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Difference between Gig Economy and Traditional Economy
The expansion of new types of employment has led to a corresponding increase in diversity in workplace cultures and organizational structures. Individuals typically held down a single job in the past, but the emergence of on-demand service providers like Uber, a decline in the number of people finding work in traditional settings, and the need for greater flexibility have all contributed to the rise of what is now known as the gig economy. Both of these economic systems are commonplace in the modern world, yet they are different in important ways.
What is Gig Economy?
Due to the economy's current state, many companies are hiring temporary workers and contractors instead of full-time employees. Connecting a customer, a project, and a freelance worker is essential to the growth of this economy. The parties to a contract often negotiate a fee for services depending on the scope of work to be done, the time required to complete the tasks, and any additional resources that may be required to carry out the agreement.
Most people would be interested in this arrangement because of its relative flexibility, but others could be put off by the demand for regular payments. The number of individuals employed in gig economies has increased, according to recent research, in both developed and developing countries.
The following are some of the benefits of a gig economy −
Expenses like employee benefits, office space, and staff training are examples of overhead costs that may be reduced or eliminated by employers.
Employees are given a great lot of flexibility with regard to their time off.
Workers have the independence to do tasks without direct supervision.
It's an effective way to spice up the workday and spark renewed interest and enthusiasm.
As a result, firms may spend less time on hiring new staff.
Despite its many benefits, a gig economy also has a number of drawbacks, including the following −
Despite the fact that it is possible to make a comfortable life in the gig economy, the great majority of independent contractors barely make enough money to exist.
Gig economy workers are often left without access to basic benefits like health and life insurance because their employers do not offer them.
Freelancers may experience unhealthily high levels of stress due to the constant pressure they feel to find fresh jobs.
Businesses that have adopted certain characteristics of the "gig economy" include ridesharing and freelance marketplaces like Uber and Fiverr as well as hospitality platforms like Airbnb and package delivery services like Hermes.
What is Traditional Economy?
In this economic paradigm, businesses have permanent employees who are responsible for a certain tasks. The working hours are negotiated between the business and its staff, with most shifts lasting between seven and eight hours. When an employee reaches this level of performance, they are rewarded with a stable wage and additional benefits, such as health insurance and vacation time.
Numerous advantages are gained by participating in the traditional economy.
Workers are assured of receiving a minimum wage regardless of how much labor they put in.
Extra benefits, such as paid time off and health insurance, are available to employees.
Employees have the freedom to pursue whichever career interests them.
However, the following are some drawbacks −
Workers are given little leeway in terms of scheduling flexibility.
Overhead expenses include things like staff salaries, rent, and benefits.
Workers experience boredom in the workplace since they are required to execute the same tasks day in and day out.
Differences − Gig Economy and Traditional Economy
The following table highlights how a Gig Economy is different from a Traditional Economy −
| Characteristics | Gig Economy | Traditional Economy |
|---|---|---|
Definition |
The phrase "gig economy" refers to an economic situation in which vocations can be both flexible and temporary, enabling firms to use freelancers and independent contractors in lieu of full-time employees. |
The phrase "traditional economy" refers to a type of economic system in which firms engage permanent employees to perform certain duties. |
Types of jobs |
In a gig-based economy, temporary employment possibilities such as contracts and short-term engagements are available. |
In a traditional economy, it may be possible to find both permanent and long-term employment. |
Flexibility |
Participants in the "gig economy" enjoy a substantial degree of independence. |
A typical economy does not offer any workplace flexibility. |
Benefits |
Workers in the gig economy are not eligible for supplementary benefits. |
In a traditional economy, workers are entitled to additional benefits, such as health insurance and vacation time, in addition to their wages. |
Benefits |
As a result of the emergence of the gig economy, employers may decrease or eliminate unnecessary overhead costs like benefits, office space, and training. |
Employers are responsible for paying overhead expenses such as the supply of benefits, the leasing of office space, and the provision of training in a typical economy. |
Work monotony |
The gig economy offers labor with diversity, which in turn stimulates innovation and enthusiasm for one's career. |
The repetitious nature of jobs resulting from a conventional economic paradigm stifles creativity and saps enthusiasm. |
Conclusion
The phrase "gig economy" refers to an economic situation in which vocations can be both flexible and temporary, enabling firms to use freelancers and independent contractors in lieu of full-time employees. Employers eliminate unnecessary overhead expenses, such as additional employee incentives, office space, and staff training. Even though they do not earn any additional benefits, the employees enjoy a great deal of autonomy over their work schedules.
In contrast, when referring to an economy, the phrase "traditional economy" refers to one in which a firm employs individuals full-time to do a certain task. The employees receive additional benefits like health insurance and paid time off in addition to their steady remuneration, despite the lack of flexibility in their employment. Employers are responsible for costs such as the payment of supplemental benefits, the renting of office space, and the supply of staff training.
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