Freelance market as the possible future of labor market

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Russian Presidential academy of national economy and public administration (Russia, Moscow)

Freelance market as the possible future of labor market

V.A. Kazakova, student

Abstract

The problem of employment is considered to be one of the most significant, important and fundamental in development of our society. In this research, the recent trends in labor market, such as digitalization and computerization will be highlighted, which are connected with the rise of freelance. The author will introduce statistics, showing the growing number of independently employed in different countries. Many independent workers consider this model of work to be preferable as they have obtained freedom to work independently. It is predicted that the rise of freelancing may completely change the structure of labor market.

Keywords: freelance, gig economy, labor market, digitalization, computerization.

Аннотация

РЫНОК ФРИЛАНСА КАК ВОЗМОЖНОЕ БУДУЩЕЕ РЫНКА ТРУДА

В.А. Казакова, студент

Российская академия народного хозяйства и государственной службы при Президенте РФ (Россия, г. Москва)

Проблема занятости считается одной из самых значительных, важных и фундаментальных в развитии нашего общества. В этом исследовании будут выделены последние тенденции на рынке труда, такие как цифровизация и компьютеризация, которые связаны с ростом внештатных сотрудников. Автор представит статистические данные, в которых будет показано, что число занятых в разных странах постоянно растет. Самозанятая часть населения считает эту модель работы более предпочтительной, поскольку у них есть возможность работать независимо. Предсказывается, что рост фриланса может значительно изменить структуру рынка труда.

Ключевые слова: фриланс, цифровая экономика, рынок труда, цифровизация, компьютеризация.

The problem of employment is considered to be one of the most significant, important and fundamental in the development of society. Labor market changes every day, new conditions are required, new high-skilled employees are needed, and some jobs are highly demanded then in the previous decade.

Freelancers are often thought to be self-employed and have freedom to choose and pick preferable projects or tasks in the companies they would like to cooperate with. Web-programming (PHP, CSS, applications programming, JavaScript etc.), working with texts (copywriting, rewriting, writing of articles, reports, course works, graduation works etc.) and design (web design, design of exhibition stands, interior design, interface design, the creation of corporate style etc.) are common activities for freelancing [1]. Some freelancers are able to submit their projects to many different places, without joining a particular company and particular employer.

Speaking about current situation, experts predict that the following 8 professions will rank as the most demanded and well-paid in the market during 2018:

Web designers are highly sought professionals that create the websites and apps we deal with. Many of these roles require ongoing maintenance of responsive websites, but other gigs are short-term solo projects.

Bookkeepers are responsible for managing the books for small businesses. This field is great for offering various packages to clients, covering items such as accounts receivable, accounts payable, creating P&L statements, reconciling accounts, making payment arrangements, filing taxes, financial analysis, and other tasks.

Project managers obtain organizational skills with a flair for working with many different people in a coordinating or leadership role. People doing this job should be able to multitask efficiently, effectively communicate, negotiate well, and be familiar with the project's industry to succeed in this role.

Social media management is one of those easily-performed remote positions that is not going on anywhere soon! Small businesses and entrepreneurs need the exposure of a well-executed social media presence, but many are short of time to learn the lingo, quirks and best practices for major social media platforms.

As for a video assistant, the recent research demonstrated that the majority of people today tend to watch videos more than read blog posts. Video assistants can help their clients to select video and do post-production with video editing software. They can contact, coordinate, and contract with actors or interviewees on behalf of their clients. They can even write any necessary scripts, provide captioning, overlay text, source sound effects or any other edition and correction that are needed in the final content.

Let's consider the profession of a content writer. The society today is oriented on a good content. Corporations need employees to write handbooks and training materials. It is necessary for small businesses to create website to place their best retail practice online. Brand managers need an engaging copy for social media accounts, while small businesses require SEO (search engine optimization) posts canvassing of customers.

