A growing number of Australians are abandoning conventional employment structures and focusing on freelance work and other independent opportunities, otherwise known as the ‘gig economy’.
Upwork research shows nearly one-third of Australians did freelance work in 2015, while the latest World Bank data found 17 per cent of people identified as self-employed last year.
If you’re wondering whether the gig economy is right for your financial plans for the future, here are some of the main pros and cons.
75 per cent of people would take a salary cut to work from home.
Flexible work hours
Employees – particularly Millennials – want flexibility and autonomy in their work schedule. For example, a Hays Australia survey from last year found 75 per cent of people would take a salary cut to work from home. Australia’s gig economy offers the ultimate flexibility in choosing the hours, days and projects on which you work.
Be your own boss
A 2014 Citibank study found that being your own boss is the main reason people have for starting a business, and freelancing in the gig economy offers similar benefits. You don’t have to answer to anyone and can still earn a sizable salary if you develop a reliable network of opportunities.
Pursue a passion
For many, the gig economy isn’t just about independence; it’s the opportunity to learn new skills, follow your dreams and earn money doing something you love. This is incredibly appealing for people who may not have ended up in the career they had hoped.
— Upwork (@Upwork) October 26, 2015
Lack of benefits
One of the major downsides to the gig economy is that freelancing doesn’t usually provide access to key benefits that you’d normally receive through work, such as healthcare and paid holidays and sickness. However, insurance can provide peace of mind and financial support for gig workers.
Miss out on super contributions
Anyone who is self-employed or freelancing must ask themselves ‘what about the gig economy and my super?’. The answer is that many gig workers may be missing out on the Superannuation Guarantee contributions that employers pay on behalf of their full-time, salaried employees.
Damian Hill, chief executive of REST Super, told Reuters that gig workers could be missing out on up to $150 million a year in super nationwide.
Flexible hours are seen as a benefit, but the gig economy is also often unreliable and you may face shortfalls in your working hours that could affect your financial planning for the future. As such, you may want to talk to a financial adviser before making any big decisions on your future employment.
What you need to know
This information is provided by Invest Blue Limited (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.
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