Developing Professional Skills

Gig economy as an upcoming trend-but

with more harm or good?
first version

Vada Virág Nóra

BA in IB, Year 1 G03

6 November 2022
Table of Contents

Introduction to gig economy.......................................................................................................3

Gig economy as upcoming trend................................................................................................4
Benefits of gig economy.............................................................................................................7
Organizational benefits...........................................................................................................7
Individual benefits..................................................................................................................8
Thoughts of John McAfee......................................................................................................9
Drawbacks of gig economy......................................................................................................10
Organizational drawbacks.....................................................................................................10
Individual drawbacks............................................................................................................10
Thoughts of Jeffrey Pfeffer...................................................................................................12
Comparing the situation-Hungary and Western Europe...........................................................14
Summary and conclusions........................................................................................................15
Reference list............................................................................................................................16

2
Introduction to gig economy

Gig economy is considered to be a relatively new phenomenon, which attracts millions of

workers worldwide. Lot of people think the presence of gig economy evolved a couple of
years ago, but this is a common misconception. According to Harry S. Truman, there is
nothing new in the world, except the history we do not know. This train of thought is right in
relation to gig economy as well which is proven by the fact that we were in gig economy
before it even became a term. In XX. century enterprises began to allow temporary workers to
have enough workforce which started a new tendency. As time passed, the phenomenon of
gig economy transformed not only the newest HR trends but the labor market as well,
although it is still in the early stages of transforming how we work, when we work, and what
we work. The popularity of the gig economy is growing, and it is changing the working habits
of people to a great extent. A very important question can be raised related to this: Do the
growing popularity of the gig economy and all the transformation which are caused directly
and indirectly by it do more good or harm on society? From generation to generation the
general mentality towards working is altering. Nothing proves this more than the thoughts of
Robin Chase: “My father had one job in his lifetime, I will have six jobs in my lifetime, and
my children will have six jobs at the same time.” We can be sure that the working conditions,
work requirements, and the mentality of the labor force have changed a lot during the past few
years, and they are possible to bring further changes to our society in several aspects during
the next years. In my essay, I would like to show the main benefits and drawbacks of the gig
economy from the aspect of organizations and workers.

3
 1. Gig economy as upcoming trend

During the past few years, the general attitude to work changed a lot. Only one generation
ago, the majority of children expected to be in full-time employment when they grow up, take
up secure full-time jobs and work for only one or two organizations over their whole life.
“The generation retiring now built a life anchored around the expectations of a stable and
rising income, a steady package of corporate benefits, and a corporate-financed retirement at
the end of work. That predefined climb up the corporate ladder is much less available to
today’s workers.” (Marion McGovern, 2017) This illustrates how the world is transforming
regarding the attitude and preferences of workers. From the desire for always predictable
employment, the working trends shifted towards the elimination of secure full-time jobs.
Therefore, human resource management has gone through huge transformations. Recognizing
the need to understand these processes concerning the labor market is inevitable to keep pace
with rapid developments, especially in the time of pandemic and war. The upcoming HR
trends include for example the need for hybrid work model, the transition from employee
well-being to a healthy organization, and the importance of power skills. (figure1) (Ritika
Dixit, 2022) These changes are quite significant, but now I would like to deal with embracing
the gig economy. The gig economy is an economic sector consisting of part-time, temporary,
and freelance jobs whose popularity is growing and growing. (Dictionary.com)

Figure 1-Upcoming HR trends1

1
Select Hub (2022) [Online]. Available at: https://www.selecthub.com/hris/hr-trends/ (Accessed: 22 October
2022)

4
With the recent turn of events, the statistics on the gig economy show a skyrocket in the
number of participants in the U.S. In 2022 approximately 70 million people are freelancing
there, (figure2) and in 2020, the freelance participation was 50% by people aged between 18
and 22 (Gen Z). (figure3) In my personal point of view, this is not a surprise as this lifestyle
requires huge risk-taking, which teenagers are more tent to. At that age, they do not have as
many family commitments as they will probably have later, so they do not have to commit to
a company where they will stay for ages. The mentality of younger generations shows they
enjoy the variability in all fields of life which they can get from the gig economy by having
the opportunity to alter their jobs frequently without any further consequences. The most
popular gig economy jobs in the U.S. seem to be delivery jobs, graphic design, branding,
programming or even driving for a ride-sharing service, fitness training, tutoring, consulting,
and accounting. (figure4) The common thing is that these jobs are often one-time or short-
term contract jobs. Finding the best opportunities is easier with the assistance of gig economy
apps, such as TaskRabbit which is for professionals looking to pick up odd jobs for extra cash
or Uber, which is a very popular ridesharing app, GrubHub which is an application for food
delivery or Fiverr which is often used by professionals who look for opportunities to grow
their skills. (Oksana Lavri, 2022)

