What is the gig economy? 4 key things to know

You may have heard ‘the gig economy’ being talked about in the media, and that’s because it’s a growing part of the Australian (and global) jobs landscape. This style of work offers plenty of benefits, like flexibility, variety and accessibility.

If you’re thinking, What do you mean by ‘gig economy’? don’t worry – we define the gig economy meaning, explain its key features and explore its pros and cons below. Here’s a guide to the gig economy, its benefits, its drawbacks, and the legislation governing it in Australia.

• What is the gig economy?
• Key features of the gig economy in Australia
• Pros and cons of joining the gig economy
• Legal requirements and labour rights of gig economy workers
• How will the gig economy evolve over the next few years?
• FAQs 

What is the gig economy?

To define the gig economy we first need to look at the type of work meant by ‘gig’. Basically it means short, freelance or contract-based one-off jobs (you’ve probably heard the term ‘live gig’ in a music context.) The gig economy refers to the type of labour market that’s created by having lots of people working these short-term ‘gigs’ rather than entering a permanent full-time or part-time role with an employer.

Gig workers are paid on a per-project basis, rather than receiving a salary like a permanent part-time or full-time employee, or getting an hourly rate, like a casual wage worker. 

Gig work is closely tied to technology, with platforms like Uber and Grab creating jobs for gig workers in private transport and delivery services. Contract desk jobs through Fiverr and Upwork can also be considered gig work, made possible through the advent of remote work technologies. 

1. Key features of the gig economy in Australia

The gig economy and how gig work is governed looks different from country to country. So what is the gig economy in Australia? Here are the main features of Australian gig work. 

Flexibility and autonomy

The gig economy in Australia offers flexibility to employees and employers. Gig workers can choose what jobs they want to take, can dictate their own hours, take on more than one contract at a time, set their own rates, and in some cases work remotely. As a gig worker, you work for yourself, so you decide your own schedule. For employers, it means organisations can hire on a per-project basis, freeing up internal resources and allowing them to save money on hiring. 

Diverse opportunities

Gig workers in Australia have the option to work across a wide range of projects and even across industries. By working fixed-term contracts, they can hop from job to job and company to company, to avoid becoming bored or feeling stuck. With more varied experience, gig workers can access more diverse job opportunities and build on a wider variety of skills, which in turn opens up more career options.

Short-term engagements

‘Gigs’ in the context of the gig economy in Australia are typically short-term jobs. A gig in Australia can mean a delivery job, a freelance project or even a full-time contract of a few weeks or months. Short engagements mean gig workers can move from one project to another without making a long-term, ongoing commitment to a single employer or client. 

2. Pros and cons of joining the gig economy 

While there are a lot of benefits for gig workers, there are plenty of downsides to consider. Understanding the pros and cons of joining the gig economy can help you decide whether it’s the right fit for you. 

Benefits of gig economy jobs

There are many benefits of gig economy jobs: flexibility, opportunity, variety and more. Here are the main benefits to consider. 

It gives you more control over your work-life balance

One of the main reasons people are attracted to the gig economy is the flexibility it offers. Gig workers work for themselves, choosing the jobs they take, when they work and sometimes even where they work from. As a gig worker, you can control your schedule and make time for hobbies, friends and family commitments. There’s also the option of working more than 40 hours of work per week, if you choose.

You have access to a wider range of opportunities

Independent contractors and freelancers have the opportunity to work in different roles, on different projects and even in different fields. Working for diverse clients, you can gain more experience and meet more people for your professional network. The fact that you’re not tied to a single employer means you can take new opportunities when they arise. You can even take on more than one job at once, which isn’t possible if you’re a permanent employee

You can develop your entrepreneurial skills

As a gig worker, you’re your own boss. If you have plans on working in the gig economy long term, it helps to learn entrepreneurial skills so you can manage your workflow and ensure ongoing business. You might need to market yourself and your skills, negotiate contracts, build your network, or take courses or training to improve your skills. You might even eventually launch your own business with your refined entrepreneurial skills.

