Gig workers play a vital role in the UK economy, contributing approximately £20 billion every year, according to the Centre for Research and Self-Employment. These independent contractors carry out essential work in daily society, from delivery drivers and couriers to graphic designers and even university lecturers.
In March 2023, one-fifth (22.1%) of the UK workforce or 7.25 million people worked at least once a week in the gig economy, research by the Office for National Statistics (ONS) has found. That’s up 50% on 2021, based on research by the University of Hertfordshire, with the number expected to top 14.86m regular workers by 2026.
Yet gig workers are often lowly paid and because they work for themselves, they don’t enjoy many of the rights and benefits that their employed counterparts do. For example, they don’t receive a pension, holiday or sick pay, or medical coverage.
Many also tend to be on zero-hour or short-term contracts, dependent on how much work is available, getting paid for tasks completed rather than the time they have worked. Worst still, because they are freelancers, their jobs are more dispensable that full-time workers.
Rising living costs
To compound these financial pressures, gig workers have also had to contend with rising living costs, driven by high inflation and energy prices. This has pushed many to the brink, particularly those who have had to take on multiple jobs just to make ends meet.
Once they have forked out for work-related expenses, such as fuel or obtaining a private licence, they don’t have much left over from their pay packet. Reflecting this, a Leigh Day survey of 860 gig economy drivers found that 81% didn’t think their wages covered the cost of living, with 73% saying they had worked more than six days without a day off.
As a result, eight in 10 gig workers have been pushed to cut their spending on groceries and energy, according to the Independent Workers of Great Britain Union. That compares with 35% of those in average salaried jobs who have reported having to reduce their expenditure on household essentials, as per the ONS.
A study by Commonwealth has also found that around 70 to 80% of U.S. gig workers had $1,000 or less in savings and more than 40% had no savings at all. Furthermore, three in four had experienced a financial hardship of more than $1,000, while 79% said that it had prevented them from working.
This situation has been further exacerbated by a lack of access to mainstream banking and financial products because of their employment status. Many traditional credit scoring models view gig workers less favourably than full-time employees, even if they have never been in the red.
The net result is that many gig workers are rightly worried about their job security, with a high turnover rate in companies. Additionally, they feel that they aren’t being heard and just want to be treated well.
While employers have no obligation to help gig workers during the current economic downturn, many do so because they realise the value that they bring to their organisation. Especially with many organisations having to make staff cuts during the current downturn, gig workers have stepped up to fill the gap.
Pay reward
The first step is to recognise the service that gig workers provide. That means giving them fair pay that reflects their hard work and endeavour.
As well as giving them equitable pay, companies should help them to cover the cost of other expenses. That may include fuel or vehicle repairs.
It’s also important to make sure that they have a steady stream of work to keep them busy at all times and, thus, continue to bring revenue in. The more regular the work, the more reliable a service they will provide in return.
Where appropriate, such as in the food delivery industry, employers should also provide gig workers with access to free or discounted meals during their shifts. If possible, they should reduce the burden further by putting on free transport on major travel routes, such as shuttles.
South African firm ifood has gone the extra mile by providing pit-stops for drivers to stop for a drink and a rest during a shift. Hubs like these could be extended to include vehicle maintenance and the like in the future.
Training opportunities
Employers should also look for opportunities to provide training and upskill gig workers to qualify them for higher paying roles. This can be done on a one-to-one or group basis.
In addition, where possible, although not usually provided because of their status, they should seek to provide other benefits outside of financial assistance, such as wellness programs and therapy. If their mental state is good then they are likely to be more productive and, thus, enhance their earning capability.
Better payment access
One of the most useful ways that businesses can help their gig workers is by providing them with access to payment. With many not knowing when they will receive their next pay cheque, it puts a big strain on them both financially and mentally.
The best way to do this is through the use of technology such as instant payment apps to give them access to the pay they are due as soon as a job has been completed. Or, if they are short or urgently need money during a lean period, they can request it upfront, with the deficit being covered once they start earning again.
Other technology that can benefit them includes money management tools. These range from open banking and budgeting capabilities and financial planning to credit building and self-assessment tax returns apps.
This extends to face-to-face financial advice and guidance too. There’s also the option to provide targeted online seminars and workshops.
All of the platforms used must be fair and transparent. Gig workers can better manage their finances if they’re more easily able to see what is happening.
By enabling gig workers to flourish, the wider economy benefits also. As increasingly more services continue to go online in the wake of the Covid-19 pandemic, so the gig economy will be even more important than ever. It’s, therefore, vital that employers safeguard their futures financially.
