what exactly is the gig economy?

The gig economy. Many of us have read about it and some of us have worked alongside professional contractors on our teams. However, very few understand what the gig economy is about. The most important question of all, “Is it a fad or is it here to stay?”

what is the gig economy?

The blowup of the gig economy very well coincides with the rise of social media. Social media has fostered a new culture among the youths and city dwellers - instant gratification. In other words, the need for immediate attention.

As consumers, we want our lunch delivered to our desks, on-demand transport services and even our groceries picked up from the supermarket and sent to our home.

The New Yorker calls the gig economy the “on-demand, peer, or platform economy.” In simpler terms, the gig economy consists of companies who engaged contract workers for a temporary period or project-based jobs, instead of hiring them for permanent positions.

who works in the gig economy?

gig economy malaysia

The people who participate in the gig economy come from a massive variety of backgrounds. While some are part-timers who are looking to make some extra money outside of their day job, others are full-time devotees to gig economy who make their living solely from on-demand work.

CNN explains, “If you've ever been a freelancer, a temp or really any sort of independent contractor, you've participated in the gig economy.”

Gig workers include anyone from an Uber driver or Airbnb host, to project managers and developers who are instrumental in digital transformation projects that global companies often invest in.

According to Forbes, more than one third (36 per cent) of U.S. workers are in the gig economy, and they are dominated by millennials who are attracted to the flexibility to try new things, acquire new skills and meet new people.

While there are no substantial studies to measure a close-to-accurate number of gig workers in the Asia Pacific region, we are approximately five years behind the game as compared to our western counterparts.

The lag could be attributed to the traditional belief that only a permanent contract can provide a strong sense of job security. Many Asian workers desire what is commonly known as the ‘iron-clad bowl’ job - one which offers a steady income and presents minimal risk of getting laid off or fired. However, the ideology of ‘job security’ might soon be a fad.

Many permanent roles today do not offer the same level of job security as before as employers often look at optimising cost efficiencies. Companies often choose to reduce operation size as a way to find more resources to invest into other parts of the business.

Rather than keeping just full-time permanent employees, an agile workforce allows companies to better manage expenses and investments to match business and market demands.

how has the gig economy impacted the labour market?

The gig economy reported effects on the labour market vary depending on who you talk to. There's no question that, in the last several years, the gig economy trend has certainly grown.

According to the World Bank Data, about 25.3% of the Malaysian workforce are freelancers in 2018 and that the number is growing, as more people are opting for flexible working hours.

freelance gigs are categorised into two broad leagues

1. independent contractors

The first are the workers who enjoy lots of flexibility (perfect for families and students) and the freedom from the dreaded 9 to 5, desk-bound corporate job. These could be people who were previously unable to find a job and can now make a living performing ‘gigs’ on their own time, or professionals’ whose skills are only needed by a company for a short period of time to better manage workload.

2. project-based gigs

Companies often hire contract workers on project-basis, particularly those that are restructuring their business to remain competitive in a world empowered by technology. Some examples of these projects include migrating from traditional legacy processes to online workflows, building user-friendly and mobile-optimised websites or providing advisory recommendations on internal workflows to comply to the latest regulatory standards. These projects typically call for a highly-skilled and experienced gig worker to manage the whole project from ideation to implementation, or be responsible for a critical part of the development process.

Inevitably, the rise of the gig economy has encouraged employers to improve diversity in their workforce strategies. Some large companies have even replaced their permanent employees with professional contractors for some teams - so that they can tap into a more specialist talent pool, while remaining agile and competitive.

While it's easy to write "gig economy" off as a buzz phrase used by techies and founders of innovative start-ups, it's an important concept that has far-reaching implications for employees and companies to come.

Companies in key industries that contribute significantly to national GDPs are also getting on the bandwagon. These large-sized firms have acknowledged that a blended workforce can help them become more agile, quickly meet changing market and consumer demands as well as better manage their finances.

Some of the key industries where gig economy workers are currently employed include banking and financial services, construction and property, trade manufacturing and supply chain as well as healthcare. Specialised professionals in accounting and finance, sales and marketing as well as human resources are also more open to the idea of working as a contractor, as they can choose to work on projects that they are passionate about and get paid a premium for their expertise.

While there are some definite drawbacks of the gig economy, one thing seems certain. It's going to continue to grow and may soon become the new workforce dynamic. As a result, companies and freelancers are now shifting their focus to how the gig economy is being regulated and working together to ensure that employment rights, regardless of their status, are equal and protected.

the future of the gig economy

gig economy workforce

While it's easy to write "gig economy" off as a buzz phrase used by techies and founders of innovative start-ups, it's an important concept that has far-reaching implications for employees and companies to come.

Companies in key industries that contribute significantly to national GDPs are also getting on the bandwagon. These large-sized firms have acknowledged that a blended workforce can help them become more agile, quickly meet changing market and consumer demands as well as better manage their finances.

Some of the key industries where gig economy workers are currently employed include banking and financial services, construction and property, trade manufacturing and supply chain as well as healthcare. Specialised professionals in accounting and finance, sales and marketing as well as human resources are also more open to the idea of working as a contractor, as they can choose to work on projects that they are passionate about and get paid a premium for their expertise.

While there are some definite drawbacks of the gig economy, one thing seems certain. It's going to continue to grow and may soon become the new workforce dynamic. As a result, companies and freelancers are now shifting their focus to how the gig economy is being regulated and working together to ensure that employment rights, regardless of their status, are equal and protected.

are you building a blended workforce?

If you are interested to find out more about building a blended workforce or how you can go about hiring professional contractors who have the right skills and personality to fit into your organisational culture, we can help you out.

In addition to recruitment specialists, we have a team of dedicated contracting administrative team who provides end-to-end contracting solutions based on your requirements. Our services are complemented with innovative HR technology to ensure timely proceedings and eliminate human errors, so that you can focus your efforts and resources on delivering business results.

Read up more about our contracting services here or contact us today for a discussion on your talent needs.