Email marketing is still the absolute best method for engaging with customers (or followers) and making sales. Every time email marketers send an email, they're reaching out to a curated group of people who have already engaged with them. The clients want to be entertained or informed; they want to know company's goods, additional information about product.

Another profession in demand is a virtual assistant (VA), a person providing support services to other businesses from a remote location. His responsibilities can vary depending on the company in cooperation. Virtual assistants are especially in demand by solopreneurs and online businesses that claim some help but don't want to take up staff.

Freelancing is gaining popularity in the world every single second. In 2018 everyone can be offered fantastic and beneficial proposals [2].

The rise of automation and Internet availability has created new environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. It is called “gig economy”. In the gig economy, businesses save resources in terms of benefits, office space and training. They also can contract with experts for specific projects that can be high-priced to maintain the staff. From the perspective of the freelancer, a gig economy and digitalization can improve work-life balance [3]. Thus, a rise of freelancing is directly connected with digitalization. The Internet, computer accessibility and technological advance enables companies to satisfy with resources in new and flexible ways offering workers contemporary skills in managing and career promotion.

In 2017 freelancers represented about 35% of the United States workforce and 16.1% in the European Union. In OECD countries, studies showed that freelancers work mostly represented in the service sector (50% of men and 70% of women). Every figure demonstrates the same global trend: freelancing is on the rise [4].

Based on the rate of growing workforce, American freelance will rapidly increase by 2027. More than that, 47% of US Millennial workers freelance, it is more than any other generation [5]. Also, based on the newest research, 78% of the UK public think that freelancing and flexible working help promote a good work-life balance, 72% admit that freelancing has a positive effect on family life, 29% of the responders say that it is a part of their career strategy for the next five years [2].

Fewer and fewer jobs today require employees to be physically present in the offices. Alvin Toffler's book “The Third Wave” popularized the idea of new employment. He proposed a thought that due to the active development of information and communication technologies and transition to a postindustrial type of society, people are more likely to work directly from home in the future [6, 211-216].

As regards to benefits and drawbacks of freelancing, this concept is considered from both sides: freelancers themselves and companies that hire them.

Freelancing is often represented as liberating, empowering, and even glamorous, but the reality is rather complex.

On the behalf of freelancers, the top drivers to remote work apart from earning extra money are freedom to pick any desirable task or project, flexibility of schedule and opportunity to work directly from home combining spending time with families. Freelancers can choose places that fit their preferable lifestyle and the budget: some of them think that getting diversified income is more secure than work only for one employer and have one financial source. It is not necessary to work from 9AM to 5PM in the office, people prefer distant jobs. Freelancers seek more flexible work conditions, desirable location and convenient schedule. Also, more people work from home, as they avoid traffic jams and time-spending on transportation to work. It is in favor not only for self-employees, but also for improving ecological situation in the particular country and in global scale. However, some barriers may subsist. For instance, along with the diversification, the income is unpredictable, and it is not easy to anticipate earnings for a long-time period. Besides, sometimes it is impossible to find appropriate work, eligible for freelancer's skills [5]. Currently, there is not a strong single social protection system that clearly corresponds to all freelancers, from house cleaners and taxi drivers to architects and news editors [4].

Those risks in freelancing are unstable wages, social insurance, annual payable weekends, pension. However, there are similar risks in the full-time, non-freelance jobs with the background of social-economic instability and crisis tendencies [7, 30-31].

As for the employers, companies use online freelancers in many projects, ranging from marketing and customer support to product development and networks. The Oxford Internet Institute identified three main motivations for online-hiring: Internet freelance sources provide access to the extensible place of labor and skills, it reduces start-up and transaction costs compared to conventional sources of contingent labor and it reduces hiring barriers such as geography. That is to say, enterprises seek access to skills from freelancing platforms and advantages in innovation along with knowledge creation that come from making the corporate boundary more permeable and accessing workers outside their usual channels, with different backgrounds and work histories. One of the drawbacks of hiring somebody from aside is the uncertainty in the competence of the future employee - there is no guarantee that freelancer handle the project on time, without delays and qualitatively. Likewise, some enterprises may face various challenges in adopting online freelancing platforms, like internal resistance, preventing increased coordination costs, and adapting platforms to the firm's existing socio-technical infrastructures, such as procurement policies and vendor management systems [8].

