Gig Economy: How It Came to Be and Where It Is Going

The gig economy today is gaining momentum. COVID-19, worldwide internet access and international trade have all contributed to its popularity. Gig workers today, like musicians back then performing at one-off events, are choose to avoid permanent employment all together and continue working on many different projects, thus amplifying their potential and experience. The article discusses people involved in the gig economy, how the term appeared and where it is going.

How the term was coined. Meaning.

The term ‘gig-economy' is not new. The word ‘gig' in it was borrowed from music professionals. In their jargon, a gig is a short-term engagement at a venue. Today, however, ‘gig' is very much ‘project' or ‘flex' — with a primary emphasis on a one-off nature of a task that a gig-worker is hired to fulfill.

‘The Future of Work' (November 2017) by Fitzgerald et al. shares that ‘people have always worked gigs'. Yet it is specifically in our age, from 2005 onwards, that the gig-economy has grown considerably. The study cites the change in the US workforce. Namely, the share of those engaged in an income-generating side-hustle ‘rose from 10.1 percent in 2005 to 15.8 percent in 2016'. At the same time, ‘the number of self-employed individuals … soared by over 19 percent from 2005 to 2015'. The study ‘Young people and the gig economy' (May 2021) by Caro at al. shows that ‘the rates in countries that already have a greater tendency towards workers in this type of contractual arrangement also surged'. The statistics provided are the rates of 11.4% in Italy, 5.7% in Spain and 5.3% in the Netherlands, and 4.9% in the United Kingdom.

However, as Ms. Molly Turner puts it in the report, ‘today when most people refer to the gig economy, they’re specifically talking about new technology-enabled kinds of work'. Indeed, thanks to multiple well-developed digital mediums such as Uber, Airbnb, Lyft, Etsy and TaskRabbit, workers are connected to a wide pool of employers and common folk that look for fast solutions. These platforms also serve as a third party that keeps payment money safe while work is in progress and takes a cut of that money.

Ultimately, these tools served as a catalyst that boosted the growth of the gig-economy. Richard Heeks is cited to estimate that around seventy million people have found work via a platform. Additional factors are in place that drove the new economy forward. One is that app-based platforms have considerably shortened the path between consumers and producers. Another contributing factor is that more and more people are attracted towards this unexplored way of employment. Some work gigs because it adds money to their full time salaries, while others choose to become independent workers because they are not able to find conventional full-time positions.

Apart from the now digitized employer-contractor relationship, two more additional factors played a significant role in the trend. The 2008 economic crisis gave a first taste of holding multiple jobs to people where a regular income is supported with payments from flexible mini-jobs. In 12 years, the second factor came to be — COVID-19 significantly accelerated the gig economy development as now it was gig-workers that delivered goods to home-bound consumers.

Today, the gig economy is defined as a labor market constituted by freelance or part-time jobs (and workers). Unlike the traditional employment environment where positions are full time backed up by fixed contracts and salaries, gig workers perform on a short-term project basis and are

As any system, the gig-economy is made up of constituent parts. They are the following, according to the ‘Future of Work':
  • Technology platform companies that have 4 distinct similarities: a. mediate direct money exchange between consumers and producers; b. flexible work schedules for gig-workers; c. online payments that platforms get a commission off of; d. always up-to-date review database for consumers and producers.
  • Gig workers that are divided into two large groups: a. labor providers that have trouble finding regular employment due to lack of education and make a living out of their gigs; b. goods providers whose services are knowledge-based and who don’t depend on gigs entirely.
  • Consumers, both physical persons and legal entities, that occasionally need independent contractors for one-off projects.

Gig Economy: Pros & Cons.

As seen above, workers and employers are part of the gig economy. Their views on the phenomenon differ, and so do the benefits and downsides they find in the gig economy.

