Companies need to do more for workers in the gig economy

13 Jan 2019

By Olivia Poh


The term “gig economy” was coined at the height of the financial crisis in early 2009, when the unemployed made a living by gigging, or working several part-time jobs, wherever and whenever they could.

In its earliest usage, “gig workers” referred to jazz club musicians in the 1920s. These musicians did not receive healthcare benefits, a pension or paid leave.

The nature of gig work has changed little since then, but it has taken on a new context today.

Even if the term “gig economy” is new to you, you have probably contributed to it by hailing a ride through a mobile app, booking a residential apartment overseas or ordering restaurant food from home.

The gig economy is characterised by a working environment that involves short-term contracts, freelance employment and entrepreneurship. Fueled by technology, more people have become employed this way, either to earn more money or make ends meet.

Think of the retired person who occasionally lets out a spare room on Airbnb, the student who uses his bike to deliver food, or the office worker who picks up an extra passenger on the morning commute by using a ride-hailing app.

Although they do these jobs mostly on an ad hoc basis, many people do them full time. Some 223,500 residents in Singapore did gig jobs for their regular source of income last year, up by 11.7 per cent from 2016.

The benefits of doing a gig job are obvious. It allows people to be their own boss by planning their work schedule, determining their dress code and working whenever they want to. Their income is limited only by their own ambitions.

However, gig work can be detrimental and needs to be properly regulated so that gig workers do not fall through the cracks.

While the flexibility and autonomy of gig work can be very appealing to workers, there are consequences that aren't always evident from the start.

The autonomy of working in the gig economy often comes with long and irregular work hours, which can lead to sleep deprivation and exhaustion, according to a 2018 study by the University of Oxford. Despite these effects, many firms do not offer full-time benefits such as health insurance, overtime pay or scheduled meal breaks.

Take ride-sharing company Grab for example. Drivers must provide their own vehicles, purchase their own commercial insurance and use their personal smartphones. The firm also takes a 20 per cent cut from drivers’ earnings, and drivers can be “timed-out” if they consistently ignore or cancel jobs, or if their ratings keep falling below average.

Meanwhile, mobile food delivery giant Foodpanda grades riders based on customer feedback and how fast they complete their assigned deliveries, among other things. These grades do not factor in the weather, traffic conditions, or the time of day. A Foodpanda rider with a higher grade could earn more per delivery or get priority for choosing his or her work schedule.

The gig economy offers people more flexibility and efficiency, but it often comes at the expense of freedom and security, said Dr Lan Ha, an insight analyst at data agency Euromonitor International.

The University of Oxford study showed that the competitive nature of online platforms leads to high-intensity work, which forces workers to complete as many gigs as possible, and as quickly as they can.

Fifty-four per cent of the 700 workers who took part in the study said they must work at very high speeds, and 22 per cent reported physical pain as a result of their work.

In Singapore, companies are taking steps to improve the work environments of gig employees. To improve health and occupational safety for drivers, Grab introduced a feature in its app that measures driver fatigue and reminds them to take a break when they have been driving for too long.

However, the firm does not limit the number of hours drivers can spend on the road. Its incentives, such as a guaranteed gross monthly income of $6,888 to $11,888, count on drivers to clock at least 180 trips per week. This averages out to driving for 12-hour shifts on all seven days of the week, private-hire car driver Mr Jack Toh told The Straits Times in a news report published on 22 Oct last year.

"You cannot go on holiday overseas, you cannot fall sick, you cannot take a few days off to rest," the 38-year-old added.

Despite these disadvantages, the gig economy has attracted more young graduates and millennials in Singapore, according to a 2017 Maybank Kim Eng report.

About 47 per cent of Institute of Technical Education, 35 per cent of polytechnic and 10 per cent of university graduates went into part-time, temporary or freelance jobs in 2017, more than double the share from a decade ago, said the report.

“It has definitely helped me in supplementing my income, but I can’t see myself doing this long-term as a full-time job,” said Ms Tammy Cheung, a freelance yoga instructor.

“It is too risky and doesn’t offer much financial security,” the 28-year-old added.

Although more young adults are becoming a part of the gig economy, the main drivers of the industry are less educated, skill-based workers.

According to statistics from the Ministry of Manpower, a majority of primary own account workers, or workers engaged in their own work as a regular form of employment, were aged 50 and above and did not have tertiary qualifications.

With a higher dependence on the gig economy for work, these workers are often more vulnerable to the demands of their employers. Firms in the gig economy need to implement more measures, like full-time employee benefits and a stable salary, to level the playing field.

It is time for the gig economy to stop hiding under the pretense of “flexibility” and start treating their workers like employees.

Offering benefits such as including gig workers in company events, offering discounts and matching them up to insurance brokers do not come at a huge cost for companies involved, but will go a long way in helping to build stronger relationships with gig workers. Such benefits can help freelancers make the decision to remain loyal to the company.

Some of the perks that attract gig workers are surprisingly simple. "They might not be what we think of as traditional benefits," said Penny Queller, senior vice president of sales solutions at Alexander Mann Solutions in St. Louis. Instead, they involve efforts built around "engagement and processes."

For example, independent workers can have a hard time obtaining health insurance, said Yvette Cameron, global vice president of strategy for SAP SuccessFactors in Denver, who has been closely studying the gig economy.

To solve that, businesses like the ride service Uber and online marketplace Etsy have partnered with San Francisco-based Stride Health to act as a health insurance broker for their gig workers.

Essentially, Stride Health is a marketplace that matches users with insurance plans that the worker—not the employer—pays for. Stride Health earns commissions from the insurance companies, while the employers have simply arranged the access to Stride Health service. Cameron said that conversations she's had with Uber drivers indicate the perk is "a big deal" to them.