What is the Gig Economy ? Definition and Impact on Workers and Companies

The gig economy is a term that continues to grow in the era of Industry 4.0. Some consider this phenomenon to be positive, while others see it as a threat.

Actually, what is the gig economy and how can we as a productive society deal with it?

I. What is the Gig Economy ?

There are many parties that define the gig economy differently.

According to the BBC, the gig economy is a labor market that is synonymous with short-term contract employees or freelancers.


From another perspective, the gig economy can also be defined as a flexible work environment in terms of working hours, but with minimal workplace protection and potential for exploitation.

Meanwhile, TechTarget defines the gig economy from its origin, which is ‘gig’ and ‘economy’.

‘Gig’ or gigging is a term commonly used in the entertainment world, especially in music. This term describes workers in the entertainment industry who usually work for a relatively short period of time.

Thus, it can be concluded that the gig economy is a work system where institutions or companies generally prefer to recruit independent or short-term contract workers.

Recently, the gig economy has been increasingly implemented by companies. In America alone, there are more than 57 million workers who are part of the gig economy, as quoted from Forbes.

The phenomenon of the gig economy is not surprising. Anthony Hussenot, a professor at the University of Nice Sophia Antipolis (UNS), once mentioned that freelance work is the job of the future.

Anthony explained that the development of telecommunications and the use of crowdsourcing have encouraged several business sectors not to require many permanent employees.

Therefore, they begin to switch to hiring freelance workers instead of permanent employees.

II. Gig Economy vs Traditional Economy

The rise of the gig economy has brought about a significant shift in the way people work, challenging the traditional model of full-time employment and employee benefits.

Gig EconomyTraditional Economy
WorkforceFreelancers, independent contractors, temporary workersFull-time employees, permanent workers
Work ArrangementsFlexible, short-term contracts, remote workFixed schedules, long-term contracts, on-site work
BenefitsLimited or no benefitsComprehensive benefits such as health insurance, retirement plans, and paid leave
IncomeVaried and unstableStable and predictable
Job SecurityNo job security, high risk of layoffsMore job security, low risk of layoffs
Skill DevelopmentOpportunities to learn new skills and work in various industriesLimited opportunities for skill development and career growth
Control over WorkGreater control over work and scheduleLess control over work and schedule
TechnologyTechnology-dependent, uses online platforms and digital toolsLess technology-dependent
Employer-Employee RelationshipIndependent relationship between worker and employerDependent relationship between worker and employer
RegulationLimited regulation and legal protectionRegulated by labor laws and legal protection
Comparison table between gig economy and traditional economy

Here are some points of comparison between Gig Economy and Traditional Economy in terms of their advantages and disadvantages:

Gig Economy

Advantages of Gig Economy:

  • Flexibility in work hours and location
  • Opportunity to pursue multiple income streams and diversify skills
  • Higher potential earnings for skilled or in-demand workers
  • Ability to choose projects and clients, leading to greater job satisfaction

Disadvantages of Gig Economy:

  • Inconsistent income and lack of job security
  • Limited access to employee benefits such as health insurance and retirement plans
  • Responsibility for self-employment taxes and expenses
  • Lack of social connections and opportunities for career advancement

Traditional Economy

Advantages of Traditional Economy:

  • Stable, predictable income and job security
  • Access to employee benefits such as health insurance, retirement plans, and paid time off
  • Opportunities for career advancement within a company
  • Social connections and sense of belonging to a community of co-workers

Disadvantages of Traditional Economy:

  • Limited flexibility in work hours and location
  • Limited opportunity to pursue multiple income streams or diversify skills
  • Limited potential earnings based on job title and experience
  • Limited control over job responsibilities and projects.

III. Common Jobs in the Gig Economy

In some countries, gig economy is a growing phenomenon. Therefore, it is not surprising that many people are considering to become freelance workers.

However, not all jobs can follow the gig economy trend.


