The Gig Economy Explained: Introduction To A Modern Concept
Updated: Nov 13, 2021
The modern financial landscape and the world economy are everchanging due to the constant fluctuation of all the factors involved. From unfathomable technological advances, changing of political and social structures, to climate change, the factors are endless that contribute to the ever-growing world economy. We’ve seen plenty of new developments and concepts take root due to the unique characteristics and lifestyle changes that have come about in the last five decades or so. However, everything was put into hyper-drive with the advent of the internet and the “information age.” Amongst the many new concepts that this new era brought forth, the gig economy stands out.
While the term gig-economy can be traced back to 1915 when jazz musicians coined the term “gig” to refer to performances. The terminology now means something entirely different. Since 2009, the term has been used to describe a very modern concept of work. We at the Zed Network work in the financial sector and have been closely observing its effect in the domestic and world economy in general for quite some time now. So we thought we should put our research and observations out there in public to aid you in further understanding this very modern concept.
According to Zed Founder and entrepreneur Alan Safahi, the effects of the gig economy are felt throughout the financial sector. Gig economy workers are considered as the driving force behind the fast-tracking of payment modernization. So what is it? Why is it such a big deal? Well, that’s what we will talk about in the following passages. By the end of this article, our goal is to provide you pertinent information about the gig economy. So let’s dive in and check out this modern concept that took root in the last decade.
What Is The Gig Economy?
The basic idea for a gig economy is where temporary, flexible jobs are widespread and where companies look to hire independent contractors and freelancers instead of full-time employees. The gig economy and its workers directly undermine the traditional economy of full-time workers who often focus on their career development. It’s a versatile economy that is usually more adaptable to the needs of the moment and the demand for flexible lifestyles. From workers, businesses, and consumers, it can benefit everyone involved. However, it’s not all roses. There are downsides to the gig economy too. It usually stems from the erosion of traditional economic relationships between workers, businesses, and clients.
Understanding The Gig Economy
A considerable part of the population works part-time or in temporary positions or as independent contractors. Therefore, it tends to encourage cheaper, more efficient services. The direct result of the gig economy is market-changing companies like Uber and Airbnb. Now, if you don’t use technology-based services, then you won’t be able to enjoy its perks benefits. Large urban areas and big cities are usually the places where you will see highly developed services and are the most entrenched in the gig economy. Now, identifying gig economy workers can be a bit hard as almost every job has the capability of being part of the gig economy.
However, here are some of the most common examples of gig economy workers driving for Lyft or delivering food to writing code or freelance articles. In addition, you can see the gig economy at work in the educational sector. Adjunct and part-time professors, for example, are contracted employees as opposed to tenure-track or tenured professors. So universities and colleges can easily cut costs and hire and match professors according to their academic needs by hiring more adjunct and part-time professors.
Factors Leading To The Gig Economy
Going by the estimates, we can see that a third of the working population is already in gig capacity in one way or another within the US. That means the United States is already on its way to establishing a gig economy. Experts are already suggesting that the numbers will only rise from here as these positions allow for independent contracting work with many clients, and management won’t need them to come to the office usually. Freelance gig economy workers usually look for part-time workers and to work from home.
According to Alan, businesses tend to get a wide range of applicants that they can consider without worrying about how near the office they are. Add to the fact that a craze for automation is afoot, with many computers now strong enough to do many different jobs. And with the COVID-19 Pandemic coming into full flow last year, it has made working from home quite a popular choice. There’s a growing population that wants to work from home—plenty of economic factors that contribute to the ever-growing gig economy. The Pandemic, travel restrictions, and the general health hazard that started back in 2020 have been felt throughout industries worldwide.
Now, many employers won’t be able to afford to hire full-time employees, with many established businesses even having to furlough or lay off staff. While the Pandemic isn’t a cause of the gig economy, it has brought it to the forefront. Before, freelancers and other gig economy workers were a niche where companies would hire part-time or temporary employees to take care of busier times or specific projects.
But now, with the world static, there is a high need for the versatility a gig economy can offer. Now, that’s from the employer’s point of view. So now, let’s look at it from the employee’s perspective. People usually have a hard time finding something to do and then sticking with it. We often find ourselves having to move or take multiple positions to afford the lifestyle we want. It can even lead to multiple career changes in our lifetime. The gig economy is just that but on a much larger scale.
As we’ve said earlier, the Pandemic has put the spotlight on the gig economy with gig workers delivering necessities to home-bound consumers, and the people who lost their jobs have turned to part-time and contract work for income. Like everything else in the world, the gig economy too had to change and adapt during the Pandemic, and it has transformed into something even more prominent. So employers will have to plan for the future about the overall workforce, including the gig economy workers, once the Pandemic dies down.
The Gig Economy And Its Criticisms
It’s not all roses with the gig economy. There are obvious downsides to it. While not all employers will hire contracted employees, but the general gig economy trend can hurt the full-time workforce. They can find it very hard to build a career since temporary employees are usually cheaper to hire and more flexible in their availability. We’ve already seen that workers who like to follow a traditional career path and the stability and security of it are already being crowded out in some industries.
Not everyone is the same, and for many, the life of a gig economy worker can do more harm than good. Work flexibility can disrupt many aspects of life like the work-life balance, sleep patterns, and activities of daily life. It can even lead to them spiraling downwards mentally and physically. Add to that the fact that flexibility can often mean being available anytime a gig comes up, regardless of whether you need it or not. But that’s not all.
As a gig economy worker, you will always need to be on the hunt for the next gig. With increased competition and no assurance of unemployment insurance (the CARES Act made an exception for the Pandemic) after the Pandemic, the gig economy can become a toxic environment for many of the population. If you look carefully, you will notice freelancers or other gig economy workers have more in common with entrepreneurs than traditional workers.
Now, yes, that may come with greater freedom for the individual worker. Still, things like security of a steady job, regular pay, benefits like a retirement account, and the daily routine that has defined work for generations are all on their way to becoming extinct. Another criticism that often pops up is that there is significant chance transactions and relationships, long-term relationships between workers, employers, clients, and vendors can simply deteriorate due to the fluid nature of the gig economy.
Now that means the benefits of building long-term, meaningful relationships and trust will no longer be there. It can even eliminate the stalwarts of the traditional work economy like customary practice and familiarity with clients and employers. That can even mean investment in relationship-specific assets might be discouraged that would be otherwise profitable because no party has an incentive to invest significantly in a relationship that only lasts until the next gig comes along.
The Gig Economy & The Payments Modernization
Now, even though there is an individualistic shine to the gig economy, it works as a global tool. It is connecting more and more people worldwide, even though it might be for one project. With so many new interests and ways to make a living, the time for thinking domestically is long gone. Anyone can start a Fintech company or a FOREX brokerage with the right resources and expertise. That means needing a comprehensive payments orchestration solution that can keep up with the modern world but is scalable for the future.
Well, if that is what you need, then we here at the Zed Network can help you out. We work with FOREX and CFD brokerage firms, Fintech companies, Legaltech companies, and other international institutes and provide them with the best payment orchestration solution in the market. Not only does it let you conduct fast international money transfers, but it is also optimized for gig economy payments. So if you need a market-leading payment orchestration solution or have any more questions about the gig economy, please contact us or drop your questions in the comments below. Also, hit us up on our socials and send in your thoughts and suggestions on improving our services to better cater to your needs. And with that being said, that’s about all we have for you today. We will come back with something new for you soon. Until then, see ya!