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EconomicAffairs

Managing the gig economy

The future of work has been a hot topic over the past year, and much has been said about how important it is for workers to keep upgrading their skills so that they remain relevant amid the inexorable march of technology.

One aspect of this future that has been less discussed is how the nature of work itself is changing.

That is, we are facing a future where companies could increasingly offer contract-based, short-term "gigs", in place of permanent jobs.

Nowhere is this more evident than in the tech sector. The unofficial mascots of this so-called "gig economy" are the Uber driver and the Foodpanda deliveryman.

Neither is a salaried employee, but independent, self-employed workers who use the Uber or Foodpanda platform as a medium through which to get gigs - whether it is a paying passenger or a customer who would like food delivered to his home for a fee.

On the surface, this seems like a marginal trend, a way for people with spare time to take up jobs on the side to earn some extra cash.

However, the gig economy is growing, and is spreading across many sectors beyond technology.

There are now Uber-like third-party platforms acting as the middleman to connect healthcare workers to patients and food and beverage staff to restaurants and hotels.


ST ILLUSTRATION : MANNY FRANCISCO

Workers who take up such gigs are not listed on any company payroll, and so neither the third-party platform nor the business that uses their services has to offer them health benefits or contribute to their Central Provident Fund (CPF) accounts.

It is not hard to imagine a future where businesses, in a bid to save on headcount costs, might use third-party platforms to find freelance workers of all stripes, whether accountants, programmers or salespeople, instead of hiring full-time staff.

The good news is that most people today are involved in the gig economy because they want to be independent and not because they have no other job options. According to the McKinsey Global Institute, 70 per cent are independent workers by choice.

Institute director Jacques Bughin added: "There are so many more people willing to become independent workers by choice - with independent work as a source of primary income. This segment is growing fast, at 30 per cent a year."

This rapid growth raises questions about how the Government should help ensure security for rising numbers of gig workers and what responsibilities companies should have in this future.

CHALLENGE FOR POLICYMAKERS 

One basic problem facing governments that are grappling with the gig economy is simply that there is little data about it.

In a report about the global gig economy published in October, McKinsey & Co wrote: "Any changes in policy shifts have to be based on evidence, and what is available today is problematic. Governments need to conduct more regular surveys to gain a better understanding of the many types of flexible arrangements that now govern work, with up-to-date categories and criteria."

Beyond collecting better data, one of the largest looming questions is whether independent workers have an adequate social safety net, it added.

This was also highlighted by Deputy Prime Minister Tharman Shanmugaratnam, who said at the McKinsey Innovation Forum in October: "I'm not yet a fan of the gig economy."

The worry is more about the less-skilled - those workers who may have to take up gig after low-paying gig because they have no other option, and who may suffer from a lack of security in their retirement years as a result. Already, there are reports of gig workers banding together to demand better working terms. Yasmine Yahya

Hiring such workers "serves the interest of the company", he added, which is "pushing risk onto the contract worker" - a dynamic, he said, that does not make for a good social model.

He added: "We've got to avoid a continuing drift - risk being passed from companies to workers, who actually can't take much risk - the risk of instability in wages, and the risk of not being prepared for retirement because of a lack of social security contributions."

Writing for The Straits Times last month, Jurong GRC MP Tan Wu Meng called for nothing less than reinventing policy, to ensure workers' interests would be well protected in a gig economy.

He noted, for example, that the Government could test new ways to assess an employer's CPF contribution responsibilities.

"Imagine a formula that looked at the hours of work spent on micro-jobs, or the remuneration each month from a contractor arrangement, then specified how much the firm should contribute in CPF for the worker," he wrote.

Once in place, it would open the door to policy measures, he added.

"What if a minimum employer CPF contribution were specified, for each hour worked or each unit of labour?"

This could also be a platform to help employers purchase insurance and pool risk, so that workers are not left in the lurch should a workplace accident occur, or without pay if urgent sick leave needs to be taken, Dr Tan wrote.

COMPANIES HAVE TO STEP UP 

One start-up, MyWork, is already looking to make this happen.

