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The Gig Economy Explained for Business Owners

If you’re a business owner, you’re sure to be aware that things in the business world change rapidly at times, more so since the advent of the internet.  New technology and new ways of doing things seem to be coming at us at such a pace that sometimes it can seem difficult to keep up with what’s going on.  New terminology is a particular burden as we all struggle to understand new words for old things, and sometimes new words for totally new things.  One of the phrases that has been bandied about more and more frequently in recent years is the “gig economy” so today we’re going to take a look at what it actually is.

Basically, a “gig economy” is an environment in which temporary work positions are common and companies and other organisations contract with independent workers on short-term engagements.  It’s a growing trend and Intuit (one of the leading business and financial software companies) predicts that by 2020, a massive 40% of American workers would be independent contractors.  The usual case is that where the US leads, the UK follows (though we’ve still to elect a reality TV star for our Prime Minister) so the gig economy is likely to expand here in the UK over the coming years too.

The benefits for businesses which hire short-term contractors on the gig economy can be attractive.  Companies can save resources in terms of benefits, office space and training, to name but a few areas.  Businesses can also hire industry experts for specific projects, experts who may command too high a price to hire on a full time, permanent basis. 

The trend towards a gig economy is being driven by several factors:

The digital age has resulted in a more mobile workforce and work can increasingly be done from anywhere (remote working – it doesn’t mean working in remote areas, it means working from a location outside of the company or office, using technology to stay connected).  Jobs and location don’t necessarily go together nowadays which means that freelancers can work on jobs from around the world.  This has opened up a global workforce of freelance professionals that seek to work with companies on short-term contracts, allowing potential employers to draw from a huge pool of individuals to work on their projects.

Digitisation is also responsible for a decrease in jobs as software has replaced the need for human workers for some types of work and speeded up other work processes.  This has combined with financial pressures on businesses during the years following the 2008 economic crisis, resulting in staff reductions in businesses worldwide.  People nowadays don’t expect to have a “job for life” and tend to change their jobs (and in many cases, their professions) many times throughout their working lives.

While the gig economy can be good news for business owners, it may present some serious challenges to workers.  Next week we’ll be taking a look at this issue.  If you want to find out more about the gig economy, don’t miss out on next week’s update – why not follow us on Facebook and Twitter to get a heads-up when the news is published?