Gig Economy Advantages And Disadvantages

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The GIG economy is defined as the labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs1. According to a recent report by McKinsey Global Institute2, it was reported that 20 to 30% of the working age population in America and EU-15 perform independent work, which constitutes up to 162 million people. Notably, close to half of this population of workers rely on such freelance work for their primary income.

This changing nature of employment presents benefits for both workers and businesses. From a company lens, the ability to capitalize on such a workforce provides a lower set of business operating costs. In particular, companies are able to ride through business cycles and recessions
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In addition, it allows some workers an inroad to career paths via bootstrapping of new skills that may not have been available before. Also, GIG serve as a useful channel for supplementary income or acts as a financial lifeline for some workers. In totality, Mckinsey reported that this accounts for 90 million in the US and EU-15.

Nonetheless, the GIG economy does present some drawbacks across several dimensions. Firstly, independent workers have limited access to benefits and employment rights. The lack of benefits is a key concern which includes no protection against unfair dismissal, no rights to national minimum wage or holiday pay.

Secondly, technology advances via job offers via the on demand platform offers “low barriers to exit”. This means that companies are able to monitor the workers performance and reputation continuously and algorithms may choice select workers on a unilateral basis. In some cases, due to negative reviews especially in public apps like Uber, workers may be not granted future assignments depending on the (arbitrary) satisfaction of a client. This would translate to a set of inconsistent income for the workers and prove a challenging aspect when a GIG worker depends on such assignments to make ends
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Currently, these online platforms are used by only 15% of independent workers. As the online platforms grow over the next few years, efficient matching of a larger pool of consumers and workers would prove to have significant macroeconomic benefits as this expands with scale, offering more choices across a bilateral basis. Notably, studies have indicated that such digital talent platforms could boost global GDP by $2.7 trillion by 2025.

Lastly, companies have a responsibility to develop best practices to ensure a sustainable work force and self-govern in the absence of regulations. Devising company policies to reward, train and incentivize workers universally would be essential towards having an engaged workforce, which will translate to greater customer satisfaction and company returns in the long

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