The Gig Economy — Infinite Nuance

Despite being financially comfortable and gainfully employed myself, one of the things I find myself becoming increasingly opposed to is the growing ‘gig-ification’ of work and/or what I see as the increasing abuse of workers (which are sometimes the same thing and sometimes two separate issues). So much has been said about this in the media I really don’t have anything to add to the general issue. I believe that generally:

a) Companies are increasingly outsourcing their responsibilities onto workers by making them contractors, freelancers, casuals, or other ‘piecework’ styles of pay. The company demand higher standards and effectively wields much greater power. I think that there are several benefits to this trend because it aligns workers with the firms really well. However, it does not align the firm with the worker (worker is expendable and easy to get rid of), and appears to lead to a significant decline in the workers’ financial position in the limited # cases I am familiar with.

Edit: Richard has pointed out below that I am confounding ‘worker/ employee’ with ‘contractor/freelancer’ etc. To be clear, my concern is that in many cases a ‘contractor’ is an ’employee by a different name’. You can read more about this in my second comment down below.

b) Companies are increasingly dodging their responsibilities with regards to things like sick pay and superannuation, especially with the contractor and piecework style workers, but also casuals. This is especially obvious in cases where casuals work for 30-40 hours a week, a rate which in my opinion should justify holidays and sick days (casual leave loading notwithstanding).

c) Workers have lost their ability to collectively bargain partly due to the decline of unions but also partly due to the increasing tenuousness of many jobs, which make it hard to take a stand because it is very easy and inexpensive to fire a casual or a piecework employee. (ironically, I’m also vehemently opposed to some unions who I think have effectively ruined the union movement for everybody, but that’s another story).

However, none of this is new, and in fact it’s been going on for years. I have two specific stories in mind:

The artist (new economy gig work)

First, a friend of mine is a… well, I’m not entirely sure what he does, but he’s a graphic designer of some sort and does drawings (?) of logos and various things for companies. He works for a leading firm in a large city. However he’s only been able to achieve employment on a piecework rate – he gets a flat fee per logo-thing that he does. If there’s no work, he doesn’t get paid. He doesn’t get superannuation, sick pay, holidays, or severance. (I think the company tried to make him responsible for contributing to his own superannuation but I don’t really understand the mechanics of that). However, also, due to the nature of his work, he can hardly go and work for a competitor – the market is competitive and there are only a couple of large firms. He thinks he would be fired if he freelanced for major competitors as a way of lifting his wage, and I am inclined to agree. He has been doing this role for about 3 years for around 5-8 hours a day, and he told me he earns about 50k gross before tax.

The thing is that he receives regular instructions from the company, updates about the business, must adhere to company policy and culture, he speaks to major customers, and so on. At least from my uneducated viewpoint (I have minimal knowledge of labour regulations) he looks like he’s being used as an employee albeit with none of the benefits.

I think that that is quite unfair, not least because he’s in a very marginal position if he ever gets sick or what have you. I’m not against flexible work arrangements – quite the contrary, i think 9-5 in most jobs is deeply inefficient and soul destroying – but I think it could be done a lot better.

The foreigner (old economy gig work)

I have a different friend who is married to a foreign citizen. His partner is in Australia on a partner visa and she has full working rights until a final decision about a permanent visa is made (takes about 2 years?). She has been rejected from 112 job applications over the past year, including Woolworths, cafes etc, despite having an outgoing personality and being very smart (she speaks 4 languages), because she is not a permanent resident. Now, this couple told me over the weekend that she finally got a casual job delivering catalogues for Salmat Limited (ASX: SLM). They were really excited about it and I was excited for them too (they are struggling on a single salary) but when I got home all I could think was a) how bad the job was from a financial perspective and b) how marginal Salmat appears from a regulatory perspective.

This is the job:

Drive to warehouse, collect and manually load 2 x trolleys of brochures about 1.5m high in your car (say 30min round trip?)
Drive home, fold brochures a certain way (2 hours)
Walk/drive to specific area you are delivering in (30min round trip?)
Deliver brochures (2 x 3-4 hour walks; there is about 80kg of brochures)

Total pay: $55-$57

And hey, $57 extra a week is great if you’re trying to feed and house two people on $40k a year, and one person is unemployed. But you’re looking at 10-11 hours of work, plus petrol and wear and tear on the car, etc (car stuff is specifically a work-related expense because you are transporting work-related materials). So in the end, Salmat gets labour for $6 an hour plus free transport. This has been going on for years and years, and I am entirely unsure how it is legal. Pundits often discuss how much Uber, Airtasker etc are going to struggle from regulation, but from where I sit Salmat looks as vulnerable as anyone – not least because higher wages could make the business unviable, because it will be too expensive to deliver catalogues.

I have two very simple solution that could improve the quality of life (at least in later life) of contractors and the security of the federal pension liabilities without requiring major change:

Mandate minimum savings for superannuation from each fee paid (for freelance/piecework workers). If you can be expected to pay tax on everything you earn, it is not much harder to expect superannuation contributions too. There should be some sort of minimum check to see that the ~10% withheld for super doesn’t put people below a poverty line. The responsibility should be on employers (by ’employer’ I mean – the person that pays the contractor/pieceworker etc) to make the contribution to avoid corporate fuckery. It would be relatively simple for Airtasker, Uber etc to integrate some sort of superannuation function to their wages – all that has to happen is for 10% of the fee to be automatically siphoned off to a nominated super account.
Mandate paid sick leave and holidays for employees on more than x (5? 10? 15?) hours work per week

The specifics are negotiable. But fundamentally in a prosperous country like ours, I think many of us would agree that if you are clearly an employee of a company, even if your title is ‘contractor’, (rather than a truly independent/piecework/consultant person), regardless of how many hours you work, then you deserve superannuation, holidays, and sick days in proportion with your work. I have seen a number of listed companies increasingly tout their use of ‘contractors’ to enhance performance and lift productivity and I think it is all bad.

Neither of my suggestions come close to fixing the issue but it would be a good start and could at least make these gig workers more secure in retirement. Security in the here and now is a much greater challenge.

I would be interested to hear thoughts on the matter in the comments or via email. Saying something banal like ‘the gig economy improves flexibility for workers‘ does not count unless you also specifically attempt to resolve the increased financial vulnerability (which has far-reaching implications for the pension/super balances in retirement, govt healthcare expenditure, and so on) as well. I would be interested to hear of circumstances in which gig-work has lead to an improvement in financial position for employees also.

I have no financial position in any of the companies mentioned. For clarity, I have also never had any kind of relationship with Salmat or any Salmat employees whatsoever – apart from my friend’s spouse who delivers brochures.