It might be your fast track to financial freedom

Gig work could help you on your way to financial freedom. As a gig worker, you set your own rates, and can theoretically work as much as you want. You can take on jobs that provide the opportunity to broaden your skill set and then go for higher-paying jobs with your additional skills and experience. Every time you look for a new job, you can set your sights a little higher. 

Disadvantages of the gig economy

While there are many advantages to gig working, there are also disadvantages of working in the gig economy to consider. 

Income may be inconsistent 

As a gig worker, there may be times you’re without work. Your industry may experience seasonal peaks and troughs or you might be unable to work for a period of time due to illness or family commitments. The short-term nature of jobs in the gig economy can make it hard to plan your finances long term, as what you earn each month – or each week – may change depending on the jobs you have. Gig workers who are employed through tech platforms like Uber pay a service fee, reducing their income. 

There aren’t any employer benefits

Gig workers aren’t permanent employees, so they miss out on benefits like superannuation, annual leave, sick leave, bonuses and other employee perks. However, new legislation provides more protections for gig workers employed through tech platforms. You can find more information at the Fair Work Ombudsman website. 

You might face uncertainty or instability

The uncertainty of the gig economy can have a negative knock-on effect on other areas of your life. It can impact your finances – without a regular savings pattern, it could be difficult to secure a loan or mortgage. Uncertainty can make it hard to plan for your future or create a lifestyle that feels secure. 

You’re dependant on market demand

There are highs and lows in every employment market. As a gig worker, you are more impacted by these fluctuations than a permanent employee, as you’re not protected by unfair dismissal regulations, and may find it hard to get jobs if demand for your skills falls. While there’s no way to ensure security in the gig economy, you can protect yourself against market fluctuations, it’s worthwhile diversifying your skill set so you can offer a broader range of services. 

You might not have any job security 

Some lucky independent contractors might land jobs of up to two years. On the other hand, gig workers who get work through a digital platform work on a much shorter term basis. While new rules provide some protections for this type of gig worker, it still doesn’t offer the same security as a permanent role. 

3. Legal requirements and labour rights of gig economy workers

The gig economy in Australia is largely unregulated, but there have been recent moves to make digital-platform employers more accountable. No matter what type of employment you have, it’s important that you check the Fair Work Ombudsman regularly to understand your rights and obligations in Australia.

Independent contractors vs. employees

Employees and independent contractors are two different types of workers. Employees work for a larger organisation as ‘permanent’ staff, working to a specified job scope, and are paid a set hourly rate or yearly salary based on their hours (which are outlined in their contract and usually the same every week). 

Independent contractors work for themselves and are paid a set fee for the services they provide. They can be contracted for a set project or for a set amount of time: up to a two-year term. If their contract allows it, they are free to delegate their work to their own employees or contractors. They can choose when and with whom they work. 

Here are the differences between an independent contractor and an employee at a glance: 

Independent contractors: 

• Work for themselves
• Can choose how, where and when they work, subject to reasonable direction
• Are paid by the terms of the contract, often to achieve a specific result, or a fixed fee for work provided
• Can delegate to others who the contractor pays to complete the work on their behalf (depending on their agreement with the client)
• Accept any commercial risks or costs arising from injury as their responsibility 

Employees:

• Employed by an organisation or business
• Must work to set conditions, including when, where and how they work
• Are employed on a full-time, part-time or casual basis
• Must perform the work themselves
• Bear little to no costs for commercial risks, such as injury or poor work

Legal challenges of the gig economy

Previously, gig workers weren’t protected by any laws in Australia, but new legislation will change this. Refer to the Closing Loopholes Acts for information about the new regulations governing digital platform employers and rights of gig workers and independent contractors. 

