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How Freelancing and the Gig Economy are Transforming the World

In 2023, the US gig economy is expected to generate gross volume transactions of $455.2 billion. It’s projected that by 2027, 86.5 million people will be freelancing in the United States, making up more than half of the country’s total workforce. The gig economy refers to digital platforms such as Uber, Lyft, DoorDash, Upwork and Fiverr that connect freelancers with clients for short term contract or freelance work.

To many people, it’s understandable why half the US workforce is soon to be working in the gig economy. Work-related problems and corporate life have affected everyone at some point. The horrible commute, a micromanaging boss, office politics. The gig economy offers a form of escape.

The choice to enter the gig economy is primarily financially motivated. The Pew Research Center surveyed gig platform workers and the top reasons they took on these jobs was “Wanting to save up extra money” and “Needing to cover gaps, changes in income”. However other major reasons included “Being able to control their own schedule”, “Wanting to be their own boss” and “For fun, or something to do in their spare time”.

Let’s say you want to try out a different job. It’s not like you can go for an interview for a role totally different to what you’re currently doing and then ask to work for 1 day. On gig economy platforms you can try out a different job every day of the week.

The gig economy has also created pathways for jobs that didn’t exist in the past or jobs that didn’t have a clear route to attainment. If you want to be a doctor, you generally know that you have to go to medical school. The same goes for being a pilot. You have to get training at an airline academy or flight school.

Man working on laptop

But what if you want to do nothing… and get paid for it? Yes, that’s a job. The South China Morning Post published a video of a Japanese man who rents himself out offering ‘nothing in particular’. Before the gig economy, how would you go after such a job? Where would you get training to do ‘nothing’? Which degree would specialize in doing ‘nothing’? The man gets clients primarily to have some company and companionship, so the job really isn’t ‘nothing’, but rather passive actions such as listening and understanding.

Although this example is somewhat unique, it shows how the gig economy has opened up opportunities that didn’t exist before. Even if you want to do something specialized, let’s say Excel spreadsheet work, in a regular job you would most likely have to juggle it alongside other tasks. But now you can put that as the only job you offer on your freelancing platform profile and you can get hired immediately to do just Excel and nothing else.

The gig economy allows you to bypass a lot of traditional hurdles and opens up the spectrum of services people are willing to pay for. Let’s say you have a large following on TikTok or Instagram. You now have an avenue to earn money on Fiverr by offering shout outs or sponsored posts.

Do you live somewhere exotic? Lucky you. Not only do you live somewhere unique and interesting, but you’re able to monetize it. There are freelancers on gig economy platforms with job descriptions such as “I’ll give you any information you need about location X” or “I’ll make a weekend itinerary for your stay at location Y”. Simply by virtue of living somewhere, the gig economy had made this into an income earning opportunity for much more people.

Graphic designer working on laptop

But the gig economy isn’t all positive. Various professions have been and are still being impacted. The USP of gig economy platforms often highlight the ability to get work done at cheap cost. Let’s look at logo design for example.

A logo designer often has a background in graphic design, perhaps a bachelor degree. Not only do they need to be competent with design software, but they’re expected to take time to understand the client’s business goals, brand identity and what message the company wants to convey.

But sites like Fiverr promote its platform as a place where you can get a professional logo for as little as $5. Lots of people flock to Fiverr to get their logos designed because it’s so cheap. But from the perspective of a freelance logo designer, why would you put in extra effort if you’re going to earn $5, a fraction of the amount a professional is expected to earn utilising their experience and expertise.

Professionals who actually have a background in graphic design are getting priced out, and clients end up getting low quality work. There’s little incentive to provide high quality logo design if you’re earning $5 and competing against other freelancers using automated / AI logo designers.

A long term impact of this is that more work may eventually find its way back to professionals with appropriate training and educational backgrounds. People will likely learn that there’s a big difference between a $5 logo job and work done by someone who’s more experienced.

In 2020 California’s Proposition 22, a ballot initiative that allowed gig transport platforms such as Uber and DoorDash to label workers as ‘independent contractors’ rather than ’employees’, was passed. This prevented workers from obtaining legally-mandated employee benefits such as paid sick leave, minimum/maximum hours or unfair dismissal protection.

