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Building Back Better – The Gig Economy in a Post-COVID-19 World

think-07-06-Building Back Better-Featured Image

The impact of the COVID-19 pandemic on the labour market has been devastating. Global working-hour losses have escalated, equivalent to an increase from 160 million to 495 million fulltime jobs between the first and second quarters of 2020.1 The working-hour losses derive from shorter hours, being employed but not working, inactivity and unemployment, with inactivity increasing to a greater extent than unemployment.

 

The International Labour Organization (ILO) projected an additional 345 million full-time equivalent job losses in the third quarter and the massive disruptions in the labour market to persist into the fourth quarter of 2020. The working-hour losses have translated into labour income losses of USD3.5 billion or 5.5% of global GDP, as compared to the first three quarters of 2019 and without taking into account income support measures. Working poverty has been exacerbated, cancelling out previous gains in poverty reduction.

The world is temporarily closed

During the pandemic when many cinemas around the world were closed, Netflix acquired 16 million new subscribers – almost double the new sign-ups it saw in the final months of 2019. However, the shutdowns have halted ‘almost all’ filming around the world, according to the streaming giant. Photo: Edwin Hooper / Unsplash

The World Economic Forum (WEF) identified gig economy workers as “among the hardest hit by the coronavirus pandemic”... by April 2020, 52% of gig workers had lost their jobs and 68% had no income.

The World Economic Forum (WEF) identified gig economy workers as “among the hardest hit by the coronavirus pandemic”. Citing a survey conducted by AppJobs, an online platform that compares appbased jobs around the world, WEF reported that by April 2020, 52% of gig workers had lost their jobs and 68% had no income.2

 

RISKS AND CHALLENGES IN THE GIG ECONOMY

Before COVID-19, the term ‘gig economy’, first coined by the journalist Tina Brown at the height of the financial crisis in 2009, had evolved into a reality of how millions of workers earn some or all of their living as freelancers or independent contractors who are almost always classified as self-employed. Digital labour platforms and internet connectivity outsourced web-based opportunities for workers in different parts of the world to participate in ‘crowdwork’ (in software development and technology, creative and multimedia work, journalism, translation, data entry and analysis, for example), while location-based applications allocated work to individuals to perform local, service-oriented tasks such as transportation, delivery and home services.

It's not just a stage they're going through...

Three leading Singaporean theatre companies, Singapore Repertory Theatre, Pangdemonium and WILD RICE, joined force to produce a ‘sharply irreverent satirical comedy’ The Pitch, starring each theatre company’s artistic directors playing fictionalised versions of themselves. The short film reflects the resilience of the theatre community in the midst of pandemic when theatres are closed and a lot of freelancers in the theatre community are out of work. The Pitch is available to watch online for free. Image source: Singapore Repertory Theatre, Pangdemonium and WILD RICE

The defining characteristic of gig work is its flexibility, which ostensibly allows workers to choose when, where and how to work. But it is this very flexibility that underscores why gig workers have been severely impacted by the pandemic. The flexibility involves employment arrangements that are ‘non-standard’ – gig workers are outside of a standard employment relationship between an employee and a sole employer that is covered by legal regulations and employment-based social protection. Non-standard employment overlaps with informal work – informality being defined as work that, in law or practice, is not subject to labour regulations, income taxation, social protection or entitlement to certain employment benefits. Apart from not having access to medical benefits, paid annual or sick leave, unemployment insurance or hazard pay, the downsides of non-standard work are the precariousness and vulnerability linked to the uncertainty of securing the next work assignment, irregularity of income, lack of economic security and work-related stress due to said job insecurity and unstable incomes.

 

It is difficult for these workers to secure a loan or mortgage because credit systems do not treat them in the same light as regular workers.

 

THE IMPACT OF THE PANDEMIC ON GIG WORKERS

In the COVID-19 era, a highly visible face of the new normal has been the gig delivery workers – what would we do without them to deliver food, essential supplies and even trivial online purchases?

 

Digital delivery platforms have experienced huge spikes in demand and hired more workers. But their workers are frontliners who put themselves at high risk of infection or spreading the virus to avoid loss of income. Insofar as the delivery workers have work and some means of livelihood, they may be better off than many of the other non-standard and informal workers: the ride-hailing drivers without customers because of mobility restrictions; the temporary, part-time, casual workers whose contracts are not renewed and whose hours are whittled down to zero; the employment agency workers who are simply told, “Sorry, there is no more work for you”; the women home-based workers without work or income because of the disruptions in global and local supply chains; the daily-income street vendors and market traders who are not allowed to operate in public spaces; the dependent self-employed with unstable incomes; and the informal workers concentrated in the hardest-hit sectors, identified by the ILO as the wholesale and retail trade, manufacturing, accommodation and food services.