Founder Rebecca Chiu believes the very technology that has brought on the gig economy could also help address the issues that it raises.

The app she created is a third-party platform that connects independent workers with companies that need their skills.

Its upcoming, upgraded version will also include a CPF calculator and provide both the worker and the companies that hired him with payslips that include the CPF payable.

So if, say, the worker took up various gigs at five businesses in a month, the app would calculate, based on how much time the worker spent and was paid by each, how much each company should contribute towards his CPF account.

MyWork cannot enforce this - the employers who use the app could ignore the CPF contribution if they want. But Ms Chiu believes making them aware is a step towards creating a healthier environment for the gig economy.

She really wants the gig economy to work out for Singapore's own good. After all, she also runs the Soi 55 chain of cafes and relies on gig workers too.

"Businesses, particularly retailers and food and beverage companies, are constantly facing pressures of shortage of staff. This is happening as there is a mismatch between the jobs that are available and the people available to fill these jobs," she noted.

"We understand that the move to a gig economy worldwide calls for new government policies to regulate this new market. However, the policies drawn up in response should not serve to hinder the many benefits that such disruptive technology can bring, such as cost savings to businesses and flexibility for independent workers."

If the concern is that independent contract workers do not contribute to CPF, then an appropriate policy response may be to expand the CPF provisions to cover the self-employed, Ms Chiu added.

"If the concern is tracking, there is no better place than the digital world with a platform that tracks all jobs and payments accurately. If the concern is medical coverage, let's look towards some form of national insurance to cover independent workers."

Ms Chiu and her MyWork team have already met insurers to explore ways for MyWork to buy insurance policies in bulk for gig workers on their platform.

This means the companies which hire them for short-term gigs will not have to work out the complexities of who should contribute how much towards a worker's policy.

If MyWork's example is heeded across the corporate and start-up world, that would certainly go some way towards creating a more secure gig economy for Singaporean workers.

WHAT ABOUT THE WORKERS? 

Frankly, there is little workers can do to better equip themselves for the growth of the gig economy, beyond what has been advised time and again - upgrade one's skills and stay relevant.

Highly skilled professionals could very well turn the gig economy to their advantage, picking a series of attractive, well-paying short-term jobs to fit their schedule and lifestyle, earn enough to buy their own insurance and still have plenty of free time.

The worry is more about the less-skilled - those workers who may have to take up gig after low-paying gig because they have no other option, and who may suffer from a lack of security in their retirement years as a result.

Already, there are reports of gig workers banding together to demand better working terms.

A group of riders in Britain took legal action against food courier platform Deliveroo last month, to demand workers' rights.

Uber has faced similar action in various cities where it operates. Earlier this year, two London drivers took Uber to a tribunal over such demands - and won.

In its ruling in October, the Central London Employment Tribunal found that the drivers should be considered Uber employees and entitled to rights such as holiday pay, a guaranteed minimum wage and breaks.

While this could have drastic implications all over the world, Uber has said it will appeal against the judgment and so the issue is still up for debate.

In Singapore, a new labour association has taken steps to give gig workers a collective voice.

The National Private Hire Vehicles Association (NPHVA), which was officially registered in May, signed an agreement in September with ride-booking app Grab to better protect the welfare of private-hire drivers. It has also approached Uber to work together.

NPHVA members are also part of the National Trades Union Congress (NTUC) and enjoy benefits such as free insurance, skills training support and bursaries for children.

This is a promising move towards building a gig economy that works for both companies and workers, one that should be replicated across other industries.

Bodies such as NTUC and the Singapore Workforce Development Agency already have initiatives to help freelancers find work and upgrade their skills.

Perhaps they could do more to empower such workers with basic rights and protection, as well as knowledge about how to build a retirement nest egg while juggling gigs.

It is time for Singapore to take a much closer look at how it should deal with the gig economy before it becomes a behemoth that is too big to manage.

A version of this article appeared in the print edition of The Straits Times on December 28, 2016, with the headline 'Managing the gig economy'. Print Edition | Subscribe