Why we need a gig economy that works for everyone

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Anthony Beilin, CEO, Collective Benefits

• The gig economy has become an essential income source for a growing number of workers on both sides of the Atlantic.
• Currently, gig workers have to make a trade-off between the flexibility and tax benefits that gig work brings, and the social protections and support mechanisms that traditional employees benefit from.
• Policies can be implemented to level standards and working conditions across traditional employment and the gig economy, including social protections, targeted benefits and social support.

For many, the gig economy is not a helpful side hustle but a vital source of income.

In the United States, 26% of independent workers say they take on this additional work to support “basic family needs.” In the United Kingdom, almost a quarter of those providing courier services earn 90% of their total income through the gig economy.

Many of those earning income this way will experience financial vulnerability. For instance, 36% of gig workers in the UK report being unable to take time off work when ill because “they can’t afford to miss out on the pay.”

Of course, low pay and few savings are not unique to the gig economy. That said, research by Collective Benefits shows how the gig economy creates vulnerabilities that those in traditional work escape. For example, too many gig workers lack access to the social protections that employees take for granted, such as sick pay or maternity and paternity benefits.

Employee trade offs

As Hasan, a gig worker we spoke to recently, said: “If you had an accident, and you’re not earning for another 10, 15 or 20 days, how are you going to pay for things? How are you going to pay your bills?”

Alongside that, there is a trade-off from working through an app. On the one hand, there is less tax to pay and the chance to work when you want. But, on the other hand, there are fewer social support mechanisms that humans provide: a sense of team camaraderie or a line manager to talk through worries or problems.

“You are on your own,” was how Ahmed described his work to us.

Soaring inflation and economic uncertainty have only heightened these worries. In our research on how the Cost of Living Crisis affects gig workers, the theme of “not enough work” occurs repeatedly.

As Ali told us, “That’s how we view our job. Fewer jobs, more riders. Yes. Before, there were enough jobs for everyone; now, it’s less.”

No government can realistically protect all their people from the effects of soaring prices. However, the right thing must be to target support to those already lacking financial resilience.

Alongside that, policymakers can make it easier for gig platforms to support their workers by:

• Creating a level playing field across all forms of work – independent or employed – by defining a minimum set of social protections everyone must receive.
• With these minimum standards in place, the opportunity opens up to evolve existing frameworks for measuring working conditions in the gig economy to include a broader (and more ambitious) view of good work.

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We need to put the gig economy on a better course: one where everyone benefits.”— Anthony Beilin, Founder and CEO, Collective Benefits

These standards and conditions should be clear to workers and consumers and promoted to them so they can make informed decisions on where they work and what they buy. This enabling policy environment could then unleash much-needed innovation. For example:

• Dynamic models of social protection.
• Targeted benefits.
• Social support.

Benefits designed for the gig economy

Dynamic models of social protection

Worker protections should recognise that many gig workers work through multiple apps, often simultaneously.

“Multi-app-ing” is not a problem for delivering social protections against work-based risks, such as an accident while working, where it is clear who should pay, i.e. the platform through which a task was being completed at the time of the accident. But it leads to questions of who contributes how much towards benefits built-up around a full working life, such as a living wage guarantee, a pension pot or the equivalent of redundancy pay if there is no longer enough work.

The solution lies in taking advantage of the gig economy’s technological capabilities – connectivity, granular data and intelligence.

Targeted benefits

Many working in the gig economy are part of a vulnerable workforce who already spend more of their income on essential items such as housing, food, fuel and heating.

With this in mind, the gig economy should learn from traditional employers who constantly seek out new benefits to better meet the needs of their workforce. For example, by providing menopause support or inclusive public holidays.

For gig workers, we’ve learnt that generous discounts on essential items such as safety equipment, food, fuel or bike maintenance are likely to matter most.

Social support

Companies should provide support to protect against the side effects of the solo nature of gig economy work.

For example, ifood, a South American company, describes a “courier care eco-system” that involves physical pit-stops for drivers to get out of the rain or get a drink. It’s easy to see how this could evolve to become courier community centres – places to learn, exchange skills (maybe with a focus on how to get through the cost of living crisis) and share advice.

We need to put the gig economy on a better course: one where everyone benefits. These actions – doable, sensible, impactful and sustainable – can help make that happen.