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Making the 'gig' economy work for workers

The challenge lies in offsetting the loss of benefits like healthcare and saving for retirement

The so-called "gig" economy is growing, where people can do independent work for multiple hirers in the span of a day or week. Online platforms like ride-hailing service Uber are one example.

These changes present opportunities for Singapore workers - and challenges.

One area of opportunity lies in Singapore's ageing population. Caregiver duties will be a growing part of life for family members with frail elderly relatives.

Traditional whole-day or half-day work shifts may not allow them to balance caregiving and work - but a gig economy might.

For example, a retired nurse may want to keep busy without having to work full shifts.

Short deployments at a clinic or as a private nurse could earn her extra income, while drawing on her lifetime of experience.

Online marketplaces can help workers with skills and time, matching them with areas of demand and need.

This is especially helpful for tasks that can be done remotely.

The gig economy can also help small firms which cannot afford in-house departments or full-time employees for work in areas like design, editorial or translation.

CHALLENGES FOR WORKERS

The traditional payroll relationship between employer and worker involves benefits such as sick leave entitlements and healthcare support.

Workplaces and payroll employment are a fulcrum for state regulation and intervention, whether in maintaining safety standards or mandating Central Provident Fund (CPF) contributions by employers. But the gig economy is changing this.

Delivery drivers can be hired as payroll employees - but now, the relationship can be re-defined as a contract for service: the driver signs a contract to provide delivery runs.

Fundamentally the same kind of work, yet the firm can shift many responsibilities and risks to the worker - whether CPF contributions, insurance, or compensation in the event of an accident on the job.

The firm reaps the same benefits, but the worker has become more vulnerable.

There are deep implications for labour relations, healthcare and retirement adequacy.

Policies such as CPF are linked to the employer-employee relationship, especially the employer's CPF contribution.

Yet, by redefining a worker as a "freelancer" or contract service provider, the employer can disrupt this and avoid paying CPF.

This has knock-on effects for home ownership, Medisave and retirement.

In an ideal world, the market would enforce discipline on firms, so that workers receive adequate CPF and benefits regardless of status - payroll employee, contract service provider, or gig worker. But labour markets can become segmented.

Even in a tight labour market, there can be groups of workers who cannot find work, or who are underemployed.

In contrast, a gig economy that takes good care of workers can, in turn, benefit employers, by drawing talent and skills back to the workforce.

These workers might otherwise have stayed on the sidelines due to commitments that get in the way of full-time work.

Singapore is small enough to reinvent policy nimbly so that workers' interests are well protected in a gig economy.

Here are a few ideas.

We 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.

If an employer treats a worker like an employee, then re-defining the job as "self-employment" should not be a loophole to avoid responsibilities.

This could act as an "operating system" to help workers build up CPF retirement savings even in the gig economy.

Once in place, it would open the door to policy measures. 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 facilitate employers to 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.

The idea of risk pooling is not far- fetched - MediShield Life already provides a form of portable medical insurance for workers, whether in the conventional payroll or gig economy labour markets.

Trade union collective bargaining and tripartism will be even more important in the years to come, to help rebalance the asymmetries of the gig economy.

The public sector can also help shape market norms by providing adequate benefits when hiring contract workers, while ensuring that every subcontractor gives their own workers a fair deal - regardless of how the job is defined.

Some of these suggestions may have seemed far-fetched a decade ago, as would have the notion of a gig economy. But history has shown that the world can change in unexpected ways.

We must keep up, and disrupt the disruptions, so that these changes can work for our workers.


  • The writer is a medical doctor and a Member of Parliament for Jurong GRC.
A version of this article appeared in the print edition of The Straits Times on November 26, 2016, with the headline 'Making the 'gig' economy work for workers'. Print Edition | Subscribe