Regarding online-platforms, the period of the last five years has shown a proliferation of ones that match employers with freelancers, often inviting them to bid for each task. Two of the biggest sites are Amazon's Mechanical Turk, which lays claim to 500,000 “turkers” from 190 countries at any given time [9], and Upwork, which estimates that it has 10 million freelancers from 180 countries on its database [10]. The freelance market is evolving so quickly that it is hard to find out exactly how many people are using these sites worldwide, but management consultants from McKinsey estimate that by 2025 some 540 million workers will have to use one of these platforms to find work. India and the Philippines are considered to be two of the biggest markets for these platforms. But herein lays the problem: by inviting people to bid for work, sites such as Upwork inevitably trigger a “race to the bottom”, with workers in Mumbai or Manila able to undercut other freelancers in Geneva or London because of their lower living costs, and it is a factor in driving down real wages and increasing inequality. As freelance workers often tend to complete tasks for as little as $1 per hour, it will eventually have a casual sequence effect on the wages of traditional, non-freelance employees.

Nevertheless, with the rise of telecommuting, automation, unlimited potential of crowdsourcing and implementation of artificial intelligence, it stands to reason that more and more firms will begin running and growing their businesses with considerably fewer employees. This does not necessarily mean an increase in unemployment. Instead, it likely means more freelancers, who will form and reform around various projects and cases in constant and evolving networks [4].

Unlike the auction model, favored by Upwork and similar platforms, there are some examples of freelance websites inviting carefully selected jobseekers to apply for projects without minimizing their earnings, like Sevendays [11]. Freelancers can also specify the minimum rate they are ready to work for. There are career development opportunities for freelance workers, many startups use the Sevendays platform as the way of exploring freelancers' abilities to realize if they are a good cultural fit before offering them a permanent job and vice versa. Typically, remote freelancers are entrepreneurial, independent and self-sufficient; it is one of the mindsets that startups usually look for [12].

Freelance Internet platforms which are popular in Russia and some neighboring countries are DaoHunter [13], FreelanceHunt, which suggest fixed rates for existing freelance projects [14], FL, a market with large database of freelancers and employers [15]. The number of websites where companies can hire employees from aside, without taking on the staff, is enormous and grows from year to year.

In conclusion, there are many conditions and factors for freelancing to become the future of employment. However, a great number of companies continue to seek employees on a permanent basis. Still, this is the standard of employment for many companies in most Western countries, as well as in Russia. Many freelancers consider this model of work to be preferable as they have obtained freedom to work independently. Freelancers have already facilitated the co-management of projects. In the near future they will also produce, communicate and collaborate with the each other in the society. With the development of technologies, artificial intelligence appearance, Internet and computer availability there is a strong opportunity for such occupations as text writing, programming, design, translating, SMM-marketing and others to become freelance. It is predicted that the rise of freelancing may be the new future of labor market [4]. Many industries will continue to require employees to work onsite to particular reasons, the general prediction is that numbers of regularly employed staff will diminish and make way for an increasing level of freelancers. The future for employees it seems rests in their own hands.

labor market employment freelancing

References

1. Freelance. Some numbers // Freelance Today.

2. Top 8 Freelancing Professions in 2018.

3. Gig Economy.

4. Is freelancing the future of employment?

5. Freelancing in America.

6. Toffler, Alvin The Third Wave. New York: William Morrow and Company, Inc., 1980. 544 p.

7. Lesovskaya M.I. Crafts in post-industrial society: on the crest of the `third wave' // Social-economic and humanitarian journal Krasnoyarskogo GAU. 2017. №1. p. 29-42.

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