What is the Gig Economy? All You Need to Know

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While reading or browsing the internet for news or information about business and finance, you may come across the term “gig economy”. But what is the gig economy? How does it work? Why are so many people talking about it? Below, we’ve provided a short guide to the gig economy, its advantages and disadvantages, and some information on how things may be changing in the future for gig economy workers.

What is the Gig Economy?

The definition of “gig economy” is given as “a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs”. In other words, it’s a free market system in which temporary, flexible jobs are common and companies hire independent contractors and freelancers to carry out tasks for them. This will normally be for short engagements, and is often done instead of hiring full-time employees. 

There are many similarities between gig economy work and zero-hours contracts, as both of these treat workers as contractors with no guarantee of pay. However, the difference comes in that gig economy roles will be paid per piece, while zero-hours contracts are paid per hour, but with no set minimum. 

What are Gig Workers?

Gig workers are the independent contractors and freelancers that companies hire to take on the work for them. They’ll enter into a formal agreement with companies and agencies where their skills are in demand and provide services to them and their clients, up until the end of their contract. 

This is why the model is known as the “gig” economy ‒ the workers will be paid for each individual “gig” they do, whether that’s delivering food or carrying out repair work on someone’s property. It’s also been referred to as the “sharing economy” (particularly when talking about platforms such as Airbnb), and the “collaborative economy” in the past. 

Some gig economy workers will also refer to it as the “platform economy”, owing to the significant presence of app-based platforms that hand out gig work in bits and pieces. 

How Many People Work in the Gig Economy in the UK?

According to the McKinsey Global Institute, as of 2021 there are five million people currently working in the gig economy in the UK, meaning that around 15.6% of the country’s total full and part-time workforce are gig workers. 

How Does the Gig Economy Work?

Even though the gig economy can be explained in a singular definition, the way gig work can be carried out can be broken down into two individual categories, based on the type of worker. These are “independent” workers and “contingent” workers. We’ve explained both types in a little bit more depth below:

Independent Workers

The definition of this employee type is truly in the name, as they work independently and act as their own boss. They will also submit their own invoice for services rendered once the work is done and the contract is finished.

Contingent Workers

These workers are hired and work as though they are any other employee at a particular company. However, they operate without the same job security as others who were hired traditionally, and may not receive the same benefits. Many will often miss out on expectations such as holiday pay, sickness pay, and even health insurance if located in countries such as the United States.

Areas of Gig Work

Whether independent or contingent, workers looking to become employed in the gig economy will find that there are four primary areas in which gig workers are most often found:

  • Traditional freelancing, which involves offering a defined contracted service for a business or individual (and can be creative, such as writing or photography, or non-creative, such as bookkeeping or SEO analysis)
  • Gig marketplaces, which involves taking jobs from companies such as Amazon, Uber, and Deliveroo
  • Self-employment, which will usually include tradesmen, small business owners, and other people in similar professions
  • Other areas with a less defined name, which usually comprises side hustles that people work on in their spare time, such as blogs, affiliate marketing, and selling products through websites such as Etsy

What Benefits Come from the Gig Economy?

If you’re considering taking time off from full-time employment and relocating to the gig economy for financial purposes, or even if you’re getting started with being self-employed and running your own business, it’s understandable that you will want to know about a few of the benefits. 

Here, we’ve listed a few of the reasons and explained a little bit more about why you might consider joining the gig economy in the present day:

1. It Lets You Build up a Portfolio

If you’re planning on carrying out freelance work, being part of the gig economy may help you to build up a portfolio of steady clients with great things to say about you. This can often help you to find more clients in the future, and may prove more beneficial than staying with one steady employer.

2. There’s Variety in the Work

Knowing that you won’t be doing the same work every day is often a motivating factor, and there will always be variety in gigs because you will choose the work you take on. You can also reach out to different kinds of people, meaning that every day could result in something different.

3. Gig Platforms Help You Build Profiles

Instead of creating your own website, joining a gig platform offers you the chance to create and build on a profile that potential clients will then see. This saves you time and money that would have otherwise been spent putting this all together yourself.

4. It Offers Complete Flexibility

Carrying out gig work offers you the chance to set your own pay scale configurations (though we do recommend keeping this within an industry average). It also means that you can go on holiday or take sabbaticals without the expectation of availability.

5. It Offers the Chance for Personal Growth

If you are only planning on joining the gig economy as a side hustle and to earn some extra income, you can also treat it as an opportunity to work on skills or personal passions of yours that you might not be able to practise in your everyday job.

Why is the Gig Economy so Controversial?

There may be benefits to working in the gig economy, but it isn’t without its controversies, either. Critics of the system note that while it offers flexibility in working hours, the workers taking part in it aren’t always given the same levels of protection as full-time employees, or the fair pay they were promised (including some reports of companies not even paying minimum wage). They may also be incentivised, or pressured into working when companies need them to, rather than keeping to the agreed contracts. 

The reason companies are able to do this is because many employers do not regard these workers as employees, but instead treat them as self-employed contractors. This allows businesses to cut costs, by not providing these workers with pensions or holiday pay. 

What Can be Done to Fix the Gig Economy?

Following a 2017 report by MP Frank Field, which revealed that some gig workers were making less than £2.50 an hour, the UK government published the Taylor Review. This is an independent review of modern working practices carried out by Matthew Taylor, the chief executive of the Royal Society of Arts. It proposes a number of ways the government can fix the situation, mostly by supporting the idea of a flexible working environment while ensuring that gig workers receive rights and benefits as full-time employees would.

For instance, one of its recommendations is that gig workers be classified as “dependent contractors”, meaning employers would have to grant workers more rights and take greater responsibility for their wellbeing. It also presents the concept of “good work”, which is a working condition everyone in the UK should be entitled to and incorporates factors such as wages, employment conditions, training opportunities, work-life balance and more. 

In February of that same year, the government pledged to overhaul the then-current employee rights in order to accommodate the recommendations made by the Taylor Review. However, this has since been met with criticism, as workers on zero hours contracts and those who are categorised as self-employed are still vulnerable to exploitation from employers. Gig workers’ rights are still a topic of debate even today, and this may continue for some time until new laws are put through.

Are You Starting Your Own Business?

If you are on your way to starting your own company and know you’ll need an office space that suits all your needs while offering an impressive address to your future clients, contact our team today. 

We have a wide range of office spaces to offer in London, each with its own aesthetic, personality, and ethos, and with our flexible tenancies in place you can feel confident in knowing we’ll move you to a new location as your business grows and expands. We’ll take care of all in-house functions on your behalf as well, so you won’t have to worry about spending money where it could otherwise be saved. 

For those looking to win over investors with a brilliant business plan, we can also offer affordable meeting rooms for you to host presentations as needed. Get in touch with us and we can discuss your booking as soon as possible.