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What is the Gig Economy?

With the number of self-employed individuals projected to rise around the globe, you’re likely to hear the term ‘gig economy’ more and more in the near future. But what is the gig economy really, and how will it affect you?

Definition and History

The gig economy is generally defined as a market characterised by the prevalence of short-term contracts, or ‘gigs’, as opposed to permanent jobs. The term is now often used to refer to the industry encompassing work performed by independent contractors and freelancers.

In 2015, self-employed individuals made up 17.8% of the Australian workforce, according to the Australian Bureau of Statistics. Other countries experience a much bigger representation; in America, it’s estimated that roughly a third of the working population already undertake freelance or contracting gigs.

There are many factors that contribute to the continued growth of the gig economy. Perhaps the biggest is digitisation, which increasingly allows workers to perform work outside an organisation’s location. Mobile devices and the Internet have made it possible for work to be done entirely remotely, which in turn increased the availability of such projects.

The numerous benefits to businesses and workers alike also fuel this surging trend.

Effects on Businesses

Because contractors and freelancers are not entitled to many of the benefits of full-time employees, businesses are able to save resources on staff, office space and training. This results in improved efficiency, enabling them to offer products and services at more competitive prices.

Online-based companies such as Uber and Airbnb are leaving their more traditional competitors in the dust, thanks to the ability to make their services more affordable and more convenient.

Short-term positions also provide organisations the option of contracting experts for a limited amount of time, to complete or consult on specific projects, which is welcome considering the expensive costs of maintaining them as regular staff. A wider range of available talent is also possible as they won’t be limited by proximity to the organisation’s location.

Effects on Contractors and Freelancers

Perhaps the most common reason why contractors and freelancers eschew permanent employment is increased work-life balance – having flexible hours allow them to manage other priorities better. The ability to select and work on projects they actually like, instead of being forced to take a job due to lack of options, is also a big factor.

As mentioned previously, contractors and freelancers typically do not get many of the entitlements afforded to employees, such as holiday or sick pay, annual leaves, etc. Unfortunately, it’s inevitable for some individuals and organisations to try to save a buck by exploiting workers through sham contracting practices, for which the vigilant efforts of the Fair Work Ombudsman are much needed and appreciated.

Forecasting

Looking at historical evidence, the gig economy can be said to be the evolution of the continuing trend of people changing jobs multiple times over their careers. The current prevalence of flexible and diversified gigs is a reflection of this tendency occurring on a larger scale.

The gig economy is only expected to grow all over the globe, as more organisations discover the benefits of hiring a fluid workforce. Businesses are therefore challenged to adapt in order to survive the ongoing shift. More importantly, we need to ensure that the self-employed are protected from the ill-intentioned ones looking to take advantage of the gig economy.

In this, Certica® continues to keep a vigilant watch. We’re eager to help the gig economy gain even more momentum in Australia – let us know if you need Certainty in your contracting arrangements.

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