To recover from the pandemic, we need to adjust to the new normal – one in which gig work and the digital economy will be key aspects.

There has been a race to the bottom. With working-hour losses soaring in both the formal and informal economies, more and more people are vying for freelance work in the gig economy, pitching their services for lower rates and intensifying competition for those already doing such work. Their hardships have been compounded by the fact that non-standard workers have essentially fallen between the cracks of the economic stimulus and bailout packages of many countries.

 

 

In Malaysia, for instance, a national survey of the economic effects of COVID-19 singled out the self-employed or own-account workers in micro enterprises as most severely impacted.3 On the one hand, the self-employed did not qualify for the economic stimulus benefits targeted at formal sector employees; and, on the other hand, they were not able to take advantage of enterprise support either because they were not registered as businesses or were unable as micro enterprises to meet the bureaucratic requirements for assistance.

Food delivery riders

While food orders have shot up following the ban on dine-in at food and beverage outlets, food delivery riders are facing an increase in competition from the the large amount of new riders and private-hires. Photo: Sarayuth Punnasuriyaporn / Dreamstime

ADJUSTING TO THE NEW NORMAL

The experiences and responses to the pandemic have fundamentally changed many of the ways we work, consume and live. To recover from the pandemic, we need to adjust to the new normal – one in which gig work and the digital economy will be key aspects. This involves not returning to ‘business as usual’ but seizing the opportunities to build back better for the future by re-orienting the labour market and addressing the institutional and structural weaknesses that have been glaringly highlighted by the crisis – starting with the social protection system.

 

Priority should be given to establishing a social protection floor with universal access and basic protection for every person. This means protection not only for standard workers and typical jobs but including and better protecting the long list of needy and vulnerable workers highlighted in the paragraphs above, also taking into account that the types of protection and the sources of protection would differ depending on the particular circumstances and constraints of the diverse groups.

 

RE-THINKING WORKER WELFARE

Several approaches for extending social protection- to non-standard and informal workers have been identified – including contributory social insurance schemes that are flexible and adapted to specific categories of workers, conditional or non-conditional social assistance, labour market measures and community-based safety nets.4 In Malaysia, the Social Security Organization (SOCSO) and the Employees Provident Fund (EPF), recognising that employer-tied social protection schemes are increasingly inappropriate and inadequate, now allow gig workers to contribute voluntarily under the Self-Employment Social Security Scheme and the Voluntary Contribution with Retirement Incentive. SOCSO also launched the PenjanaGig programme to provide social protection for gig workers through matching grants for the gig economy platforms. Social protection reforms are also reviewing eligibility thresholds for social security. Gig workers often cannot meet current requirements – such as minimum hours worked weekly, minimum earnings, minimum number of months on the job, minimum number of contribution periods – leaving them without adequate protection.

Street vendors

The pandemic has devastated the livelihoods of street vendors, disrupting their ability to do their jobs and leaving many in a fight for survival. Photo: Dita Alangkara / AP Photo

Changes to social protection systems should be done in conjunction with a review of the classification of gig workers as independent contractors and freelancers, and the nature of the employment relationship. By hiring workers as independent contractors and freelancers rather than as employees, companies are able to avoid their employment-related obligations to pay social security and other benefits and may be able to pass on their economic risks to these workers.

 

Digital economy companies could label themselves as aggregators of independent contractors rather than as actual employers.

Pahingan Sunday Market

An online event run by Omah Wulangreh, an art and cultural community in Jakarta, Pahingan Sunday Market provides an online space for sellers and buyers to pre-order items like traditional snacks, batik clothes and coffee, to help people earn extra income during the COVID-19 pandemic. Photo: Achmad Ibrahim / AP Photo

Getting things right for the future means embracing these new [business, operating and financial]models and ensuring the facilitating environment for the digital economy to thrive.

However, the coronavirus has pushed these companies to recognise that they face triple exposures and need to protect not only the enterprise (the business) and the demand (their customers) but also the supply (the workers who deliver their products or services) – and that how they treat their gig workers will be key to all the challenges. In India and Pakistan, for instance, Uber announced paid sick leave and insurance for workers at risk. In Malaysia, Grab introduced a ‘Partnership Protection Fund’ and a ‘Partnership Relief Fund’ to support their drivers and delivery partners. With these moves, the companies have tacitly acknowledged their drivers and riders who are wholly dependent on the platforms for their income. Governments have also taken steps. A California Assembly Bill which took effect in 2020 sought to redefine the nature of the employer employee relationship between companies and the independent contractors and freelancers they hire, to ensure that gig workers are provided with the protection afforded to employees.5 Gig workers themselves are also organising for recognition and rights. Gig Workers Rising6 is a campaign that is supporting and educating app and platform workers who are organising for better wages, working conditions and respect.

