What is the gig economy and how can it work for you?

What is the gig economy?

When someone mentions the gig economy, it might conjure visions of Uber jobs. But almost half (44%) of gig workers have a university degree. Almost three in ten perform professional work such as accounting or providing legal advice. McKinsey says creative occupations and knowledge-intensive industries are the fastest-growing segments of the freelance economy.  

Perhaps that shouldn’t surprise us.  After all, the gig economy is just a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs, according to the BBC. In the UK, temporary work was already prominent among professional occupations – a similar situation to Switzerland and Belgium – before the gig economy mainstream.

What are the pros and cons of the gig economy?

Pros

Who wouldn’t want to be their own boss? To choose their own hours? To turn down work where you loathe the client. To avoid the rush hour on public transport? To spend more time with family and friends? Those are the pros of the gig economy. But it’s not all plain sailing.  

Cons

There are cons to the gig economy too. It comes with a host of personal, social, and economic anxieties without the cover and support of a traditional employer. The stakes of gig economy work are enormously high, financially.  It is, by its nature, insecure. The price of the apparent freedom provided of not having a formal employer is a precariousness that will never subside. Even the most successful, well-established people will never stop worrying about money. In a poll we conducted, 70% of people said they would prefer the security of being a full-time employee over the flexibility of a gig contract.  

There are existential challenges, too. People can feel their identity is at stake. If you work for yourself, failure to deliver can lead to self-doubt. There are also worries about unpredictable schedules.  Without an employer and a traditional office protecting you from outside distractions and pressures, it can be harder to establish a physical, social, and psychological space for work. You can be left feeling rootless. Productivity can be a struggle to sustain in the face of distractions – there’s less routine than in corporate life and that can slow your rate of work. And working independently can also be lonely.  Humans are social creatures. We need people to turn to for reassurance and encouragement – to calm us in times of stress. According to data from Randstad USA, a majority of workers want flexibility, but more than a quarter (26%) feel isolated when working from home. And the presence of other people are important to working lives in other ways, too. Our careers are dominated by role models (who offer a vision of what we might become in the future) and peers (who offer supportive collaboration).  

Fortunately, the best independent freelancers find workarounds to meet these challenges, tackling loneliness with online groups and distractions with defined office space, for instance. It’s important that these problems are addressed as the country needs the gig economy as much as individual workers do.

The gig economy and the future employment gap.

Population projections for 2050 show that, in the baseline scenario, the European working age population (age 15-64) will have declined by about 16% compared to 2005. On the other hand, the number of elderly people aged 65 and over will have risen by up to 75%. This will create an ‘employment gap’ which will put an enormous extra burden on the welfare state. Not only will taxes and social security contribution be collected by fewer people, there will also be a greater demand for publicly funded services such as health care and pensions. To combat this, we will need to increase employment, in terms of the number of people working (or the hours that each person works – which seems somewhat implausible). Given it is unlikely to be possible, politically, to mitigate this solely through more migration, we can achieve this only via flexible employment contracts – such as part-time and temporary employment and with the gig economy – that can make more people active in the labour market.

But general unemployment is now at the lowest level it has been since the mid-seventies. Training and work experience might be part of the solution, but they won’t solve the problem entirely either.  The pool of hours will have to come from women (where employment rates are approximately 10 percentage points lower for women than men), from young people, and from the elderly.

Flexible contracts, such as jobs in the gig economy, will help bridge the gap.

Flexible forms of employment – such as part-time roles, temporary contracts and gig economy jobs, are often the preferred choice of these demographics – not a second-best choice forced by lack of full-time jobs. Our research shows that in Ireland, Germany, the Netherlands and the UK, temporary work is a voluntary choice for 80% of all temporary workers.  

Women are embracing flexible options. 

Our Mind The Gap report showed, “when looking at gender differences in the popularity of part-time work, the figures makes it very clear that part-time work is a female phenomenon”. Europe, Denmark and the Netherlands are the only countries where the part-time rate for men comes somewhere near 1/3 of the female part-time rate.

There has been a sharp increase in the number of women taking on part-time self-employment, this rose from 439,000 to 812,000 between 2001 and 2016. The allure of increased flexibility and control over earnings, which can be particularly important after maternity leave with additional commitments, will likely see more women entering into gig work – helping to reduce the gender discrepancy.

The gig economy works for young people and older people, too.

The gig economy works for the younger generation. Almost 3 million young people worked in the gig economy between February 2017-18. For older people, alternative employment models, such as part-time retirement in the gig economy, could provide more opportunities to extend their working lives and ensure maintenance of their skills, experience, and know-how. In particular, part-time retirement provides them with a bridge between employment and retirement.

So how do you take advantage of the booming gig economy?  

How do you make the shift from a permanent job with a full-time employer to a more flexible short-term contract or freelance work? An option are digital platforms like Uber, Catalant, and TaskRabbit that aim to match candidates with jobs dependant. The other option is to ditch the AI and rely on a recruitment consultancy like Randstad (other staffing agencies are available) that can find a consistent stream of work for temporary, freelancers in fields that are disparate such as accountancy, nursing, surveying and teaching. 

5 gig economy jobs that will land you the most cash.

1. For accountants, the best paying contract work is in internal audit, where people can earn, £700 a day, at the top end
2. The average agency nurse’s annual pay is around £59,000. But more important than the money is the lifestyle. Our research shows that 24% more agency nurses would recommend the profession to someone else – which is a great deal higher than full-time salaried nurses (84% of whom say they would not recommend working in this profession to someone else).  And while 25% of full-time salaried nurses tell us that their mental health is suffering – only 13% of agency nurses say the same
3. Working on a temporary basis, regional heads of compliance can earn up to £2,000 a day
4. Equally, a head of financial crime, working across EMEA, can currently earn between £1,500 and £2,000 a day
5. In risk management, a front office quantitative analyst can earn up for £1,000 a day

What Do Employers Need to Know?

From an employer’s point of view, different types of workers have different rights, duties, and benefits in relation to payment, tax, national insurance, and benefits. It will be either the HR manager or head of HR’s responsibility to make sure that workers' rights and benefits are legally fulfilled – and that can cover gig workers too, following cases brought forward by workers at Pimlico Plumbers and Uber.  This means that some gig workers have been reclassified from independent contractors to dependent contractors.

Looking for something new, search our latest temporary and contract vacancies.

Here's five more things you probably didn't know about the gig economy.