Uber has maintained that the passing of Proposition 22 was the right choice and something that their gig workers wanted. It turns out Uber, Lyft, DoorDash, Instacart and Postmates spent over $185 million in a marketing campaign to get Proposition 22 passed.

A similar discussion has been happening in Australia, in which the “policy challenge for the Parliament would seem to be finding a balance that preserves much of the flexibility and advantages of digital platform enabled gig work for both businesses and workers in a way that also provides appropriate protections, rights and benefits for workers participating in the gig economy.

This has captured the public’s attention particularly after the deaths of Uber Eats and DoorDash drivers. Many drivers are immigrants working to support families back home and came to Australia for a ‘better life’. Tolerance is wearing thin when stories emerge of riders getting threatened to be fired if they are a few minutes late and the risks they need to take to ensure their deliveries reach on time.

Selamat Datang monument in Jakarta, Indonesia at night
Selamat Datang monument in Jakarta, Indonesia

In Southeast Asia, and the impact of the gig economy is there for all to see. Jakarta, the capital of Indonesia, is a bustling city and a noticeable feature of its roads are the vast number of moped riders wearing Grab or GoJek jackets. These are the Southeast Asian equivalents of Uber and Lyft. For many, it is a pleasant experience being handed a helmet and then having a Grab rider weave through the traffic and congestion of Jakarta, which otherwise would take hours to navigate through.

While the concept of ride-hailing apps provides exciting opportunities for some, it’s a source of concern for others. Some local taxi businesses, particularly in island locations, fear it is only a matter of time before they will have to close as ride hailing apps become more established. In Langkawi, an island on the west coast of Malaysia, local taxi drivers have complained that their customers were being ‘stolen’ because ride-hailing apps offered lower prices. In 2018 the Prime Minister of Malaysia, Mahathir Mohamad, even visited the Taxi Drivers Association in Langkawi to hear their concerns. It didn’t turn out too well with the Prime Minister offering to resign and several taxi drivers hurling insults at him after he said he couldn’t terminate Grab’s service.

Ride-hailing has been disrupting the way the taxi industry has been run, and there’ll naturally be some ripple effects. In Bangkok, Uber was banned from Suvarnabhumi Airport several years ago. Following Grab’s acquisition of Uber Southeast Asia, GrabCar is available at the airport now. Rumours exist of a dispute between Grab drivers and traditional taxi drivers, who aren’t too happy with Grab drivers encroaching on their territory.

Just like in the US, the number of people joining the gig economy in Southeast Asia is projected to rise. This is in part due to flexibility offered, but also due to the opportunities to participate. Both Grab and Gojek apps have been attempting to be ‘super apps’, offering on-demand services such as massages, cleaning and ticket bookings.

Uber Eats driver
Photo by Max Chen on Unsplash

A criticism of the gig economy in comparison to working a traditional job is that there is a much greater expectation to squeeze every bit of productivity out of you in the gig economy. In a regular company, people can spend their working hours at the coffee machine, talking away for 10 minutes. You may notice someone stop by a colleague’s desk and talk for 15 minutes about anything from a recent sports game to how the weekend was. Employees are getting paid for this. You generally don’t have this freedom when you’re a gig worker. You get paid only for the work you produce.

Another difference is reputation and earning potential. When you join a new company, you get paid to have various inductions to learn the ropes. In the gig economy, however, the burden is often on the freelancer. For example, if you join Upwork as a proof-reader, it may be hard to get a proofreading gig because you have no feedback from clients. You may have to reduce your cost significantly just to get a chance. You need to take the hit so you can build up positive feedback and then ultimately charge higher prices as you become more in demand. Over time, you can build strong client-customer relationships, which allow for repeat work opportunities. But in starting out, there is a trade-off to the low barrier to entry.

Many gig economy platforms are publicly-listed companies with billion-dollar valuations that will have power and influence to shape the culture of freelancing. But as with any disruption there will be advocates and detractors, many of whom are fighting for greater freelancer protections and rights. Where this will end up… who knows? Gig economy platforms have transformed the world, and if projections are anything to go by, they will continue to do so.

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