Is the gig economy a ripoff?

Everyone seems to be an 'independent' now, but is it a good idea? Is it safe to be a freelancer or is it more trouble than it's worth? Should we hire a full-time employee or will a subcontractor be able to do the job well enough? Will the changing landscape of work bring more problems or will it eventually create more innovative and productive employees and employers, leading to a happier society?

Apparently it's a trend...

For a couple of years now, the status of 'full-time employee' has been losing its dominance, giving way to part-time projects, temporary contracts, and full-time freelancing. No longer is it just musicians who are looking for 'gigs' - the rest of us seem to be engulfed in this lifestyle just as much.

Many people are turning away from the traditional 9-to-5 jobs that give them the security of a regular paycheck, and towards short-term, delivery-based projects. With this comes the freedom of working as much or as little as one wants and choosing the gigs one desires, but also the price of financial uncertainty and uncontrollability.

As the number of gig workers increased rapidly, many criticisms of this 'gig economy' came about. Many people started to worry about the changing world of work and what that means for individuals and society as a whole.

Let's discuss their concerns in more details. In the end, is the gig economy a ripoff?

Concern #1: "Employers 'exploiting' contract workers by avoiding providing them with certain benefits"

First of all, let's point out the fact that the we've subconsciously started to generalize gig workers and slot all of them into the same category as Uber drivers.

Of course, Uber is the giant that dominates the gig economy market (at the moment), and the company has been far from perfect (yet, very impressive for an industry leader!). However, the actions of one organization do not automatically define how every other peer-to-peer platform treats its contractors.

Many platforms are letting giving their contractors more control over their wages, and some are even operating as co-ops, with members having partial ownership and management rights.

Moreover, a simple flipside to this argument is simply that most freelancers chose this lifestyle over a full-time employment. While it does have its downfalls, it gives them a certain amount of freedom in their professional life.

Finally, the companies that are being criticized for 'making money off the back of poor contractors' will eventually find the balance of what is acceptable and what isn't fair or ethical, especially after a few lawsuits. These things tend to self-regulate in time.

What we should be focusing on is not how to stop the gig economy from growing, but rather, how we can evolve our social and economic systems to accommodate for these new models and protect the rights of freelancers.

Concern #2: "Full-time workers losing their jobs due to the rise of the gig economy"

Fortunately or unfortunately, this argument is a legitimate concern. Realistically, things will change for some workers. The world is constantly changing. We need to be prepared for that and deal with it.

However, this is not the first time in history that things are changing for workers. When motorcars came along and disrupted the transport industry, many people were upset (most horses were happy, however) - their trade became unnecessary, or the amount of business they got dramatically decreased. There was also a lot of fear and uncertainty towards the new technology. Despite this, it doesn't mean that the automobile was an awful idea. While it caused some short-term distress and anxiety, we can now get places faster, and have things delivered swiftly across the whole world. As a result, we have become a closer knit society as human beings.

Unfortunately, as with any change, with the rise of the gig economy, some will win and some will lose. However, as with any change, there are always alternatives that are available to people who are affected. It is a matter of adapting.

Concern #3: "Money not flowing into industries locally, causing economic breakdown"

The fact that people can make an extra buck or two from their unused car, room, or almost any useful belonging that they don't use means that there is less money flowing into the established 'traditional' enterprises, such as hotel or taxi companies.

Again, this is similar to the case above. Organizations that made money by developing photographic film started to lose business as digital cameras were invited. In turn, digital camera sales took a plunge once mobile phones with high resolution cameras became mainstream. It's the circle of life, and for many industries, it's time to 'adapt or die'.

Actually, the more we try to suspend or drive away freelancing and peer-to-peer facilitators from cities and countries, the more money we are driving away from the local economy. For example, some Uber drivers actually relocate to another city when the company becomes banned where they currently work.

The other concern under the economic umbrella is the tax side of things. Many contractors manage to avoid taxation regulations of their country, mainly because the systems have been created at a time when both the public and private sectors consisted of only enterprises and 'regular' employees.

This only confirms that taxation systems need to adapt to correspond to the changing times, much like other social and economic structures. With the right tax regulations, the government can still get the share required to invest in social systems and benefits for the population.

Besides, as goods and service providers in the gig economy earn extra money, they spend it on something else, reinjecting it into the industry. If tax systems were to be adjusted accordingly, the problem of 'evaporating money' will be solved.