Freelancers in the gig-economy benefit in the following ways.
  • A wide selection of jobs. From project to project, freelancers get to participate in different projects, where their skills are applied in new ways each time. In the long run, gig workers find themselves to be more creative when it comes to work thanks to interesting perspectives they encounter in their different projects.
  • Independence. While this advantage may be viewed as isolating by some people, for gig workers the sense of independence is a feature of freelance work that they will never give up on. Indeed, independent contractors are given a task and then are immediately left alone to complete it.
  • Flexibility. Gig workers decide on when and how much to work, as well as on how much their work costs.
  • Low commitment. Freelancers, untied to their employer with a labor contract, are able to leave the project at a lot simpler terms than their in-house counterparts.

In their article "Advantages And Challenges of The Gig Economy: Perspective from Potential Hospitality Employees", Tay and Mohamad discuss an opinion that Gen Z hospitality workers of Malaysia have on the gig-economy.

The topic of flexibility is expanded into flexibility of work time, of workplace, and of attire. Indeed, Gen Z workers, to whom work-life balance is a crucial factor in their career choices, appreciate a chance to control their working hours. As for a flexible workplace, young Malaysians value an opportunity to work from any setting, provided internet access.

High pay has also been mentioned as a reason to join the gig economy. Interestingly though, young people seemed to perceive gigs as more high-paying than regular jobs based on their gig-working peers' income and visible lifestyle.

Last but not least, it is low stress levels that young people value in the gig economy. To their belief, freelancers have less people to deal with, hence less stress.

Downsides, however, are also found in the system both in scientific research and in public surveys.

  1. Inconsistent employment holds true for both high-education and low-education jobs. While intellectual jobs such as programming and design are competitive, manual jobs like delivery or ride-hailing dictate the wages to its gig workers. Apps like Uber automatically calculate price for a ride, and workers have no say in how much a trip will be, Consequently, to some, Uber may not be enough to support a family and they may be forced to go out of business, further adding up to an already uneasy situation of being out of work.
  2. Lack of employment rights that are available to full-time employees may be a serious problem, as there is no sick leave, maternity leave or any support that an official employment offers.
  3. Competition. While a regular employee quits the race once they are settled with a full-time position, freelancers are on track every day, regardless of how many clients there are in line. It is especially true given that some freelancers at entry-level tend to damp prices to attract their first clients.

Going back to Tay and Mohamad’s research, Malaysian young people list, among others, the following challenges presented by the gig economy. First, absence of benefit leaves gig workers, both of high-end and low-end specializations, unprotected with no sick pay, sick leave, health insurance or pension plans. Second, unpredictability is an ever burning concern with gig workers as they can only earn as much as they work, with no additional safety plans offered in a regular employee-employer relationship. Third, high competition remains a huge issue with freelancers. The fear is that with platforms like Upwork local employers can reach out to remote, but cheap gig workforce, leaving locals unwanted for short-term projects.

The advantages and disadvantages above are perceived through the eyes of gig workers themselves. However, to an employer, the gig economy appears in a different light. On the one hand, the freelance market, especially backed up by a fully developed infrastructure, offers a chance to find a specific match for a project, without long-term commitments and obligations normally present in a regular labor contract. On the other hand, freelancers may often lack a full understanding of what a company is doing which is crucial in developing a tailored solution. Another consequence of hiring a freelancer is that they may not always be available and committed enough for a long project. As was mentioned above, a freelancer is a gig worker whose value is a swift change from one project to another. If a company is looking to come up with a solution that doesn’t have a specific decision yet and requires loads of research and trial and error, it may be that freelancers won’t stay with the company long enough.

Gig Economy and Labor Force Distribution

According to ‘The Gig Economy and Workforce', a study by Janadari and Preena, the largest constituent part of gig workers is Generation Y in ages of 23−36 who take up 34% of all gig workforce now. Being familiar with the technology facilitation and being somewhat native to it, this population is able to rip the most benefit of the gig economy.

The second largest population group that is active in the gig economy is Boomers, now in their age of 53+. While it is amazing that the older generation is able to navigate through the technology behind job search in the gig economy reality, it is certainly not unexpected. Many 55 y.o.+ professionals resign (or are asked to) and choose to sell their endless expertise with private clients. Although retired and out of corporate, these seniors still get a chance to sell their advice and earn from it.

