What is a Freelance Economy?

The freelance economy means an economic situation in which the labour market is increasingly saturated with short-term contracts rather than full-time employment. Instead of hiring for permanent positions, companies recruit self-employed professionals to perform specific tasks for a fee.

In the freelance economy, also known as the gig economy, freelancers are professionals who work for a short-term period. They usually find gigs or short-term jobs through classified ads, outsourcing agencies, or other means, such as social media.   

Freelancers are no different from people who work for permanent jobs. They are professionals who work independently and offer their expertise to organisations for specific jobs. 

The term freelancer dates back to the early nineteenth century and refers to mercenaries who would fight for whoever offered them the best pay. The original term consisted of two words: free and lance.    

Understanding the freelance economy

The freelancing economy is not a new trend. It has been around for decades and has been popular within creative fields, such as design, copywriting, web development and the entertainment industry. The freelance economy has also been common in journalism.

However, it was not until the 2008 global recession that the freelancing economy came to global prominence. As a result of the financial difficulties, many people found themselves jobless amid massive layoffs, which pointed them to freelancing in order to supplement their incomes. Companies also increasingly preferred to hire freelancers or independent contractors to manage costs.

In recent years, the rise of digitalisation has helped to boost the freelance economy. The internet provides wider exposure for freelancers to the global marketplace. At the same time, it allows corporations or organisations to connect with talents easily.

Emergence of ride-sharing apps such as Uber (UBER) and Lyft (LYFT) also helped to grow the number of freelancers amid the rising demand for flexible working hours. 

How does the freelance economy work?

Freelancers manage how many hours they want to work. Some freelancers prefer to work full-time, juggling various jobs for numerous clients or businesses. Others chose part-time, allowing them to supplement their income while working full-time.

The freelance economy has opened the opportunity for individuals to have livelihoods that previously seemed challenging to attain. For example, in the past taxi drivers had to have a licence to operate a cab. Today drivers only need a smartphone and a car to start earning money.

The benefit of freelancers is that they have higher working hours flexibility and can work from anywhere, including their homes. Yet there is also the downside of being a freelancer, such as working out their taxes, pensions and health insurance – things an employer would typically do for their employees. Freelancers also do not get sick leave and annual leave pay.