A gig economy is a labor market that mainly relies on temporary and part-time work performed by independent contractors and freelancers instead of permanent full-time employees.

Gig workers get flexibility and autonomy but have limited or no job security. Numerous firms save money by not providing perks such as health insurance and paid leaves. Others provide certain benefits to freelancers but outsource the management of their benefits programs and other administrative duties to other firms. The name is adopted from the music industry, where “gigs” refer to single or brief engagements at various places.

What Are the Cons of the Gig Economy for Workers?

Pierre Kleinhouse/ HBR | The gig economy has become an essential income source

No Benefits

Unfortunately, the majority of gig economy employment does not include benefits. Because you are not a full-time employee of the organization, the regulations governing the benefits the organization is required to provide you differ. It is uncommon for corporations to give rewards to longer-term contractors. Workers in the gig economy should budget for acquiring private insurance.

In addition, they must prepare for retirement and choose how much of their monthly income to allocate. There are several ways to invest for retirement, including IRAs and 401(k)s. Most organizations won’t handle this for independent contractors, so it’s advisable to speak with a financial counselor to see what choices are available and which is ideal for each circumstance.

Isolation, Lack of Cultural Solidarity

Some employees may find the isolation of the gig economy problematic. Frequently, freelancers who do not report to the workplace miss out on social features. When working from home or in a remote location, gig economy employees may spend most of their day alone. While this increases flexibility, it can also lead to feelings of isolation and exclusion from the rest of the workforce.

What Are the Pros of the Gig Economy for Businesses?

Sterling/ Blog Image | 36% of gig workers in the UK report being unable to take time off work when ill

Lower Cost

Freelance employees often have a cheaper cost than other workers since employers do not have to pay for benefits or onboarding fees of a full-time, new employee. For gig economy workers, employers might pay a salary and are sometimes not required to supply work equipment. This helps companies save expenses by just paying for the work performed by a freelancer.

Potential to Earn More

Depending on your business and degree of expertise, you may make more as a gig worker than a typical employee. You’ll also be able to develop many revenue streams so that if you lose one project or customer, you have another to fall back on.

For businesses, the gig economy also offers several advantages. Companies may now employ exceptional people from anywhere globally, as the talent pool has become genuinely global. Organizations are no longer restricted to local labor markets or the limited number of individuals ready to relocate for work.

Gig Economy Platforms

Anthony Beilin/ Collective Benefits | Currently, gig workers have to make a trade-off between flexibility and tax benefits

As the gig economy grows, so are the internet platforms that enable freelance workers to find work. These websites and applications provide direct linkages between gig workers, individuals, and businesses seeking a certain service.

They maintain the profitability of their business strategy by charging a nominal fee for connecting these two parties. Several multinational platforms, such as Airbnb, Deliveroo, Uber, Fiverr, and Amazon, are now among the world’s most successful businesses.