Rights and protections of gig workers

Under the Fair Work Act, employers must correctly classify anyone performing work for their business. This includes ensuring independent contractors are performing temporary roles, and not being used in place of permanent employees. Where this happens, the business may have to back pay the person for all the entitlements they should have received as an employee, like superannuation, annual leave pay, and health insurance. 

Independent contractors are protected under the Independent Contractors Act 2006. This act protects contractors from unfair contract terms – for example, independent contractors have the rights to fair conditions, including pay and work expectations. 

4. How will the gig economy evolve over the next few years?

The gig economy in Australia will likely evolve in line with technology, regulations and wider market forces. It will also be shaped by gig workers themselves and by the businesses hiring them. 

Advancements in digital platforms

Platforms like Uber, Grab, Upwork and Fiverr have all shaped the gig economy and will continue to influence how it evolves. In the future, we can expect more gig platforms and freelance-job marketplaces to emerge, with advanced capabilities to match jobs with workers. Platforms may use AI to help businesses refine their search for relevant freelance and contract workers. For gig workers, it’s essential to stay up to date with the platforms and channels that can provide new opportunities. 

Remote work

Since the dawn of the internet there has been an increasing shift to remote work. There are now more online collaboration and communication tools than ever before, making it easier for businesses to become completely online. Larger organisations may also trend towards hiring more remote workers, to save money on hiring and office space, and access talent without geographical limitations. 

Forecasting gig economy trends 

It’s reasonable to assume that the gig economy will continue to grow in the coming years. There are now more than 100 digital gig-economy platforms in Australia, making jobs more accessible to gig workers. The new legislation protecting gig workers and independent contractors may also encourage more people to enter the gig economy as a legitimate and secure way of earning income. 

The gig economy is thriving in Australia, and it’s almost certainly going to grow in the coming years. It allows businesses to access the workers they need on a short-term basis and gives individuals a flexible way to work. With the support of evolving digital platforms and a growing demand for independent contractors and freelancers there are many opportunities for gig workers across a wide range of industries. 

FAQs 

What are the advantages of the gig economy?

The advantages of the gig economy include:

• greater flexibility,
• independence,
• income potential, and
• access to more diverse opportunities.

How does the gig economy impact job stability?

The gig economy tends to reduce job stability by offering short-term or project-based jobs instead of long-term, permanent employment. This lack of stability can mean financial insecurity, lack of benefits, and uncertainty about the future. 

Are gig workers considered freelancers?

The gig economy definition covers service providers such as independent contractors, freelancers and temporary workers. Gig workers offer their services on a short-term or project-by-project basis. 

What industries are most impacted by the gig economy?

Transport, delivery/logistics, tech, consulting and some creative industries have been significantly affected by the gig economy. Due to the nature of these roles, they can be done on a project-by-project basis, allowing for more flexibility for both employers and gig workers, with short-term contracts and jobs. 

How can gig workers access benefits typically associated with full-time permanent jobs?

Gig workers can access benefits typically associated with permanent full-time jobs by negotiating with clients. Each contract you enter can be negotiated to suit your preferences, and can technically include superannuation and other common full-time employee benefits, although the client is not obligated to provide these things. 

Are there any legal protections for gig workers?

New legislation gives gig workers more protections, with orders on minimum standards for pay rates, super and payment terms. 

What are the potential financial challenges faced by gig workers?

Some of the potential financial challenges gig workers face include lack of income security, no guarantee of future opportunities, and the challenges of managing your personal finances, super and tax obligations. 

Can gig economy jobs be a long-term career choice?

Gig economy jobs can be a long-term career choice for freelancers and independent contractors who can secure a steady stream of job opportunities. You can give yourself the best chances of this by building a wide professional network, providing a high standard of client services, being competitively priced, and marketing yourself.

How do gig workers manage taxes and retirement planning?

Gig workers are responsible for calculating and paying their taxes and for retirement planning. Freelancers and contractors should set aside money for taxes as their employer/client does not withhold any tax from their fee. Independent contractors must also charge GST if they earn over $75,000 in a financial year in Australia.