The third and fourth groups that make up the gig economy today are Generation X (aged 37−52) and Generation Z (aged 21−22), both taking up 21% of the workforce. These Generation X-ers are at the highest point of their work capacity, and to them largely, working gigs is a side hustle rather than a full-time job. As for Generation Z, who are fully digitally-native, their understanding of work is very different from its traditional understanding. Unlike other generations, to them, a clear mission, growth opportunities, variety and work-life balance in a workspace are a natural characteristic rather than an advantage.

Gender-wise, the gig economy is in equal parts penetrated by women and men. The latter make up 51% and the former 40%. The trend can be attributed to the fact that, unlike conventional employment, freelance can be carried out from home. This makes gigs available even to stay-at-home mothers and female students who may not have an opportunity to work from offices.

Regarding education, the numbers are also intriguing. While in traditional jobs, bachelor degree holders make up for 51%, in the gig economy that number is 62%. The statistic may appear surprising, given the scope of work that the gig economy provides.

The gig economy, like any other, offers types of work that make it lucrative for its participants. To fully understand what those jobs are, two fundamental differentiation points must be considered — Control and Wages. The model was proposed by Kalleberg and Dunn in their article ‘Good Jobs, Bad Jobs in the Gig Economy'. Although they are employed in discussions on job quality (as preferred or not preferred by people), they are just as helpful in understanding what jobs there are on the gig market.

Control in itself consists of several dimensions, i.e. autonomy, scheduling, financial transaction and engagement duration. Autonomy is how much and what exactly a person is doing in their job. Scheduling is time allocation to a particular task. Clearly, gigs offer unseen flexibility. Financial transaction is how gig workers are paid and how much is taken from them. Engagement duration is how long it takes to complete a task.

The graph from Kalleberg and Dunn’s article

As can be seen from the table, Control and Wages separate gigs into four broad quadrants. Transportation and Delivery platforms (for example, Uber) fall under the High Wages/Low Worker Control which means that although considerable sums of money may be earned (especially during surge periods), amount of work is actually strictly controlled by platforms. Crowdwork platforms, such as Amazon MTurk, offer minimal wage and low control as platforms only provide one-off low-education tasks. Online freelance platforms, like Upwork, are positioned in the High Wages/High Worker Control sector where gigs require special knowledge and experience. The research cited doesn’t mention any platforms that offer jobs with Low Wages and High Worker Control. Actually, this is rather logical. Jobs that offer a high level of control of work normally mean that a contractor has special knowledge. At the same time, people with special knowledge expect a higher wage for their labor.

Overall, job distribution forms the following pattern:

The graph from Kalleberg and Dunn’s article

Gig Economy and Society

Although the term ‘standard employment contract' has been used already in the article, it has a clear definition and is opposed to the gig economy employment. ‘Standard employment contract' stands for ‘stable, socially protected, dependent full time job' that is further influenced by government laws and collective agreements.

These contracts are not available to neither High Wages/Low Control gig workers nor High Wages/High Control contractors. However, crowdworking platforms and freelance platforms accelerate job delivery. As a result, consumers (individual food delivery clients or companies expecting a code) expect faster and faster solutions. Yet platforms free themselves from employment obligations and add to accelerating on-demand services.

Additionally, overall work intensification is a real consequence of the gig economy. Uber rides save time on commutes; Uber Eats saves time on food preparation; a freelancer from Upwork completes a task in 24 hours. These time-efficient solutions add enormously to the labor quality of today, allowing people to work more and, like in a vicious circle, to demand even faster services.

It has been mentioned briefly already that women, especially stay-at-home mothers, receive an opportunity to earn money without a serious commitment that may take them away from the family or children. It is clear that women are able to take up a significant amount of space in the gig economy.

Another interesting consequence of the growth of the gig economy is the appearance of ‘specialist human resources companies' that cater specifically to those who willingly walk away from traditional forms of employment. Firms like that specialize in a particular sector of gig workers and find solutions to secure their benefits that regular employees are entitled to. Despite their efforts though, it is clear that traditional employees always have a headstart and more security when it comes to social insurance and other benefits.