Figure 2-Number of freelancers in the United States from 2017 to 20282

2
Statista (2022) [Online]. Available at: https://www.statista.com/statistics/921593/gig-economy-number-of-
freelancers-us/ (Accessed: 30 October 2022)

5
Figure 3-Freelance participation in the United States as of 2020, by generation3

Figure 4- Gig economy job examples4

3
Statista (2022) [Online]. Available at https://www.statista.com/statistics/531012/freelancers-by-age-us/
(Accessed: 30 October 2022)

4
Lavri.O. (2022) HR forecast. [Online]. Available at: https://hrforecast.com/gig-economy-examples-and-guides/
(Accessed: 30 October 2022)

6
Benefits of gig economy

Many people are considering entering the gig economy; however, this requires very thorough
decision-making by investigating into several factors. No general answer exists whether
working in the gig economy is better than traditional working or not, as several factors need to
be considered throughout the decision. Every individual has different wants and needs during
their work so it cannot be generally concluded which working environment is better; gig
economy or general 9-5 employment. As I see, workers should list the advantages and
disadvantages of both sides regarding their personal preferences, and after it will be easier to
come up with personalized opinions and decisions.

Organizational benefits

The major benefits of the gig economy from the aspect of organizations are having lower
costs, diverse working force, and contracts for short-term projects. Lower operation costs can
be recognized in a lot of cases: companies have to provide neither office space and equipment
nor benefits for workers in contrast to full-time employees. Looking at the happenings of the
last few years, it is not a surprise that this kind of working form became more widespread
during the pandemic as a lot of workers did not have the opportunity at all to go to their
office, so they used to work from home. Now it is true that health regulations enable workers
to go to office every day to work, but companies realized that transforming the working
system by making it home office or at least hybrid can result in much lower operating costs. It
is also true that HR departments probably won’t go through the full onboarding process in the
case of hiring people for gig economy jobs, so the companies can save more money. As
organizations pay for the education of full-time workers, they can save money on not
financing the training of freelance workers. Finding sufficient labor force which already meets
the requirements of companies is cheaper than financing the education of employees to gain
the required skills or knowledge.

A diverse pool of flexible workers makes it less difficult to have available labor for upcoming
urgent issues early in the morning or late at night. I think having an around-the-clock service
is a huge benefit. In the case of full-time 9-5 works, the worst case can occur when urgent
issues wait 16 hours to be dealt with. Having an around-the-clock service enables companies
to be able to manage to maintain the network at all hours of the day.

Not to mention the benefit of concluding short-term contracts which are quite beneficial if the
organizations need a workforce for only short-term projects. When a company only needs a

7
little help to introduce a new program or service it is better to hire freelance people. In the
case of hiring full-time workers, the company needs to find work for them after the project
ends, even if there is no further need for their work. (Andra Laca, 2019)

