Are you a freelancer relying on gig work for your primary or additional source of income?
The number of freelancers has risen steadily in recent years. The pandemic pushed millions more into the gig economy and many are asking if the gig economy is the future of work and whether it’s sustainable.
So, what does the future of the gig economy look like?
In this article, we’ll discuss what the gig economy is and its downsides. Additionally, we’ll look at what to expect in 2023 and beyond, and how to prepare for your financial future.
What is the gig economy?
The gig economy is a modern twist on the age-old practice of hiring laborers and artisans for short-term work. Its roots date back centuries, but the term is pretty recent.
“Gig economy” refers to a job market in which task-based workers use digital platforms to find temporary or part-time gigs.
Employers hire gig economy workers on an as-needed basis. As independent contractors, these workers don’t receive the same benefits as traditional employees. Gigs or tasks they can perform run the gamut. Examples are driving for Uber or Lyft, providing short-term home rentals through Airbnb, or completing freelance projects such as writing or graphic design.
Many workers are turning to the gig economy primarily because of flexibility. They can choose their work hours, the types of work to perform, and even the clients to work with. Employers, on the other hand, can tap a large network of talent and service providers without having to employ them full-time.
What are the downsides of the gig economy?
Generally, gig workers are a happy bunch.
In 2021, about 1% of gig economy workers in the US reported being “very dissatisfied” with independent work. In contrast, 77% said they were very satisfied.
That said, the gig economy has some notable drawbacks:
- Limited job security: Because gig workers are hired on an as-needed basis, they can be let go at any time.
- Non-guaranteed pay: Income isn’t guaranteed, which can lead to workers accepting low-paying jobs or those that aren’t a good fit. In some very unfortunate cases, they get cheated out of their earnings.
- Limited benefits: Gig workers are independent contractors. Therefore, they are not entitled to traditional employee benefits such as health plans, retirement packages, and paid time off.
- Lack of legal protections: Gig workers are often not subject to wage minimums and overtime pay or protected against harassment and discrimination.
- Dependence on ratings and reviews: Platform ratings and reviews can impact the amount of work gig workers get.
- Little to no collective bargaining power: Often, gig workers and freelancers are lone wolves working by themselves. They don’t have the backing and bargaining power of a workers’ union or other related organization.
- Uncertainty: Because long-term, high-paying work isn’t guaranteed, planning for the future can be a challenge.
The gig economy and the future of work
In 2022, McKinsey’s American Opportunity Survey (AOS) found that 36% of employed Americans were independent workers. In 2016, that figure was 27%.
Numerous online publications quote the World Bank as saying there are currently 1.57 billion freelancers. That is 46.4% of the total global workforce.
What lies ahead for freelancers
The emerging macroeconomic picture for 2023 isn’t exactly pretty. World Bank Group analysts predict that a sharp slowdown in global growth will happen this year. In their analysis, World Bank Group says, “Any adverse developments risk pushing the global economy into recession.”
With this backdrop, what can freelancers expect from the gig economy?
In Payoneer’s latest Global Freelancer Income Report, 32% of freelancers saw higher demand for their work since the beginning of the pandemic. Additionally, more than 66% believe demand for their services will continue to rise in 2023.
A 2023 research insights report on the gig economy states that, globally, the market will breach the $873 billion mark by 2027. That’s a compound annual growth rate (CAGR) of 16.18% from 2022’s $355 billion.
These figures point to one optimistic fact: Even despite fears of an economic slowdown in 2023, the gig economy will continue to expand.
Top skills for 2023 and beyond
As for the skills to cultivate this 2023 and beyond, LinkedIn just recently posted the most in-demand skills for 2023.
The top skills companies need in today’s economy are:
- Customer service
- Project management
- Analytical skills
The most in-demand hard skills for 2023 are:
- Software development
- Python (programming language)
- Data analysis
- Cloud computing
- Customer relationship management (CRM)
The most in-demand skills in accounting and finance are:
- Analytical skills
- Customer service
- Financial analysis
- Financial reporting
How can freelancers prepare for the future?
The gig economy and the future of work certainly look promising. However, the drawbacks inherent to both gig and freelance work will remain. So, freelancers should put measures in place to cushion themselves from these lingering challenges.
- Stay on top of industry trends: The world of work constantly evolves. Keep your finger on the pulse by closely following industry blogs and news outlets, attending conferences, and expanding your professional network. Stay current on the latest tools and technologies in your field.
- Develop in-demand skills: Build skills in rapidly growing areas such as programming, digital marketing, project management, web design, finance, and data analysis.
- Strengthen your brand: Create a strong brand that highlights your experience, skills, and what makes you different. This can mean building a solid presence on social media or launching a regularly updated website.
- Continuously learn: Keep your skills sharp by investing in ongoing training and education. Take courses, attend workshops or conferences, and find a coach or mentor.
- Plan for your long-term financial future: Take steps to plan for retirement and other financial goals. Work with a financial planner to build an emergency fund and set up a retirement savings account. Also, consider getting health and other insurance.
- Diversify your income stream: Don’t put all your eggs in one basket. Reduce your financial risk by working with clients in different niches, industries, or geographies. This can insulate you from fluctuations in demand for specific skills.
Forging ahead into the future of work
Just like in the years gone by, the gig economy will be exciting but chaotic in 2023.
To keep up, it’s vital that freelancers continuously hone their skills, adapt to new trends and technologies, develop strong relationships with clients and peers, and plan for their financial future.
Ready to step into what lies ahead for the gig economy? Spruce up your ClearVoice CV today!