Concern #4: "The rise of scam gigs and freelancers not getting paid for their work"

Unfortunately, there is always some dishonesty in everything. Some freelancers have had the unpleasant and infuriating experience of not receiving their agreed-upon payment. This issue is especially prevalent in service-oriented gigs.

Furthermore, the loose legal framework around freelance gigs means that some workers are roped into activities of questionable ethical - and even illegal - nature without their prior knowledge. This is an issue not only for the individual, but for society as a whole.

While these problems are serious, they are also easier to solve. Freelancers can even settle these issues as individuals. Starting with bulletproof contracts, up-front or installment payment options, usage of legitimate freelance platforms, and factoring solutions, and ending with authentication using blockchain technology, there are many things freelancers can do to protect themselves.

On the government side, protection laws and policies that reflect the reality of the 21st-century workforce should be put in place to ensure safety of both freelancing individuals and organizations, as well as the general public.

Concern #5: "Freelancers delivering to a poor standard"

At the end of the day, the problems that come with the rise of the gig economy are not only for the individual workers or competitors with 'traditional' business models. The consumers in the gig economy - the companies buying services from freelancers, the individuals purchasing goods from other individuals online - also have their worries. The majority of consumers are concerned about the quality of the products or services they are paying for.

And rightly so! With so many online platforms operating on reviews, it is easy to 'cheat the system' by providing an average service for a lower price or regularly switch between platforms. Moreover, what is considered a 'good service' varies from industry to industry, culture to culture, and person to person. Reviews are subjective and can always be explained under a different light.

Unlike firms, independent contractors have less of an incentive to provide a high-quality product or service. Their brand and reputation is less at stake, and even if someone leaves them a very bad review, they can just delete their account on platform A and go work through platform B. They can even have a different name if they want!

With new online marketplaces popping up every week, the number of available loopholes for providers of poor quality services is constantly growing.

How can consumers ensure they are getting a high delivery standard from gig workers?

Platforms need to stop reinventing the wheel - there is no need for ten different platforms for graphic designers. Indeed, if they combined and worked together, it will be easier for consumers to find what they are looking for, and a bigger incentive for contractors to provide a better service.

Platforms need to evolve their operating model as well. A more scientific and reliable review and ranking method needs to be put in place in order to encourage independents to do their best for their clients.

Again, instead of trying to stop this movement, we should be trying to improve it, to eliminate trust issues and make hiring freelancers a reliable choice for consumers.

It's not perfect, but it's here to stay.

Over the course of history, our society has given people more and more freedom - in our appearance, education, personal lives, family lives, and increasingly, working lives as well. It appears that structures that allow and respect individuals' choices tend to be more sturdy and long-lasting than oppressive and conformist regimes.

By this logic, this 'gigdom' will not be a passing trend. It will stick around, as it gives people the freedom to work on what they like, when they like. Whereas in the past we used to work to earn enough to be free not to work, we recently realized that being free to work on things we enjoy is a much better alternative.

Indeed, the freedom to work is an important and powerful tool to give to someone, and the gig economy is giving this tool to anyone who wants it.

So if the temporary contracts, freelance marketplaces, and outcome-based projects are the future, how do we ensure these gigs help organizations be more productive and profitable, individual workers more fulfilled and secure, and societies more stable and fair?

We need to change our social and legal systems! Evolving our taxation regulations, employment standards, unemployment benefits, healthcare and social services to better accommodate for independent contractors is a good place to start.

While it is not fair to assign all blame and responsibility to government bodies, they do have an important role to play in creating a prosperous future for their citizens in these changing times.

In the meantime, innovative individuals and organizations need to constantly challenge the old mindsets and move society forward. In time, rules that will support their inventions will follow. Big social changes are never slow and predicted - they're messy, and someone always wins and someone always loses in the short term. However, the innovations that stick through all the challenges and ambiguity that comes up in the beginning are the ones that help move humanity towards a brighter future.

Overall, the gig economy makes a lot of logical sense. People long for more freedom in their careers, and more companies are remunerating workers for completed tasks and meeting KPIs rather than the number of hours spent at work.

It is unlikely that we will ever have a 100% on-demand workforce. Some people will still be full-time employees - organizations still need some consistency to operate. However, both individuals and companies should have more of a choice in their working and hiring options without having to worry about being ripped off by one choice or the other.