The Growth of the Gig Economy

 by Sarada P

The UK gig economy has an estimated strength of 1.7 million people. The gig economy is a type of labour market that comprises part-time/ temporary jobs (‘gigs’) in contrast to the traditional full-time work. Examples include Uber drivers, delivery services, etc. Its sudden rise in popularity provides a great opportunity to observe how the economic climate of the world may change.

Changing lifestyle choices since the COVID-19 pandemic may be one of the main reasons for the shift. The lockdown regulations enforced in 2020 showed a subsequent surge in the reliance on online services to facilitate everyday purchases. The demand for ‘gigs’, specifically for delivery drivers , grew in this time- exposing people to the benefits of working such jobs for extra cash. Even after restrictions were lifted consumer spending habits stayed the same, and businesses realised the profit incentives to have employees predominantly working from home hence the gig economy continued to grow. 

The numerous consecutive economic fluctuations in recent years led to extended periods of uncertainty may have caused wider income insecurity, leading many to feel the need to take on additional part-time jobs to pay bills. The economic fluctuations were mainly caused by a series of unprecedented events: from the COVID-19 pandemic in 2020, to the Russia-Ukraine war and then to the huge spikes in inflation in the UK (11.1% in 2022).

Additionally, there has been a considerable shift in the desires of younger workers. Many now prioritise a greater work-life balance- a problem that can conveniently be solved by switching traditional jobs for jobs in the gig economy. The development of many apps such as Uber, Upwork and Fiverr have all opened up an easy-to-use method which makes joining the gig economy more convenient and thus more popular in recent years. 

The ability to hire a part-time employee instead of a full-time worker to reduce costs for firms is  a huge selling point of the gig economy to employers. In times where firms bear a high workload, employers can hire gig workers. The nature of the part-time contract also means the employer does not have to pay vacation or sick pay- giving the cause a high incentive. 

However, despite its flexibility and freelance nature, the gig economy presents problems. The increase in the availability of part-time workers decreases the job prospects for full-time workers, who prefer the stable career path that full-time work offers. Freelancers are at a higher risk of being taken advantage of as they are not protected under any worker’s rights. Since employers do not have to pay benefits that are associated with full-time jobs, employers will also take advantage and try to hire workers for the cheapest rates possible, with little to no change in their pay. Additionally, different jobs can lead to varying amounts of pay since there is no standardisation. Hence, the gig economy can lead to unstable pay, which would be unreliable as a main income source. There is also a lack of career development opportunities and a lower scope of being able to leave the gig economy due to a lack of transferable skills. In addition, upskilling workers is a challenge and highly cost and time-inefficient. 

So, what is the future of the gig economy? Social attitudes towards gig work are changing, as are the desires of young workers. 1 in 5 HR Directors in the UK seem to believe that in the next five years, the gig economy will make up 75% of the workforce. I believe that the continued growth of the gig economy, especially on such a large scale, will require a strict reform of worker’s rights to protect participants since this seems to be a major flaw in the current system setup. There are many other factors that need to be addressed too, however, it is clear that the  gig economy is here to stay and with the right impetus, can grow.