Here are some jobs commonly employed in the gig economy phenomenon:

  • IT: network analyst, information security engineer
  • Writing: content writer, resume writer, copywriter, UX copywriter
  • Accounting: accountant, accounting assistant
  • Administrative: virtual assistant, pharmacy technician, design administrative assistant
  • Education: teacher, lecturer, tutor
  • Software development: game engineer, UI/UX designer, DevOps engineer
  • Project management: project manager, office manager, epic management project manager

In addition to the above list, other jobs that are growing in the gig economy are those who work in the fields of design, event, and advertising.

IV. Gig Economy Advantages and Disadvantages

a. Advantages of the Gig Economy

The growth of gig economy workers reflects the advantages of this system. Here are some of the benefits of the gig economy for those who participate in it.


1). Potential for unlimited income

One of the main differences between the gig economy and traditional employment is the limit on the number of jobs a person can take. In the gig economy, you can take on multiple jobs simultaneously, and the more jobs you take, the greater your income potential. You can choose the number of jobs you want to take on based on your ability and capacity to work. This is different from traditional employment where monthly income is predetermined and cannot be changed except through bonuses or other additional benefits according to company policy.

2). Flexibility in scheduling

Another advantage of the gig economy is that you have flexibility in scheduling your work. Unlike traditional employment where employees have fixed schedules, in the gig economy, you can work whenever you want according to the schedule you set for yourself. The only thing to consider is not to exceed the agreed-upon deadline. You can even choose your own days off in the gig economy. This is because all work activities are under your control as a participant in the gig economy.

3). Earning according to the work done

One thing that attracts many people to the gig economy is the issue of payment. In the gig economy, you can set your own price for a job or service provided to a client so that you can be paid according to the work done. The larger the project’s value, the greater the payment you will receive. This is different from traditional employment where payment is already fixed.

4). Choosing the job

Another advantage of the gig economy is that you can choose the job you like. All the work you do is the result of your own choice. In this position, you can refuse a job if you feel you are not capable of doing it. This is not possible if you are an employee of a company. All work given must be done, even if it is not part of your job. However, if you refuse to do the job, you may receive a warning or be fired.

b. Disadvantages of the Gig Economy

As we mentioned above, there are pros and cons to the gig economy. In addition to its advantages, the gig economy has some disadvantages compared to traditional employment. Here are some of the shortcomings of the gig economy.


1). Unstable income potential

Although the gig economy offers unlimited income potential, it can also make a person’s income unstable. This is especially true for beginners who are new to the gig economy. They may have difficulty finding clients willing to use their services. As a result, they may have difficulty earning income.

2). Company not share profits with workers for bonus

A company is not only obliged to provide salaries to its employees. The company must also provide other benefits, such as insurance, allowances, and so on, according to company regulations. These benefits cannot be enjoyed by freelance workers. Freelancers only receive a fee or commission for completed work.

3). Paying taxes from your own pocket

If a person is a permanent employee of a company, the company will pay their income tax. In contrast, if you decide to work in the gig economy, you will not receive any tax benefits.

4). Difficulty in managing time

Flexibility is one of the attractions of the gig economy. However, this flexibility can be a double-edged sword that is harmful to freelance workers. Without fixed working hours, a freelance worker can work for up to dozens of hours a day. This is not a good condition, especially when considering work-life balance.

V. Who Benefits from the Gig Economy ?


1. Companies

Companies are the main actors in the gig economy. However, not all companies are part of the gig economy. Companies that are part of the gig economy include Shopee, Grab, and others. The main characteristics of these companies are setting flexible work schedules for every worker, providing online payments through their platforms, providing transaction facilities for consumers and producers directly, as well as online profiles and reviews of producers for consumers.

2. Workers

In the gig economy, workers are divided into two categories, namely service providers and goods providers. Those who fall under the service providers category include couriers, drivers, handymen, and others, while goods providers include artisans, artists, clothing retailers, and others.

3. Consumers

Consumers are the ones who enjoy the products and services offered in the economy. They are one of the actors in the gig economy. Without them, economic transactions would not be possible.

So, that was our brief explanation about the gig economy. The current technological development has created a rapid growth in the gig economy. On the other hand, as positive as the impact of the gig economy may be in the economic world, there will also be some negative impacts in the economic world.

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