The gig economy is characterized by digital platforms facilitating services between freelancers and customers.
A recent MasterCard white paper refers to the gig economy as, “digital platforms that allow freelancers to connect with individuals or businesses for short-term services or asset-sharing.”
The definition of the gig economy varies by academic and business publications. Yet while research entities have not quite aligned on a collective definition of this industry, the trending growth of digital freelancer services is commonly understood.
A key component to the gig economy is the freelancer’s involvement on digital or online platforms.
For example, an individual selling crafts through an online retailer, such as Etsy, is a part of the gig economy. But if that individual were to sell the same crafts exclusively at in-person markets, they would be excluded.
This same study estimates the gig economy to be approximately $204 billion USD in annual Gross Volume (GV) in 2018.
Of this some $204 billion, about two-thirds is paid directly to freelancers offering their goods or services. The rest is either collected as commission by the digital platform or distributed to third parties in the gig ecosystem, such as restaurant partners in food delivery services.
Because a majority of GV comes from platforms that are relatively new to the market, the outlook for continued industry expansion is positive. Gig platforms are projected to continue extending their operations regionally and offer a greater diversity of services to customers, thus enabling the industry to expand and mature.
The projected growth of the gig economy is expected to be approximately 123% over the next five years. Societal trends drive this expansion and new, innovative solutions offered by the gig economy are driven by consumer demand.
The increasing supply of gig economy freelancers offering their services to gig platforms is motivated by the following factors:
- Social attitudes about the sharing of personal items are now more normalized and accepted
- Increasing digitization rates and internet access in underserved regions is expanding the number of eligible gig freelancers
- A cultural shift toward embracing a flexible work-life environment is altering the working population’s expectations of a typical work schedule