The impact of the gig economy is still poorly understood, even though the labour market continues to adapt to the new global, digital marketplace.
There are both advantages and disadvantages to participating in the gig economy.
The gig economy is a system that rewards people per task or gig in smaller increments than salaried employees. “Giggers” need to understand the demand for their particular job in the market and what that job would typically be priced at. Negotiation is a two-way discussion, framed by affordability and economic conditions.
Some online platforms, such as Uber, allow participants to choose the jobs they want and at the rates for which they are prepared to work. Problems, however, may arise when many people start offering your skill at a lower price.
The challenge with pricing jobs in the gig economy is that technology allows for thousands of entrants to compete for jobs. Where there is a dramatic increase in the supply of people willing to do a job, there will be a massive decrease in rates of pay.
This can have detrimental effects on pay, and it opens the possibility of exploitation.
The “real money” in the gig economy lies in the ability to provide specialist skills that support industry disruption, innovation or growth in a digital economy.
Despite the risk of being outpriced in certain industries, the gig economy provides an earning outlet for anyone who requires greater flexibility in their lives.
A retiree who wants to increase the longevity of his/her work life with the benefit of being able to work beyond her retirement age, or a graduate who wants to do freelance work while travelling instead of pursuing a 9am to 5pm job are all prime examples of those who may opt to achieve their lifestyle goals through gigging.
To achieve this lifestyle, they would typically sacrifice on the benefits that permanent employers offer, such as a pension, medical aid contributions and job security.
It is just as important for giggers to keep an eye on their savings and retirement, despite the perceived ability to work beyond retirement constraints. They should also consult a financial adviser and keep track of their financial security.
Although participants in the gig economy sacrifice many benefits that a salaried employee would normally receive along with a certain amount of financial security and income predictability, surveys show that gig economy participants have higher levels of job satisfaction, which is generally linked to the flexibility that the gig economy provides.
The key to success in the gig economy is building good networks and demonstrating a good and reliable service. This will help you build credibility for repeat work opportunities.
Muhammed Goolab is an executive committee member of the South African Rewards Association.