The Gig Economy
If you keep up with societal and business trends, you have no doubt heard about the gig economy: that segment of the working world populated by freelancers and individuals passionately pursuing a side hustle.
Freelancing is becoming increasingly prevalent as the gig economy grows. Those driving this phenomenon are a diverse combination of people eager to ditch traditional employment in favour of working for themselves and people who use gigging to earn some pocket money, amongst others. As the gig economy gains momentum, we take a peek at how this trend may present opportunities, challenges and implications for you.
When one job is not enough
Adobe released a report last year stating that as many as one-third of US office workers may currently have a second job, with slightly over half thinking that we will all have multiple jobs in the future.
These findings were reinforced by a study by freelance company UpWork, which surveyed more than 6,000 US workers for their opinions on the topic of freelancing in the United States over the course of 2016. It found that 35% of respondents were freelancing, which translates to 55 million people in the United States. Among those not currently freelancing, 81% said they would “be willing to do additional work outside of their primary job if it was available and enabled them to make money”.
While these studies admittedly focus on the US economy, it’s not hard to see parallels in Singapore and more broadly in Asia.
So what do these findings mean? One way to interpret them is that if you’re one of the people with only one job currently, your situation may change in the years ahead. However, exactly what form this may take – whether it’s working for two different companies at once or simply doing some freelance work alongside a primary job – is unclear.
Freelancers are everywhere
So who exactly are these freelancers in our midst? According to a report by the McKinsey Global Institute, independent workers can be categorised into four main groups:
1. Free Agents – Freelancing is their preferred choice and primary source of income (30% of the population, 49 million people)
2. Casual Earners – Freelancing is their preferred choice, but is supplemental to their income (40% of the population, 64 million people)
3. Reluctants – They have to do freelance work out of necessity and it is their primary source of income (14% of the population, 23 million people)
4. Financially Strapped – They have to do freelance work out of necessity, but it is supplemental to their income (16% of the population, 26 million people)
The motivations for pursuing freelance work are as diverse as the people doing it. Some are attracted by the freedom that comes with being your own boss. Some are driven by money – either because they see greater financial opportunity in going it alone or because they have no other employment options available. For others, it’s a way to overcome or avoid workplace burnout in their regular job.
As our digital world evolves, so does freelancing. Various websites offer marketplaces for freelance business, allowing this segment of the economy to expand and gain prominence. For work that can be done remotely, customers now enjoy more options when looking for a service provider, rather than being limited to those in their geographic region.
It’s not all laptops on the beach
Independent work is not without its bumps, however. Depending on the field, freelancing can entail high start-up costs and a substantial time investment, creating high barriers to entry. Also, marketplace websites can take a large cut of the project fee from those who actually perform the services.
Due to the nature of freelance work, income is not fixed and there’s no guarantee of how much money you’ll make in a given time period. For those who rely on it as a primary source of income, there’s no fall-back in the event of a dip in business. This is in stark contrast with traditional employment, where you typically have a fixed salary.
Another potential challenge facing freelancers is that their market can quickly become saturated if it is popular and attracts more freelancers to join the game. When this occurs, developing a competitive advantage – whether that’s your customer network, quality of work or unique selling point – is critical for survival.
Is there a gig in your future?
The gig economy has experienced significant growth in recent years and appears set to continue on this trajectory for the foreseeable future. Whether and how you embrace this trend will influence its impact on you. However, if the findings of the US studies are an indication of what lies ahead, then there’s no time like the present to start thinking about how a freelance gig might fit into your life.
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