be greater regulation and more consideration for the human rights of gig workers.
There are several advantages, drawbacks, and much work to be done within the gig economy. But the original desire of the gig economy to create flexible working relationships has the potential to inspire positive ventures.
The gig economy, for example, can help disabled people and caregivers who may not have the time or means to engage in a formal employment relationship and can instead look to gig work to offer their professional services.
“People in developing countries are using their skills, their knowledge, and capabilities to serve customers on digital labor platforms across the world. There are ways that platforms could be used to create more broadly inclusive and fairer gig work,” says Anne from UCD Smurfit.
She adds that the current governance of platforms, however, is mainly in the hands of private companies with for-profit motives, and the treatment of workers leaves much to be desired.
Platform cooperatives, based on a stakeholder rather than a shareholder model, may hold some potential for developing fairer models of gig work.
"Regulation of platform enabled gig work by governments is also urgently needed if the gig economy is to make a positive social impact and offer sustainable forms of work,” says Anne.
Considering how receptive customers and workers have been to the gig economy, these social impact initiatives may become the future of gig work, upholding the value of flexible employee relationships.
Is A Four Day Work Week Good For Business?
BB Insights draws on the expertise of world leading business school professors to cover the most important business topics of today.