Exploring the Income Gap in the Gig Economy Versus Traditional Employment

Abstract

The gig economy has emerged as a significant force in the global market, now accounting for as much as 12 percent of the global workforce, a figure that surpasses earlier estimates. In the Philippines, this shift toward flexible, freelance, and project-based work is especially evident as an increasing number of Filipinos turn to digital platforms to access employment opportunities both locally and internationally (8.2). This growing sector is emerging as a promising opportunity for traditionally underrepresented groups, such as women and young people, particularly in developing nations where formal job opportunities may be limited (8.5). Despite its potential to promote economic inclusion and flexibility, the rapid expansion of the gig economy also highlights significant gaps in social issues. Therefore, it is essential to investigate whether the job satisfaction of gig workers is a pressing concern to create effective, inclusive policies in this sector (8.8). A recent World Bank report (2023) underscores the lack of social security, job stability, and legal safeguards for gig workers, making them vulnerable to exploitation and economic insecurity. Despite these challenges, demand for online gig work continues to surge, fueled by technological advancements and the global shift toward remote labor. While these issues become increasingly urgent to address, there is a need for policymakers, platform providers, and global institutions to work collaboratively to create inclusive labor frameworks that ensure fair compensation, benefits, and rights for gig workers (8.3). By analyzing both the earnings and income gap of these two labor groups, this paper aims to investigate the potential change in the landscape of job opportunities of Filipino gig economy workers vis-à-vis traditional employees and to assess whether such digital work arrangements can be viable and sustainable as a livelihood strategy under current conditions and regulatory frameworks. Determining the effect size of these disparities is crucial for understanding whether the flexibility of independent work outweighs the financial security and psychological satisfaction traditionally provided by salaried or traditional employment.