Last but not least, the gig economy earnings and their fast nature may promote tax evasion. As far fetched as it sounds, reduced taxes end up growing into a national budget shortage. It is no surprise then, why so much academic research and debate has been put into defining the gig economy and gig workers.

Gig Economy and The Future

To give a numerical background to the gig economy and its growth, International Finance shares that the global gig economy is expected to grow at a compound annual growth rate (CAGR) of 17.4%, moving from USD 204 billion in 2018 all the way to USD 455 billion in 2023. In the West, it is predicted that the number of US freelancers will reach 86 million by 2027. Likewise, in the UK the growth over the span of four years has been 4.7 million gig workers. International Finance also cites the data by Mastercard which suggests that the global gig economy will be valued at USD 350 billion this year. The most value comes from asset-sharing platforms (Uber or Airbnb).
As companies continue to rely on gig workers, to rely on gig workers, they face pressure to develop ethical and responsible practices. Prioritizing fair wages, access to benefits and avenues for professional growth can mitigate some of the negative impacts associated with the gig economy.

Overall, the gig economy is yet to develop a comprehensive legal definition and regulation. Regulation in the sphere is a still evolving concept. Defining employment status of gig workers is a necessary step which will allow them to reach fair compensation and employment benefits. There are some areas where hybrid classifications have been implemented that allow gig workers both benefit from employment and maintain independence. However, creating a separate legislature to impose over the gig economy is a serious challenge. The responsibilities shared largely by companies that allegedly prioritize fair pay and transparent compensation structures. It is on them to develop additional legal and monetary structures to support their freelancers.
Additionally, as the gig economy becomes international and borderless, taxation-related problems and lacking regulations on social security contributions and cross-border labor rights have become apparent. Policymakers are working hard to synchronize rules and restrictions across jurisdictions to ensure just treatment and protect workers' rights without stifling innovation.

EasyStaff and the Gig economy

A very important outcome of the growing gig economy is that it makes labor international. Further accelerated and facilitated by technology, gig workers can reach out to international markets to offer their services there and earn more. Likewise, any company now can reach out to a different labor market to find a perfect freelancer.
It is safe to assume that the primary reason why companies venture out into foreign labor force is lower labor costs. However, there are many other reasons why they do so. One of them is a different time zone which helps to remain productive non-stop. While local teams sleep, overseas contractors prepare the necessary material by the next morning.
Another reason why foreign labor markets are a helpful way to optimize your costs is that by working with a foreign contractor on a B2B contract, a company can save up to 50% of payroll costs. Overcoming different labor law requirements and staying compliant is possible with EasyStaff, a European company that operates worldwide.
EasyStaff is a global freelance management platform. Its core features are task management for remote teams, tax invoicing and cross-border payments. With EasyStaff, remote workforce is managed through B2B contracts. EasyStaff employs foreign freelancers for the company and pays them, whereas the company pays a commission of EUR 39 or a 4% rate per transaction. Fully compliant closing documents and invoices are generated automatically in a client’s account. Onboarding only takes a few minutes for both contractors and companies.


  • The gig economy is an emerging trend, although its followers are present in every country.
  • Despite the gig economy being an urbanistic economic phenomenon, it is actively getting popular among rural and distant areas, as well as traditionally unemployed societal groups (moms at home or low-education workers).
  • While gigs help people earn more, they are a yet undefined legal field with little to no regulation. Determining the legal status of gig workers will tremendously improve their working conditions and provide security to them.
  • EasyStaff is a reliable leverage to manage freelancers overseas. While the international workforce is a pool of talent at better prices, working with it and staying compliant is difficult. EasyStaff helps companies work internationally risk-free with its solutions for businesses.

We’re EasyStaff, a global freelance management platform. Our core features are task management for remote teams, tax invoicing and cross-border payments. If you want to grow your business internationally, stay compliant and save on tax, join EasyStaff now and book your free demo today.

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