The Gig Economy, and why it Matters

Globalization, de-industrialization, automation, and digitization – all have had and continued to have a disruptive effect on traditional jobs and working practices throughout the world (De Stefano, 2015). A gig economy is a free market system in which temporary positions are common and organizations contract with independent workers for short term engagement. the digital element is argued to be the primary distinction between the gig economy and the traditional working arrangements. there are currently four broad types of platforms that have been identified; higher skilled creative and IT tasks that can be performed from anywhere; low-level repetitive work that can be performed from anywhere; manual service work that can be performed on the customer's premises and lastly work that involves driving and delivery. Many talented people have decided to leave the traditional workforce in exchange for freelance work in their area of expertise. This gives them desired flexibility in their lifestyle. Working with this emerging system is becoming a challenge for Human Resource Managers. If the best talent is no longer available for an in-house position, HR managers must find ways to either create long-term contracts or to develop other suitable talents (Lawrence F. Katz; Alan B. Krueger;, 2015).

Leading companies in the gig economy

Some might argue that outsourcing and freelancing have been there for the past 25-30 years and why it has become the new talk of the town? People have been doing independent work for a time in memorial. Especially in the field of education (lecturers), software engineering, consulting etc. This is just a matter of technology making it easier than it ever was. Technology enabled a lot of people to become free agents to live much more flexible work lives. And so that’s the very positive side of the gig economy. It brings agility, flexibility, and innovation (O’Brady, 2014). Whereas employment benefits such as pension, medical insurance are the downside of this disruptive economy. HR departments will have to reckon with what that means for the future of talent recruitment, acquisition, development, and retention.

Source: BMO wealth management survey 2017

According to the World Economic Forum human capital report 53% of the working world are employed and 13% of the working world are self-employed. the rate of self-employment is increasing throughout the world year by year. and its time for HR managers to adapt to the new working world and plan human resource management accordingly (Todoli-Signes, 2017). According to Intuit by 2020 as much as 40% of the American workforce will be contingent workers or independent contractors. Most see gig economy as a positive trend, employers are eased with downsizing along with the burden of labour security expenses they have to offer for permanent employees. If a business is successful it means it has a competitive advantage over its rival. Competitive advantage is about differentiation. Independent workforce is undifferentiated. A successful business cannot hire any worker through any sort of gig economy type if that job involves creating or maintaining its competitive advantage. Thus, HR managers are with the task to accommodate both in house and contract workers in the most efficient way. Embracing a flexible workforce, identifying roles that could feasibly adapt to the gig economy.  Integrate gig workers and workforce by offering gig workers a sense of belonging, which in turn will make it easier for HR managers to establish a pool of go-to freelancers that they can rely again and again.

References:

De Stefano, V. (2015). The Rise of the 'Just-in-Time Workforce': On-Demand Work, Crowd Work and Labour Protection in the 'Gig-Economy'. SSRN Electronic Journal.

  Katz, L. and Krueger, A. (n.d.). The rise and nature of alternative work arrangements in the United States, 1995-2015.

O’Brady, S. (2014). The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It by David Weil, Cambridge, MA: Harvard University Press, 2014, 424 pages. ISBN: 978-0674725447. Relations industrielles, 69(3), p.655.

Todolí-Signes, A. (2017). The ‘gig economy’: employee, self-employed or the need for a special employment regulation?. Transfer: European Review of Labour and Research, 23(2), pp.193-205.