Gig work and the changing employment landscape
Since the global financial crisis, there has been a significant increase in the amount of contract, temporary and freelance work – dubbed ‘the gig economy’
The popular image of the gig economy worker might be young, funky Uber drivers or Deliveroo riders.
But as a whole new generation of young Australia workers enters the gig economy, questions are being posed as to how these people will fare financially into the future.
Experts say the gig economy creates new cohorts of workers who potentially won’t have enough retirement savings.
They also say gig work can expose workers to unethical treatment, the potential to be ripped off and with no access to compensation
According to one a recent study around 100,000 workers, or 0.8 per cent of Australia’s workforce, who make their living through the gig economy are likely to miss out on superannuation payments.
The Australian Industry Group said last year that 4.1 million Australians, or 32 per cent of the workforce, had freelanced at some point during 2014 and 2015.
In the US and Europe, the McKinsey Global Institute puts the numbers working in the gig economy today at between 20 and 30 per cent of the working population – and the numbers are rising.
In China, AliResearch says that up to 400 million Chinese may be self-employed in the gig economy by 2036, while in the US, Intuit Research projects the number of on-demand workers will double in the next four years.
The gig economy compounds the problem of Australian workers being left under-covered by their superannuation. According to Industry Super Australia, employer non-compliance in 2013-14 amounted to $5.5 billion. Over 2.7 million workers were affected.
According to Professor Sarah Kaine, of UTS University’s Centre for Business and Social Innovation, sham contracting is rife in the gig economy.
She says this involves employers claiming the worker is not an employee as defined in the Superannuation Guarantee legislation but is instead an independent contractor.
A recent Senate report into ‘wage theft’ found sham contracting was a serious issue for workers who will have most reliance on Superannuation Guarantee savings in retirement.
Professor Kaine says Uber is a case in point.
“Uber’s determination to classify itself as a technology company belies the relationship it has with its drivers. Uber exercises a high degree of control over conditions of work, pricing and performance expectations,” she said.
“Uber is a significant example due to the number of drivers it has attracted. The Australian Tax Office estimates that more than 100,000 have been paid for ride-share work in Australia in the past two years,” Prof Kaine said.
A recent case in the UK rejected Uber’s assertion that its drivers are self-employed.
The court ruled that workers were therefore entitled to a minimum wage, holiday and sick pay. The ruling, which Uber has appealed, affects 40,000 Uber drivers in Britain and will be a signal to other jurisdictions internationally, including Australia.
Professor Kaine said the current Superannuation Guarantee regime doesn’t adequately address the needs of gig economy workers.
“The regime needs to extend its definition of employees to cover “dependent contractors” to ensure payer obligations include these workers. The definition of employees is clearly too narrow to adequately meet the reality of changing work practices in 2017,” she said.
“Another significant threat to workers’ retirement incomes arises from the current exclusion from Superannuation Guarantee obligations where an employee earns less than $450 in a calendar month from an employer. By its nature, the gig economy has many workers who are at risk of exclusion under this rule,” Prof Kaine said.
Apart from the gig economy, casualisation of work means many lower-income workers and those with multiple jobs, including precarious workers, are excluded from the Superannuation Guarantee.
Professor Kaine recommends providing a second category of worker for Superannuation Guarantee coverage that would serve the interests of more workers while also maintaining the original intentions of the legislation and would reduce the capacity for sham contracts.
AMES Australia Senior Journalist