What is Gig Economy?
The pandemic has changed the world very quickly. Almost every aspect of our lives is now drastically different. This impact can be seen in the workforce as well. Many people lost their jobs during the pandemic, pushing people to seek alternatives to earn money. Due to this, more and more people started choosing flexible and autonomous work over regular 9-to-5 jobs. This trend is called the “Gig Economy“, also known as the “On-Demand Economy”. In the gig economy, individuals are hired on a contractual basis or as freelancers to complete specific projects or tasks. The gig economy was growing even before the pandemic, but the pandemic accelerated this trend multiple folds. At the same time, technology overgrew due to lockdowns, making this trend relatively easy to adopt.
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Globally, the gig economy has grown, and India is no different. The Indian gig economy was estimated to be worth $1.5 billion in 2019 and increased by 33% in 2020. According to ASSOCHAM, the Indian gig economy is anticipated to reach $455 billion by 2024, with a rise in the number of gig workers from 5 million in 2018 to 25 million in 2023. India has the second-largest freelance workforce in the world, with 15 million gig workers. On average, gig workers in India make Rs 390 per hour, but some can make up to Rs 1,200. Even after this growth of the gig economy, men outnumber women significantly. There are around 71% male gig workers compared to 29% females in India. The top industries in India for gig workers are IT services, creative and multimedia, sales and marketing, accounting and finance, and HR and law. The COVID-19 pandemic has caused the gig economy to grow in India; 40% of gig workers reported having more work during the pandemic. Click here to understand the impact of Covid-19 on different sectors.
Benefits of Gig Economy for Workforce
There are several reasons for this growing gig economy trend; it provides several benefits to the workers, which regular employment doesn’t give. Some of these benefits are:
- Flexibility: Gig work allows workers to manage their time and responsibilities outside of work. For example, workers can take breaks or time off without permission, making it appealing to those with caregiving or educational commitments. Also, retired people have started working as gig workers.
- Autonomy: Gig workers have more control over their work and can choose the projects and clients they work with. This level of freedom creates a sense of independence and job satisfaction.
- Variety: Gig work provides various opportunities to work on different projects in diverse industries. This enables workers to expand their portfolio of work, gain new experiences and learn valuable new skills.
- Leaning: The exposure to different industries and clients allows gig workers to learn new skills and gain valuable knowledge, leading to growth in their personal and professional development.
- Higher Earning Potential: Gig work can offer higher earnings than traditional employment, especially for those with highly sought-after skills or working on high-paying projects.
- Entrepreneurial Opportunity: The gig economy creates opportunities for workers to establish their own businesses and brands, leading to greater financial stability and career growth in the long run.
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Challenges for HR Professionals due to Gig Economy
The gig economy provides many benefits to the workforce, but at the same time, it also creates new challenges for organisations and their HR professionals. Below are some of the challenges that have arisen for HR professionals due to the gig economy:
- Recruitment: Attracting and selecting gig workers differs from the usual recruitment. HR needs to target different sources and platforms for gig workers and build relationships with them.
- Remote Work: Gig workers often work remotely, making it difficult for HR professionals to manage and support them. HR professionals must develop new onboarding, training and communication strategies for remote workers.
- Performance Management: The HR professionals need to develop new metrics to measure the performance of the gig workers, focusing on skills and results rather than traditional employment metrics.
- Fair Treatment: The HR professionals must ensure that the gig workers are treated fairly and equitably, particularly regarding pay, benefits, and job security, as gig workers may have different needs and expectations than traditional employees.
- Laws and Regulations: The gig economy has new legal and regulatory challenges concerning tax and labour laws compliance. HR professionals must work closely with the legal and finance departments to ensure the business complies with all applicable laws and regulations.
- Retention: Gig workers work with several clients and have different priorities than traditional employees. HR professionals must offer incentives and benefits tailored to the gig worker’s needs, making it very challenging to retain them.
Suggestions for HR Professionals to Handle this Change
The gig economy will keep growing despite the challenges the HR professionals might face, so the right thing to do here is to adapt to this change and get better at handling these challenges. So, if the trend will not stop, how to adapt, what to do? Below are some suggestions that might help an organisation and its HR professionals to handle this gig economy:
- Building Relationships: HR professionals can connect with gig workers by creating a positive employer image and proposing flexible work arrangements. Utilising social media platforms and gig worker marketplaces can also increase exposure to potential candidates. Additionally, HR professionals can build relationships with gig worker communities and influencers to draw in and retain talent. Click here to know about some great techniques of hiring in the current environment.
- Remote Work Management: HR professionals can handle remote teams effectively by creating transparent communication channels, providing development opportunities, and conducting regular performance check-ins. Integrating technological tools such as video conferencing, collaboration platforms, and project management tools can also improve communication and collaboration. To know more about handling Work from Home click here.
- Performance Metrics: HR professionals can develop innovative evaluation standards that concentrate on skills and outcomes rather than traditional measurements like attendance and punctuality. These standards should align with business goals and be customised to meet the needs of gig workers. Regular feedback and performance evaluations can also assist gig workers in improving their skills and performance.
- Fair Treatment: HR professionals can ensure fair treatment of gig workers by offering competitive pay rates, providing access to benefits such as healthcare and retirement plans, and offering job security where possible.
- Compliance with Laws and Regulations: HR professionals must stay up-to-date with new rules and regulations concerning the gig economy and work closely with legal and finance departments to ensure compliance. HR can also consider partnering with external legal and financial experts to ensure the business meets all legal and regulatory requirements.
- Provide Value: HR professionals can retain gig workers by offering incentives and benefits tailored to their needs and expectations, such as flexible work arrangements, performance-based bonuses, and access to training and development opportunities. HR can also establish a strong employee value proposition highlighting the unique benefits of working as a gig worker with their organisation, such as the opportunity to work on exciting projects and gain valuable experience.
To sum up, the world has realised the benefits of the gig economy, which has made the workforce switch. The pandemic further accelerated this trend. The gig economy presents various advantages, including flexibility, autonomy, diversity, higher earnings prospects, and entrepreneurship opportunities for labourers. Nonetheless, it also brings new difficulties for organisations and HR professionals, such as recruitment, remote work, performance appraisal, equitable treatment, legalities, and employee retention. HR professionals should embrace novel approaches to confront these hurdles, such as networking, remote work management, innovative assessment methods, fair treatment, legal conformity, and delivering value to keep gig workers hired. Companies can capitalise on the gig economy by resolving these issues competently and optimising their adaptable workforce. HR professionals should keep abreast of the latest trends and regulations concerning the gig economy to manage their workforce effectively.