BBA V-C
COURSE FACILITATOR:
Ms. Shafaq Rubab
Gig Economy
GROUP MEMBERS:
MADEEHA DANISH (1611193)
MURTUZA KHAN (1611205)
Muhammad Ahmer Khan(1611)
Faisal Janjua(1611)
Date: __th December 2018
A gig economy is basically a free market system in which temporary positions and
contracts are common and organizations contract or outsource short-term engagements
and projects to independent workers.
A gradual trend toward the development of
gig economy has started. Between 2003 and
2013, all industry sectors experienced
growth in non-employer businesses. A
study by Intuit predicted that by 2020,
around 40 percent of American workers
would be independent contractors.
There are a number of factors that influence
the rise in contractual, short-term jobs.
Firstly, the digital age has made the
workforce extremely mobile and so work
isn't limited to offices anymore which means job and location are not dependant on
each other. Freelancers can now select a wide array of short-term jobs and projects all
around the world, whereas, employers benefit from it by selecting specialized
individuals for specific projects from a much larger pool, unrestricted by location. This
is also due to rapid globalization as trade is not geographically restricted anymore and
neither is employment.
Digitization has also contributed directly to a reduction in available employment
opportunities as technology replaces some types of work and ensures less time
consumption which leads to people searching for alternative employment opportunities.
Other influences include financial pressures on firms causing further staff redundancy.
In a study, 37% of respondents mentioned they were helping to fill in gaps in their other
sources of income while 30% mentioned they needed ways to earn money in their spare
time so that it does not clash with their schedule.
The entrance of the Millennial generation into the workforce has brought in a more
diverse skill set and greater efficiency in the economy and they prefer doing work
which offers them greater chances of growth and development which is why they keep
switching jobs which further gives air to this trend.
Currently, people tend to change jobs several times throughout their working lives
which has turned into a sort of evolution known as the gig economy.
A firm operating in a gig economy, would save costs and scarce resources with respect
to benefits, compensation, office space and training. They also have the leverage to
contract with specialized experts for specific projects who might be too expensive to
maintain as full time employees.
From an employee's perspective, a gig economy can ameliorate work-life balance in
their lives as compared to full time employment. Ideally, the model is powered by
independent workers selecting jobs that they're actually interested in, instead of being
forced into a position where, unable to attain employment, they pick up whatever
temporary gigs they can land, i.e. gaining a temporary solution to unemployment.
The gig economy is part of an evolving cultural and business environment that also
includes the gift economy, the sharing economy and the barter economy.
The drawbacks of Gig economy include challenges in finding a sense of identity as
workers have numerous employers along with many different types of gigs. For
example, it is not unusual for a freelance writer to also be an artist, part owner in a café,
and be a dog walker on the side. This is rather difficult for traditionalists to understand,
and so they often critique people who adopt this work style as immature, unfocused,
and unable to find themselves.
Moreover, the employment legislature is sort of murky as the new gig economy has
raised several legal questions such as, when is a freelancer an independent contractor
and when should he be considered as an employee of a firm that has hired him to do
work. A common example is Uber since its drivers are considered as independent
contractors, and yet the company determines their rate of pay. Their drivers are not
eligible for any employment benefits. The real employment status of these gig workers
is unclear, and state legislatures are struggling with this issue, which is why they are
looking to introduce a new status of worker and define the parameters of the social
safety net benefits that maybe offered to an employee.
Another drawback would be the intense rise in competition and an oversupply of
employment services due to more workers coming with a diverse skill set, there would
be a decline in wage rates which might put them in a financially difficult position.
Payment issues in this type of economy are rather common as well since a large number
of gig workers and freelancers get delayed or no pay for the work they do and face an
unresponsive employer. The employees therefore has limited choices in these cases
unless they have the funds and wherewithal to initiate legal proceedings.
Further more, there are issues while deciding the method of payment as many
employers and businesses often use methods that are more beneficial to them, rather
than the gig worker.
In case a freelancer decides to open a business in a gig economy, the hassles of running
it are immense. He are a solopreneur and thus be solely responsible for marketing,
public relations, employment, and all of the accounting/finance aspects of running a
business. All of these activities are time consuming– and there would be an opportunity
cost of the time spent away from work that actually generates revenue. And if he is not
specialized or experienced enough in any of these areas, then he would have contract
those business functions out, adding more cost.
Efficient recruitment is a huge challenge for recruiters for they must actually be having
access to a rather large database, and sufficient candidates, to be able to supply niche
skill sets with required industry experience to effectively perform specialist roles.
The gig economy can be applied on a
wide array of roles, whether it is junior
HR admin role or that of a highly
skilled worker, developer and designer
and marketer. It’s also applicable at the
top executive level in a business
including but not limited to CFOs,
CMOs, CTOs etc. They can be really
effective on a gig basis as it’s an
opportunity for organizations to bring
in intellectual property (IP) if the
business is lagging behind in a
particular area.
People nowadays are seeking
experiences and growth, and the need
for stability is not so ingrained
anymore. The move towards more
temporary roles is also being driven by
specialization.
For example, twenty years ago,
professionals were generic as compared to these days, where there exists, more demand
for specialist and niche skills. But companies cannot employ people with all the niche
skills required, as they’d just have too many people and would have to bear exorbitant
costs.
The rise of technology has majorly contributed to the evolvement of the gig economy.
And with this, there is a similar change in all industries. The industries' that are most
likely to offer project-based work – like tech or creative industries – are more
conducive towards to the gig economy.
Although the newly emerging gig economy is definitely something to be excited about
in the future of the workplace, the recruitment sector will always be considered vital in
helping candidates find the right job and companies finding the right match for their
labor needs.
Clients always judge recruiters on the quality of the candidates, as the ‘human
component’ is the most crucial element in recruiting.
To conclude, it can be stated that the gig economy will never replace permanent work,
as employees will always value the security and longevity that permanent employment
can bring. Permanent employment will continue to remain vital and relevant where
there is a match of company values with that of the employee, and where it’s perceived
to contribute to their career development, growth and progress.
However, the gig economy is still expanding with companies adapting to this evolution,
and the result will be that companies which make the recruitment process easiest, will
be successful in hiring the most qualified and skilled workers. On the other hand,
companies which continue to look for temporary workers with obsolete tools and
methods will ultimately lose the battle for candidates and become stagnant regardless of
their current worth and market share.
