The way we work, live, interact and spend money has dramatically changed in the last decade, especially with ubiquitous smartphone and internet. Being hyperconnected via social networks has increased communication and has opened new ways for businesses and individuals. This changing nature of the world of work has also shaped the workforce.
As organizations ready themselves to respond to forces of globalization and technology, they are focusing on being agile to be able to address ever-changing customer needs and preferences. Businesses world over have to compete with nimble start-ups from across the globe; while ensuring that their business models are flexible to respond quickly to market demands and forces.
While the accelerated adoption of today’s emergent technologies will undoubtedly help drive innovation, the increasingly compressed technology absorption cycles also pose a difficult workforce challenge. Business leaders worry that they will be unable to hire the skilled people they will need in the future, in different departments, capabilities or units of their organization. About 8 in 10 CEOs in a global survey conducted by PwC cite constraints on the availability of key skills as the biggest threat to their business today. Many expect such skill gaps to remain a fact of business life well into the future.
Factors contributing to the rise of the gig economy
Technology no doubt is a big enabler for gig economy. However, we also need to look at other underlying social, economical and behavioral patterns that are helping shape the rise of gig economy.
First, with a more globalized world, more and more people are able to explore work that they really like doing and are able to indulge in their hobbies to either earn extra cash or be dependent on their hobbies completely for their livelihood. With advanced technology, any person sitting in any corner of the world can potentially provide solutions to any part of the world. Technology platforms like Uber, Lyft, Airbnb and even Amazon have enabled these patterns of behaviors in many different work categories.
Second, as the world becomes more globalized, there is an increasing pressure on local employment and it may not be sufficient for every participant in the economy. This unemployment or even the looming prospect of unemployment is forcing people to look at what else they can do to earn a living. This factor plays a major role in people seeking a part time work assignment outside their current regular job.
Third, as automation and robotics are likely to take up more mundane activities, individuals are increasingly being held responsible for their own employability. With almost 2/3rd of the workforce trying to invest in their own skill development in order to keep themselves “employable,” it’s easy to understand how people will develop these new skills, by seeking freelance, part time work in these areas of interest.
The gig economic structure
The gig economy is not necessarily a new concept. People have always been working on a part-time or contractual basis in the past. So, what is different about gig economy? The one fundamental difference is the number of people participating in the workforce, as the number of temporary workers has been steadily on the rise. This is essentially enabled by three components; the independent worker, the end customer who might be looking for a particular service and the platforms which enable these transactions to take place.
The major differentiation is hence, derived from these platforms like Uber which ensure that there is a fair commercial arrangement that exists between the service providing a worker and the person requesting such services. These platforms have essentially replaced the mediators enabling individuals to either supplement their current income or simply because they cannot find traditional, full-time, salaried positions.
The “gig economy” or the “sharing economy” is not necessarily replacing the traditional workers but is helping consumers and companies meet unmet demands or stimulating new demand, thus creating new work opportunities.
What companies need to do
PayPal study released earlier this year revealed that a significant 41 percent of Indian freelancers witnessed growth in the last 12 months. While in the US an estimated 53 million Americans were freelancers, indicating that 34 percent of the workforce was in the gig economy. It is estimated that it will grow to 43 percent of the workforce by 2020.
This clearly indicates that organizations world over would have to find effective and efficient mechanisms to handle this rising class of workers and ensure that they are engaged and deliver just like their regular full-time employment counterparts.
How should the organizations accommodate gig workers?
- Train the regular employees to accept the gig workers as skilled, talented and important for the work.
- Evolve systems, processes, and tools to enable an efficient functioning of the gig workers alongside the regular ones.
- Develop the same recruitment, acceptance, work-period and relieving processes, rules, and privileges as the regular workers are entitled to.
- If the government makes rules to safeguard the benefits of gig workers, follow them.