What the new gig economy means for you as an employee

gig economyFreelance and contractor work are nothing new, however, in today´s digital environment, a new trend is showing: the so-called on-demand workforce. Instead of hiring employees on a permanent base, employers and clients can now just hire workers when and how they need them.

Whereas previously hiring contractors might be typical for specific places, the on-demand workforce has extended way beyond freelancers and contractors in the office or on building sites. With the infinite amount of mobile applications that are being developed new types of on-demand jobs are popping up each and every day. Who hasn´t heard of Uber or Airbnb? These apps basically allow you to employ yourself as a driver or accommodation provider.  Taxi drivers, cleaning staff, dog walkers, grocery delivery, personal butlers, you name it and there is probably an app for it to provide you with on-demand staff.

But, what does this on-demand kind of employment mean for you as an employee?

First of all, freelance work is, of course, related to greater freedom: you decide when you work and how you work. You decide which jobs you want to take and which you don´t. You also decide when you want to take them and as for office gigs, it often means much greater flexibility to work from home as well while for example supporting younger children.

Second, you have much more options as an employee, the rising gig economy also provides new opportunities for career paths you previously thought had limited entry.

However, this trend also provides risks and challenges to employees.

For example, the low barriers to enter also have another side: low barriers to exit. Any type of contract work can quickly dry up again, because of negative (public!) reviews of your performance or because this gig economy moves fast and there is no need for your type of service anymore. There is also the possibility of the app you are working through is going out of the business. All of this leads to the fact that your income is not consistent like it would be with a “normal” job.

In addition to inconsistent income, there are new costs that you have to take care instead of your employer doing so. Think about health insurance and work-related costs. Another significant cost is employment tax, your employer isn´t supposed to be paying this for you and you will have to make sure you set enough money aside from your paycheck to be able to pay your taxes when they are due. So instead of having taxes automatically deducted from each paycheck, it is your responsibility to save up the money and this requires quite some discipline.

Contract work also usually means fewer protections, some of the usual safeguards that are available to fixed employees do not apply in the on-demand work dynamic. Think about severance pay, disability leave, sick days and worker comp insurance, these are just a few examples of protections that apply to full-time and part-time employees but not to contractors. In addition, the on-demand workforce doesn´t have a lot of legal protections, for example, minimum wages or anti-discrimination policies do not apply, and it is much easier to terminate a working relationship with a contractor than it is with a full-time or a part-time employee.

Although contractor work carries a greater risk than traditional employment does to you as an employee, the benefits of independence, flexibility, greater options and changing economy ensure the number of gig workers every year that either earn their living or complement it through gigs is rapidly growing.

What do you think this new gig economy means for employees?

 

 

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