What is the gig economy and how can you make money from it?

Ten years ago the gig economy was barely heard of, now it employs millions of people. So, what is it and how much could you make from it?

What is the gig economy?

The gig economy is a growing trend for companies to mainly employ independent contractors and freelancers instead of using full-time employees.

It provides both the company and the people who work for them complete flexibility to work as and when they want, and only pay people for the jobs they do.

People who work in the gig economy are only paid for the jobs, or gigs, they do – for example delivering a takeaway or providing a taxi journey - rather than receiving an hourly wage.

Who are the big employers?

The big names who work in the gig economy are taxi firm Uber and food delivery service Deliveroo.

Other firms who employ people on a gig basis DIY service TaskRabbit and many delivery firms such as Hermes.

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How many people work in the gig economy?

Around five million people are currently working in the gig economy in the UK, according to data from the McKinsey Global Institute.  This makes up around 15.6% of the total full and part-time workers in the country.

But, the gig economy isn’t just a British phenomenon, up to 30% of workers across the United States and Europe are thought to work in gig-type jobs.

Gig workers tend to be under 30, according to a survey by Ipsos Muri for RSA, with the majority providing professional services – such as accounting and legal advice – or creative work, for example, writing or graphic design.

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How much could you earn?

How much you could make from working for one of these companies really depends on the amount of time you dedicate to it and what you are doing.

Drivers for Uber make around £565 for a 35-45 hour week after the 25% service fee, according to the firm. But, some drivers say they make closer to £700 a week.

Delivery workers for Deliveroo are said to be able to earn up to £12 an hour by the company itself, but one worker said they can usually only manage one delivery an hour so earn just £4.

It really depends on where you are – are the restaurants and the delivery addresses close to one another – and how fast you can move.

Couriers tend to make more with £150 a day a rough average, but some speedy souls report making as much as £1,500 a week.

Work on a gig basis in a skilled job such as graphic design or photography and you could earn even more.

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What are the pitfalls?

The gig economy is great if you just want a side income – you get complete flexibility over how much and when you work.

The problem is, you also don’t benefit from any of the legal protection available to full or part-time employees. You’ll get no sick pay, no paid holiday, no pension contributions and you may not even earn the minimum wage.