Individual benefits

The number of participants has increased a lot over the past few years not surprisingly, as the
personal benefits of gig economy jobs are more evaluated now since the pandemic and war
situation caused a huge change in the labor market. From the aspect of individuals, the most
attractive characteristics of taking up jobs in the gig economy are flexibility, the variety of
available jobs, independence, and the possibility of gaining extra income. Many freelance job
takers enjoy the benefits of flexible working conditions. From working the amount of time
they would like to spent on working, through the type of job they want to take, to working
place where they want to work, they have several options to choose the most satisfying ones
which meet their individual preference. It happens often that only a deadline is given to the
workers, the time of accomplishing the task depends on them. As I see this method makes the
work more effective as the productivity of workers defer in different time periods. Some
people are more effective in the early mornings, in contrast, others are more productive late at
night, but one part of employed people can even find weekends more suitable for
accomplishing tasks while some can dedicate their time to work only during the week. The
working conditions of gig economy jobs enable individuals to reach their maximum
productivity while managing their tasks. Being able to choose the appropriate time for
working is important not only from convenience aspects, but as several workers search for
occasional or part-time jobs to complete their income and are able to maintain the standard of
living that they had before soaring inflation and the supply shortage caused by the war. As the
gig economy offers more flexibility regarding the place of work as well, finding a job that can
be executed in a home office is quite favorable for those who have to dedicate a lot of effort to
family commitments as well. Increased flexibility and independence in comparison to general
full-time employment contribute to the possibility of forming a better life-work balance.
(Western Governors University, 2018)

The wide variety of jobs offered on the market is also very attractive for workers. Having the
opportunity of executing different jobs each year, month or even week instead of doing
monotonous and exhaustive tasks for years without any variety gives the joy of excitement
and working for gig economy workers. Using their creativity to realize their mission makes
the time spent on working more challenging and exciting. Changing the types of work

8
frequently they do assists to avoid the possibility of burning out. Gaining experience from all
fields of work helps them to become more adroit.

One of the major differences between gig economy workers and full-time office workers is
that gig economy workers -as I mentioned above- usually work from remote offices or home,
which is why in a lot of cases they are not even controlled by anybody. No managers or
supervisors check them during their work. As I see, the lack of control serves as a huge
confidence boost not to mention the fact that it makes working even more flexible. (Andra
Laca, 2019)

Paying for freelance work varies between different organizations. It cannot be concluded that
by doing freelance work, more money can be earnt than in full-time employment at huge
organizations but saying the opposite is not true either. The benefit of gig economy jobs rather
lay in the possibility of earning extra income, and not having an extremely high salary.
“Covid19 pandemic upended the traditional 9-5 working world and caused many blue-and
white-collar employees to pursue gig work for additional income during the unprecedented
times.” (Rebecca Henderson, 2021)

Thoughts of John McAfee

“The gig economy is empowerment. This new business paradigm empowers individuals to
better shape their own destiny and leverage their existing assets to their benefit. “These are
the wide-world famous sentences of McAfee, who was a British-American computer
programmer, businessman, and two-time presidential candidate. He encourages individuals to
become self-employed, seize control of their life and finally reap a beautiful harvest. I share
the opinion of McAfee that a self-employed lifestyle is about promoting what is the most
important in life: individuals. No one cares about individuals, their needs, and their
preferences more than themselves. That is why embracing self-employment is quite important
to manage to live a life that matches the preferences of workers. After reading several articles
and book chapters I am convinced that making a change toward self-employment can help
workers to live more fulfilled and mindful lives. Forming a better life-work balance is the key
to being successful not only in work but in life as well.

9
Drawbacks of gig economy

When entering the labor market, every worker needs to consider the benefits and drawbacks
of the gig economy. Each people need to find a work which matches their preferences. Some
are brave and independent enough to take on a freelance job, but in other cases, the workers
regard financial security as a more important factor than flexible working hours. Till this
point, I have listed the benefits of gig economy, but it has a dark side as well from both the
point of view of organizations and workers.

Organizational drawbacks

What workers regard to be flexible, companies can consider horrible. Not having the
opportunity of controlling workers during their work can degrade the quality of achievement.
Working from home or remote offices includes the possibility of accomplishing negligent
work which is explained by the lack of control by organizational supervisors during the work
of employees. Another problem can originate from the fact that in most of cases there is no
prerequisite for applying for typical gig economy jobs. Unqualified and unskilled workers can
apply for a branch of positions which hides the danger of hiring less reliable and careless
workforce than in the case of hiring workers as a result of long HR processes.

Another problem is possible to erase when gig employees work at a company only for short
period and they start to search for new working possibilities before the projects- for which
they have been hired- end. Looking for a new job before time can have the unfortunate
outcome of employees leaving the companies earlier than they should owe to find more
appealing working opportunities.

Organizations sometimes face difficulties as well concerning administration processes.

