Economic benefits of temporary work: impact on the job market and businesses

We live in a time when entrepreneurship and the job market are undergoing constant transformations, driven by numerous global and local changes. This poses new challenges for companies, demanding rapid adaptation to new conditions, while also opening up additional opportunities for growth and development.

Back in 2009, The New Yorker editor, Tina Brown, introduced and popularized the concept of the “gig economy.” Since then, the term has been widely used to describe an economic system in which work is done on a short-term or temporary basis. In this format, professionals can undertake multiple projects simultaneously for different companies, rather than being permanently employed by a single enterprise.

In 2009, this work model gained popularity in the wake of the financial crisis. Today, this trend is becoming increasingly sought after among businesses and workers alike, who seek flexibility and development opportunities. Moreover, it is evolving into a new norm. By 2025, the volume of work performed within the gig economy is projected to reach $2.7 trillion worldwide.

Examples of services that enable the gig economy include Uber, Freelancehunt, Upwork, Glovo, Lyft, Bolt, and others.

What has caused the development of temporary work?

Let’s start by defining what is meant by temporary employment. It is a form of work arrangement where employment is limited to a specific period based on the employer’s needs.

Temporary workers are also referred to as contract workers, seasonal workers, outsourced workers, freelancers, and so on. These employees may work either full-time or part-time, depending on the requirements of individual organizations.

Why is temporary work becoming increasingly prevalent, and what are its advantages?

• Technological progress. The emergence of the internet and digitalization have completely transformed the labor market. Remote and hybrid work have become the most desirable options. The demand has led to the creation of numerous platforms for freelancing and temporary work, making the process of job searching and hiring more straightforward and accessible. For instance, according to Roland Berger data, new registrations on the freelancing platform PeoplePerHour increased by 300% in the UK, 329% in Spain, and 513% in Japan.
• Demand for flexibility and adaptability. The concept of temporary work allows individuals to shape their own plans and manage their income, while businesses can hire workers on convenient and favorable terms. The younger Generation Z increasingly rejects predictability and stability of traditional career paths in search of more diverse and engaging options.
• Economic instability. Temporary work helps businesses reduce risks and expenses. Engaging workers through outsourcing or leasing helps avoid full-time employment for temporary projects or seasonal peaks. This saves time and costs that would otherwise be spent on the hiring and training process for new employees.
• Popularity of startups and small businesses. Launching new projects requires significant investment, and companies often seek more affordable ways to hire professional experts during the initial stages of development.
• Development of the external labor market. Globalization has opened doors to attracting professionals from outside one’s city or even country. More employers are turning to experts who can bring in new knowledge and skills.
• Seeking competitive advantage for businesses. Hiring temporary employees helps to execute projects faster and more efficiently, providing certain advantages in the industry.

Challenges and Risks of Temporary Work

Although temporary work has its economic advantages, it is not without flaws and faces challenges and risks for both employees and businesses.

For Employees: Job instability, limited social protection, lack of career opportunities.

For Businesses: Workforce instability, costs of recruitment and training, insufficient integration and motivation of employees. For the Economy: Low employment stability, increasing social inequality, a rise in the number of self-employed individuals affecting tax collection and social contributions.

With the right approach and a balanced consideration of its pros and cons, temporary work can become a valuable tool for achieving success in the modern labor market, benefiting both employees and businesses.