Gig Economy

In the classic world of work, you have an employer, a contract, and a fixed monthly salary. In the gig economy, this is different. Here, someone takes on individual, usually short jobs: a food delivery, a car ride, a logo design, a translated page of text. Each of these jobs is paid separately and ends as soon as it is completed. The name comes from music: a “gig” is a single performance by a band, not a permanent engagement. The jobs are almost always brokered through an app or a website that brings together clients and workers.

A labor market without fixed contracts

The gig economy is no longer a marginal phenomenon. Estimates suggest that around 28 million people in the European Union work at least occasionally through such platforms. In Germany, this mainly involves ride services, food delivery, parcel delivery, and digital services such as graphic design or programming.

The crucial point is legal status. Anyone working through a platform is usually considered self-employed there rather than an employee. This means: no paid vacation, no continued pay in case of illness, no protection against dismissal. Contributions to health and pension insurance must also be paid by the worker themselves. The platform sees itself merely as an intermediary, not as an employer.

This is exactly what has been disputed for years. Courts in several countries have ruled that some drivers and couriers are in fact employees, because the platform dictates precisely how they must work. In 2024, the EU adopted a directive intended to curb such bogus self-employment. This is relevant for investors, because reclassifying workers as employees would significantly increase the platforms' costs.

How the app distributes the work

At the center is always a brokerage platform. On one side, it collects jobs from customers, and on the other, people who want to work. A computer program then decides who gets which job. The platform usually deducts a commission, often between 10 and 30 percent of the price.

The allocation is not handled by a human but by an algorithm, meaning a fixed set of rules within the program. It takes into account location, waiting time, past ratings, and current demand. Experts call this algorithmic management: the software takes over tasks that used to be performed by a shift supervisor. It distributes work, measures speed, and can effectively filter someone out in the event of poor ratings.

A common misconception is that prices are fixed. Many platforms use dynamic pricing: the amount rises when demand is high and falls when it is low. For workers, this means that hourly earnings can fluctuate significantly. The promised freedom to decide for yourself when to work is therefore limited. Anyone who wants to earn well often has to drive exactly when the app happens to reward it.

From Lieferando to data labeling

The gig economy is most visible on the street. Anyone living in a larger city sees couriers with backpacks from Lieferando, Wolt, or Uber Eats every day. Ride services such as Uber and Bolt, as well as cleaning or handyman brokerages, also belong to this category. These companies regularly appear in business news because their share prices react strongly to court rulings on labor law.

Less visible is the digital variant. On portals such as Fiverr or Upwork, people worldwide sell texts, translations, video editing, or programming work as individual jobs. Closely related to this is an area that is central to the AI industry: data labeling. Here, people mark images and texts for little money so that an AI system can learn from them. Without this invisible click work, many well-known AI products would not exist.

The gig economy must be distinguished from classic freelancing. A self-employed tax advisor seeks out their own clients and sets their own prices. In the gig economy, by contrast, it is usually the platform that determines the price and the order of jobs. This is why the debate about fair conditions is fought especially fiercely there.