Understanding the regulations for contractor status in their state is inevitable for businesses.
Often a huge amount of paperwork needs to be done, collecting income information, and
navigating taxing issues are more difficult in the case of freelance workers than full-time
employees. While both full-time employees and freelance workers can work at the same
company, the administrational tasks differ a lot in their cases which makes the accounting
more complex. (Western Governors University, 2021)

Individual drawbacks

While there is a wide variety of advantages that the gig economy offers for workers, I can also
come up with some downsides that need to be considered when entering the gig economy as a

10
worker. The most common obstacles are having no benefits, paying taxes in a more difficult
way, having increased own expenses, struggling with stressful situations, and coping with the
lack of social life.

Businesses in the gig economy do not provide benefits to their workers. Independent
contractors are not completely considered “employees” of the businesses which is why no
benefits are given to them. This requires careful retirement planning as no pension will be
given to them after their work. As gig economy workers have to deal with all administrative
issues themselves, they also have to plan on budgeting for purchasing private insurance.

Freelance workers often face difficulties with paying taxes. The majority of companies won’t
remove taxes from their paycheck. That means paying taxes is something workers have to
deal with individually. Gig economy workers are also responsible for covering their expenses
associated with working. Their burdens include not only financing the working equipment
such as laptops, phones, and vehicles but they also need to have a budget for electricity or
licensing. The list of increased expenses continues with the cost of training and education the
participants would like to attend. They have to finance their development and progress in
education individually. I think paying for their advanced studies can be considered a very
beneficial long-term investment that will be paid off later, but it cannot be argued that in a
more ideal situation the companies pay for the training of employees.

Unfortunately, the workers of the gig economy need to cope with the stressful situation that
their financial issues cause. Being an independent freelance worker not only involves
increased flexibility and independence, but it also means having no income in case of not
working. Workers are more exposed to political, social, or economic changes due to not
having fixed, long-term contracts. They always have to be prepared for changes which are
quite stressful as opposed to full-time workers with long-term contracts who can feel secure
and steady in their employment. Their stress level can be higher due to the unpredictability of
the future and their health conditions. They do not have stable employment, salary, and work
contract so they have to be prepared for any kind of change. Another problem is possible to
come up when they have questions or issues with a project. They do not have permanent
colleagues whom they can rely on, so communication processes are usually more difficult for
these people within a firm as they do not have good networks.

Sometimes the lack of social life can cause mental problems. In most cases freelance workers
do not go into the office but spend their day alone, working from home or a remote site.

11
Although this enables them to spend their time more flexibly, it contributes to the feeling of
being isolated. I find it quite detrimental that they do not have the chance of participating in
team-building events or organizational parties which would form the basis of social
relationships in the working environment. My personal experience shows that unpredictable
and hard times enhance the feeling of being isolated, which can negatively affect mental
health in various forms such as alcoholism, anxiety, or addiction issues. (Western Governors
University, 2021)

In countries where taking up jobs in the gig economy is more common than in Hungary,
stress-measuring research showed that in the U.S., Australia, United Kingdom, and Canada
the workers were more stressed out about work than workers in countries where gig economy
jobs are not so common to take on. “The evidence is overwhelming that work-related mental
ill-health is a major problem in our society with substantial economic, commercial, and
human costs.” (workstress.net)

Thoughts of Jeffrey Pfeffer

Jeffrey Pfeffer is one of the most outstanding figures of people emphasizing the drawbacks,
harms, and negative effects of the gig economy. In his article named “The case against the
‘gig economy” he shares some thoughts which are worth analyzing. The general aim of every
entrepreneur is to gain profit and have an as large market share as possible. A branch of
business strategies relies on the concept of minimizing cost spent on employees, equipment,
capital items… One possible way to maximize profit is to minimize costs. For example, this
can be achieved by saving money on employees, by hiring freelance workers so in most of
cases companies can save the costs of careful and long HR procedures, bonuses, benefits, and
other costs which would be spent on full-time employment. Presumably, gig economy
workers can live a full life with knowing that companies saved a lot of money by not hiring
them as a result of long HR procedures but saving money on not financing the healthcare
treatment of these employees can lead to very serious consequences. These are quite general
ideas about the drawbacks of the gig economy, but Andrew Berlin the founder of Berlin
Packaging has a very different point of view while having the same opinion about the
opposition of the gig economy. According to his way of thinking, hiring, keeping,
appreciating the employees, and spending fortunes on them is more remunerative in the long
term. Berlin is sure about “contractors would not have the same level of commitment”. As
organizational culture is a key to being successful and gaining competitive success, it is
simply not working if the success of the organization depends on careless, underpaid,

