Consider the following statements with reference to ‘Gig Economy’:
1. It allows flexibility in employer–employee relationship to both service seekers and service providers.
2. It increases overhead costs.
Select the correct answer from the code given below:

The correct answer is (D) Only 1

This statement is Correct. The core characteristic of the Gig Economy is flexibility.

Service Providers (Workers): Get flexibility in setting their own hours, choosing projects, and working independently (e.g., freelance coders, ride-share drivers).

Service Seekers (Employers/Platforms): Get flexibility in quickly scaling their workforce up or down based on demand without the long-term commitment of a traditional employment contract.

This statement is Incorrect. The Gig Economy is specifically known for reducing overhead costs for the service seeker (company/platform).

Reduced Overheads: Companies do not have to pay for traditional benefits, such as health insurance, retirement contributions, or paid time off, which are typical overhead costs of full-time employees. They also save on office space, equipment, and training costs associated with a large permanent staff.

Cost Shift: The overhead costs (like self-employment taxes, health insurance, and equipment maintenance) are largely shifted to the independent worker/service provider.

The Gig Economy is defined by flexibility and cost-efficiency (reduced overhead for companies) through the use of independent contractors and short-term contracts.