What is a Gig Economy? Why should it matter to you?
The distribution of resources is an important factor for any economy. What kind of economy it is, will be determined by the dispersion of scarce resources. Basically, there exist four different types of economies: Traditional economy, Mixed economy, Command economy, and Market economy. But have you heard about the “Gig economy?”
What exactly is Gig Economy?
It is a free market system where flexible jobs and temporary positions are a common thing. Here, Organizations make contracts with independent workers to work for a short time on small projects. The meaning of the word “gig” is “a job for a specified period of time.” You may also call it a “Freelancer economy” or “Sharing economy.”
It’s been a long time since the existence of freelancers for work, but in recent years their numbers have shot up. It is observed that millennials prefer flexible work over a fixed salary, which indicates that the Gig economy is here to stay! Some Key Features are:
- It directly contradicts a traditional economy of full-time workers who focus on a lifetime career and hence, rarely change their job postings.
- Based on temporary, flexible, or freelance jobs in which workers are connected with clients/ businesses via an online platform.
- The gig economy can do well for businesses, workers, and consumers as it makes work more adaptable for the current needs and demands of a flexible lifestyle.
- It also has downsides because of the elimination of traditional economic relationships between the businesses, workers, and clients.
How are you affected by it?
The US is already on its way to becoming a Gig economy as estimates are showing one-third of the workforce working in some or the other gig capacity. Are you one among them or are you not? Maybe you will turn a freelancer in the future, for want of flexible work timings and rest.
Businesses save resources in terms of office space, benefits, financial aspects, training, etc. On the other hand, people have started to give more importance to health, family, and such other aspects of life. That can only be experienced when you take our more time from work, which is not possible in a fixed salary (hectic) job. Hence, the need to work flexibly.
It will be positive if you have control of your work and select the work you will do at a time. But your skills need to be in high demand and there will be more competition out in the open. Everyone will be impacted, and more so in a positive way. People will also get the license to earn from multiple sources.
The gig economy may not be that good for those in the less-demanded skill set. They may, at times, will be left with no work and their income will regularly fluctuate. Overall, workers will have to do away with employer-financed retirement plans and health insurance, severance pay, PTO, sick days, etc. and such other benefits. Freelancers may also have to cough up employment taxes that can rise to 15% of their income.
Having said all that, each type of economy has its pros and cons. If people focus well on the benefits and shrug-off the minus points, the gig economy could be a good change for our professional lives.
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