Understand what the Gig Economy is and how it works.

The concept of Gig Economy It is usually accompanied by some controversy, since it goes against the traditional formal employment contract.

What is the Gig Economy?

A formal employment contract is something that is usually a priority in the professional lives of many people; after all, a signed work card is synonymous with labor rights guaranteed by law.

Vacation pay, 13th-month salary, sick leave, unemployment insurance, and many other rights are fundamental to guaranteeing financial stability for workers.

But when it comes to career advancement, there is a group of people who see the employment relationship as a limiting factor.

This is because, in a 44-hour work week, it is difficult to fit in other activities that can generate financial gain, or even provide services to other companies, which contributes to the professional's prominence in the market.

The Gig Economy is an economic model that believes in autonomous, freelance work without an employment contract as the ideal way to generate income..

In theory, in the gig economy, workers perform jobs on demand, so they can determine how many companies they want to work for and at what rates.

The central idea is to ensure greater market fluidity: why should a talented individual restrict their services to a single company when they can offer them to more than one and gain experience and financial rewards?

On the other hand, why should a company restrict its processes to a specific talent when it can test various methods to find the ideal model through the contribution of diverse talents?

This is a controversial idea, and we'll understand why later.

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What are the advantages of the Gig Economy?

We previously saw a simplified explanation of the Gig Economy concept; the idea is that you can understand how it works in practice for the worker.

It's worth mentioning that many companies already operate on a gig economy system, meaning they have teams composed of independent professionals working on a "service provision" model.

Below are some reasons that encourage this application in companies.

Flexible hours

Why spend 44 hours a week in a fixed office, when sometimes you have no work and need to "slack off" a little in the coffee corner?

In the Gig Economy, you don't waste idle time, since you can be at the company only for the time necessary to perform your tasks. Finished? Go to your next client and have the opportunity to earn money.

Professional fluency

A professional with an employment contract usually adapts their services and even their profile to the demands of the company they work for.

In the Gig Economy, this isn't necessary: you're a self-employed service provider, so you can work at your own pace and according to your own model, as long as it aligns with the client's expectations.

Therefore, you don't get "stuck" in the model of a single company, which helps in building what's called professional authority.

New business models

One of the advantages of the Gig Economy is that it encourages the formation of new business models.

Currently, there are several office models. Some companies have adopted the remote 100% model, where each worker performs their tasks from wherever they want.

And what are the disadvantages of the Gig Economy?

Not everything is rosy, and now we finally get to the controversial part: after all, what are the disadvantages of the Gig Economy?

Let's start by talking about the discrepancy in the current reality: although we have companies using this model, the majority still follow the traditional one. Therefore, it's not so simple for workers to adopt this method, due to market demand.

In addition, we have some other disadvantages, see below:

No CLT rights

Gig economy workers are self-employed, therefore they do not have a formal employment contract, and consequently do not have CLT (Brazilian labor law) rights.

Your vacation time must be paid for out of your own pocket; there is no 13th-month salary, and in case of illness, there is no guarantee, since the company has no legal obligations as you are not an employee.

Less job security for workers.

There's no denying that formal employment registration is an important element of stability. Even for income verification, the payslip ends up being the most widely accepted document.

When working in the Gig Economy model, this stability is reduced, since, although you have invoices and contracts to prove income, they do not guarantee the same security as a traditional employment contract.

Difficulty in forming teams in companies

Freelance workers typically work in a decentralized manner, focusing on their own processes and responsibilities.

This can create difficulties in team building within companies, since it requires focusing on the integration of talents and professional ideals.

Furthermore, in the Gig Economy, the idea is to have no formal employment relationship, so talent turnover is high, which also affects the formation of stable teams.

Legal problems

The big problem with the Gig Economy is that many companies take advantage of this concept to apply an irregular business model, where they have numerous unregistered employees.

In this case, the workers perform their tasks as regular employees, with set working hours, a fixed salary, and other responsibilities, but they are not formally registered as employees.

This is considered an irregularity, and unfortunately it becomes very common with the misapplication of the Gig Economy.

Why is the gig economy so controversial?

The reason the Gig Economy is so controversial is that many believe it's actually a maneuver by companies to avoid labor costs.

Having a registered employee isn't cheap; after all, you have to pay for their legally mandated rights.

A self-employed worker, on the other hand, proves to be much more economical, since as a service provider they only receive payment for their services, without any kind of link or obligation on the part of the company.

So, although it brings "flowery" concepts of fluidity and professional autonomy, there is still much disagreement regarding the honesty of applying this concept in companies.

In any case, through honesty and adjusting expectations, it is possible to apply the Gig Economy correctly and thus obtain a business model that is advantageous and secure for both parties.

But for now, it's worth keeping an eye on companies' conduct to ensure it's not a way of avoiding costs and responsibilities towards employees.

Roberta

I am a member of the O Administrador team and I produce content about career, personal finance, financial education, productivity, and professional development. My goal is to share clear and practical information to help readers with their day-to-day decisions.

July 15, 2024

Career