12
undermotivated short-term employees. The importance of culture and people for business
success is inevitable not only according to Berlin but Ed Ossie, who is the owner of the
insurance software company Majesco. “Talented, trained employees treated well by their
employers will treat customers well and deliver exceptional service. Customers will
remember our employees delivering exceptional service and will find reasons to extend the
commercial relationship with our company.” As the transformation of the labor market by the
gig economy is so significant in countries like the U.S., the examples of the two owners
mentioned above are more common phenomena in countries where the gig economy is not so
widespread. (Jeffrey Pfeffer, 2020)

13
Comparing the situation-Hungary and Western Europe

In a lot of cases only minor differences can be noticed between the lifestyle, culture, and
habits of people in Europe, but there are some very straightforward differences in their way of
living which can be distinguished. For example, western societies regard the housing issue
differently than Hungarians. In most Western European countries, especially in the
Netherlands, Norway, and Luxembourg, most of the citizens rent their flats and houses till the
end of their lives. In those societies, buying their own houses and flats did not have an old
tradition. In contrast, people in Hungary try to own their houses or flats as soon as possible to
feel more independent and less exposed to any kind of unpredictable events. This can be
paralleled with the gig economy. People in Hungary are less open-minded and would like to
live in greater self-security. Owing their properties such as their flats or houses, enjoying the
benefits of a company car, having fix salaries, and having social insurance paid by their
company make people feel secure. This is a huge difference in cultural attitude that Western
European people do not feel the need to buy their place and sometimes do not have the chance
either to do so due to financial issues, they tend to work in unpredictable conditions as their
culture does not suggest grabbing only predictable opportunities and make decisions holding
as less risk as possible. The cultural heritage of the population behind the former Iron Curtain
countries regards the creation of security to be one of the most significant issues. The
relatively low number of freelance workers can be explained by this phenomenon in the
Central and Eastern European region compared to Western Europe.

14
CSummary and conclusions

During my work, I have separately studied the benefits and drawbacks of the gig economy
from the side of organizations and individuals and by merging the facts I can conclude that
there is one general aim of both sides which is common: they would like to be successful
either in their life and/or in business. Business success is coming from a distinguishable
competition advantage that rivals are not able to have. For example, cultivating a powerful
relationship between talented, loyal employees and their working environment through
frequent team-building events can be considered a competitive advantage and something
which gig economy participants cannot experience. On the other hand, working diversity and
lower operating costs can be significant advantages for firms operating in the gig economy.
During my work, I realized the importance of life-work balance, which is worth mentioning.
The individuals have the chance of choosing the time, place, and people they want to work
with. Being able to manage tasks more flexibly gives greater independence for workers which
is one of the major appealing factors why full-time employees start to work as freelance
workers. However, by reading and analyzing several articles and journals, I found it quite
shocking how much the judgment of the gig economy differs in different contexts. Some
people think the gig economy is better at disbursing pain and economic stress than is
providing people with good jobs and stable incomes. Enjoying organizational benefits,
employment security, income security, and feeling the support of fellow employees should be
considered more valuable than flexibility and independence. I am convinced that beyond the
issues of comfort, which are given by greater independence in the gig economy, human
dignity and well-being should be taken into consideration by all people regardless of their
time and comfort preferences. In some cases, the increased stress level can cause problems in
mental health as working in a very unpredictable environment and not having fix job and
salary leads to serious consequences. In my personal understanding, the personality of
workers is needed to be considered during the decision of entering to gig economy or not.
Those who find it easier to take risks and live their days in uncertainty without serious mental
effects are more suitable for the working style offered by the gig economy than those who
need a stable income, fix job, and a more predictable future-even at the cost of less
independence and flexibility. What I find quite important before taking up a job either in full-
time employment with nine-to-five work or as freelance work without a boss is to get to know
ourselves better and try to imagine our every day in different working conditions. As all

15
people are different, all people have distinguishing preferences regarding working. The first
step should be always to investigate those preferences.

