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The economics of the Digital Transformation – XVI

An interesting representation of the Gig Economy in terms of age and earnings. What is important to notice is that the generation X, 35-44 yo, represents just 23% in terms of numbers but 32% in terms of earnings. These are the entrepreneurs of the Gig Economy. Image credit: PaYoneer

The rise of high skill – high knowledge Gig Economy

Quite often, the Gig Economy is associated to low level expertise, little jobs that are sometimes taken on the side to make up a little money, jobs that would not be chosen by persons with good knowledge and skill. These latter would even look for an employment in a company (large or small) or start their own enterprise.

This is not necessarily the case and for sure it is not the direction towards which the Gig Economy is evolving as result of the Digital Transformation.

Looking at the graph taken from the recent report on the Global Gig Economy Index, it is interesting to notice that Generation X (35 to 44 years old) participate for 23% to the Gig Economy but generates a revenue of 32%, whilst the younger population (18-24 yo) participates for 16% but generates a revenue of just 6.9%.
What is the message arising from these numbers?

The younger population gets engaged in the Gig Economy because it is easy to make a bit of money. This is further reinforced by observing the recent uptake into the Gig Economy as result of the lay-off resulting from job losses as companies downsized because of the pandemic. Not having better alternatives people turn to whatever they can find.

On the contrary, the middle age population is looking at the Gig Economy as an opportunity to leverage their knowledge and skills outside of structured business (outside of a company) and make more money.

Although one can expect that low skills and low earning will continue to be part of the Gig Economy the future is most likely to see a rapid growth of skilled people that will leverage the Gig Economy to have third parties “bid” for their skills and increase their revenues.

This increase in pro-capita revenue is also a signal that in the future people will choose to stay full time in the Gig Economy, not to use it as a complement to their main work activity. The increase has been highest (in 2019) in the US with an average of +78% (a quite significant increase since it refers to an average) but the increase has been significant also in other Countries like Brazil (+48%) and Pakistan (+47%), an indication that we are seeing a shift towards the Gig Economy.

The loss of jobs created by the pandemic in developed Countries has freed many high skill – high knowledge resources that are now looking for opportunities through the Gig Economy. At the same time companies have discovered that they can pursue their business using remote resources and are reshaping their processes to do so. As these two phenomena are now in full swing a third one is shaping up: companies want to get ready for possible fluctuation in resource need and look with interest to establish dynamic, need based, collaboration rather than having full time employees. This sets the stage for growth of the Gig Economy also in the segment of highly skilled/knowledge resources.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.