 

PREPARING FOR THE DIGITAL ECONOMY

Recovering from the pandemic and building back better will hinge heavily on the development of the digital economy. The crisis has certainly accelerated an already growing trend toward digitisation in an increasing number of sectors and activities. The digital economy has generated a range of new business, operating and financial models. Getting things right for the future means embracing these new models and ensuring the facilitating environment for the digital economy to thrive. In fact, governments of some countries are already leveraging gig work to fast-track recovery, and supporting digital platforms that have been able to be more flexible and agile than other industries (such as those with heavy physical infrastructure investments).

 

And it is not just that companies are making innovative use of robots and AI-powered droids and cashless transactions, or expanding into new areas such as telehealth, teleworking and digital education. It is also that people will increasingly expect and require digital services and experiences; for example, the demand for virtual reality tourism destinations and zoom conferences and workshops has exploded.

 

A prerequisite for digital transformation is to improve the digital infrastructure for extended coverage, speed, reliability and security, and to enhance cross-border digitalisation efforts.

 

Policies and regulations that are not conducive to a future digital reality need to be reviewed, including addressing privacy and data protection concerns and enhancing security mechanisms for digital payment systems. Importantly, building back better means preparing the workforce for a future of work that is a digital one. The Singapore Government, for instance, funds training for freelancers and self-employed persons to upgrade their digital skills. In Malaysia, the Youth and Multimedia Ministries collaborated to launch a MyGIG programme on two digital platforms aimed at supporting youth to succeed in the digital gig economy.

Online freelance service marketplace

The freelance revolution is large and growing, and COVID-19 and the shift to remote has been an accelerant. Upwork and Fiverr, both listed companies in the US, experienced a growth bump in April 2020 and are expanding revenues, talent, and client roster. Image sources: Upwork (top) & Fiverr (bottom)

LIM LIN LEAN

Lim Lin Lean is a development economist by training. She was Associate Professor in the Faculty of Economics at the University of Malaya before joining the International Labour Organization. At the ILO, her positions included being Deputy Regional Director of the Regional Office for Asia and the Pacific. Since retiring from the ILO, she has been working as a consultant with a position as Senior Visiting Fellow at the Khazanah Research Institute and serving on the Board of Trustees for the United Nations Office of the High Commissioner for Human Rights, and as Director on the Board of Women in Informal Employment: Globalizing and Organizing (WIEGO), which is a global research-policy network.

DECEMBER 2020 | ISSUE 7

Future-Proofing Our Recovery

  1. International Labour Organization. 22 September 2020. ILO Monitor: COVID-19 and the world of work Updated estimates and analysis Sixth Edition, https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/briefingnote/wcms_755910.pdf

  2. World Economic Forum 21 April 2020. Gig workers among the hardest hit by the coronavirus pandemic, https://www.weforum.org/agenda/2020/04/gig-workers-hardest-hit-coronavirus-pandemic/

  3. Department of Statistics (DOS) Malaysia. 2020. Special Survey on Effects of COVID-19 on Economy and Individual (Round 1), https://www.dosm.gov.my/v1/index.php?r=column/cone&menu_id=a0dyT2d5UmFMNEZJVTlmL0k5cFJNZz09

  4. Research Network and Support Facility (RNSF). 2017. Extending Coverage: Social Protection and the Informal Economy. Experiences and Ideas from Researchers and Practitioners, https://europa.eu/capacity4dev/iesf/documents/extending-coverage-social-protection-and-informal-economy-rnsf-book-5

  5. The One Brief. 15 April 2020. What the novel coronavirus means for the gig economy, https://theonebrief.com/what-coronavirus-means-for-the-gig-economy/

  6. https://gigworkersrising.org/get-informed/

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Leaders and changemakers of today face unique and complex challenges. The HEAD Foundation Digest features insights and opinions from those in the know addressing a wide range of pertinent issues that factor in a society’s development. 

Informed opinions can inspire healthy discussions and open up our imagination to new possibilities. Interested in contributing? Write to us at info@headfoundation

Stay updated on our latest announcements on events and publications

About

Leaders and changemakers of today face unique and complex challenges. The HEAD Foundation Digest features insights and opinions from those in the know addressing a wide range of pertinent issues that factor in a society’s development. 

Informed opinions can inspire healthy discussions and open up our imagination to new possibilities. Interested in contributing? Write to us at info@headfoundation

Stay updated on our latest announcements on events and publications

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