Reference list

Pfeffer, J. (2015), Fortune [Online]. Available at: https://fortune.com/2015/07/30/freelance-vs-full-time-

employees (Accessed: 17 October 2022)

Duvigneau, A. (2022) Beekeeper [Online]. Available at: https://www.beekeeper.io/blog/top-5-hr-trends/

(Accessed: 17 October 2022)

Western Governors University (2021) Western Governors University [Online]. Available at:
https://www.wgu.edu/blog/pros-and-cons-gig-economy1808.html#close (Accessed: 19 October 2022)

McGovern, M. (2017). Thriving in the Gig Economy: How to Capitalize and Compete in the New World of
Work. E-book format [e-book reader]. Available at: https://www.scribd.com/read/365307407/Thriving-in-the-
Gig-Economy-How-to-Capitalize-and-Compete-in-the-New-World-of-Work (Accessed: 18 October 2022)

Laca, A. (2020) ADAPTURE [Online]. Available at:

https://adapture.com/pros-and-cons-of-using-the-gig-economy-for-your-organization/ (Accessed: 18 October
2022)

Western Governors University (2020) Western Governors University [Online]. Available at:
https://www.wgu.edu/blog/what-are-best-gig-economy-jobs-apps1907.html (Accessed: 18 October 2022)

Kuhn K., Galloway T., (2019) ‘Expanding perspectives on gig work and gig workers‘, Journal of
Managerial Psychology, 34 (4), p.186-191. [Online] Available at: https://www.researchgate.net/profile/Tera-
Galloway/publication/334643615_Expanding_perspectives_on_gig_work_and_gig_workers/links/
605cba1a458515e8346fd6f9/Expanding-perspectives-on-gig-work-and-gig-workers.pdf?
origin=publication_detail (Accessed: 22 October 2022)

Pfeffer, J. (2018) Dying for a paycheck: how modern management harms employee health and company
performance and what we can do about it. 2nd edn. New York: HarperBusiness, an imprint of HarperCollins
Publishers. pg 14-15.

Grimaldi,Mark. A., (2022) RETIRESMART II: the gig economy edition. 3rd Edn. S.I.: PAGE
PUBLISHING, INC.

Qwick. (2021) 11 Best Gig Economy Apps for Extra Cash in 2021 [Online] Available at:
https://www.qwick.com/blog/best-gig-apps/ (Accessed: 23 October 2022)

CFI Team (2022) Corporate Finance Institute [Online]. Available at:

https://corporatefinanceinstitute.com/resources/knowledge/other/gig-economy/ (Accessed: 25 October 2022)

N/A (2022) What is Gig Economy, Pros and Cons of Companies & Workers? [Online]. Available at:
https://www.fieldengineer.com/skills/gig-economy-pros-and-cons (Accessed: 25 October 2022)

Mulcahy, D. (2016). The gig economy : the complete guide to getting better work, taking more time off,
and financing the life you want. 3 edn. E-book format [e-book reader]. Available at:
https://www.scribd.com/read/375130949/The-Gig-Economy-The-Complete-Guide-to-Getting-Better-Work-
Taking-More-Time-Off-and-Financing-the-Life-You-Want (Accessed: 28 October 2022)

Gorman, M. (2022) Scribd [Online]. Available at: https://www.scribd.com/article/440087981/The-Gig-

Economy-6-Reasons-Why-More-People-Are-Becoming-Self-Employed (Accessed: 28 October 2022)

Pfeffer, J. (2020) Scribd [Online]. Available at: https://www.scribd.com/document/486115117/Pfeffer-Gig-

Economy (Accessed: 28 October 2022)

16
Henderson, R. (2021) Forbes [Online]. Available at:
https://www.forbes.com/sites/rebeccahenderson/2020/12/10/how-covid-19-has-transformed-the-gig-economy/?
sh=7a3e29d66c99 (Accessed: 28 October 2022)

Statista (2022) [Online]. Available at: https://www.statista.com/statistics/921593/gig-economy-number-of-

freelancers-us/ (Accessed: 30 October 2022)

17