Why is it called the gig economy and what does the gig economy mean for you?

The rapid growth in the gig economy suggests that this is the future of work, raising the question of whether a lack of job security, lower pay and fewer benefits is the future we want to build?

Gig-economy work and zero-hour contracts have similarities. Both treat workers as contractors and offer no guarantee of pay. Gig economy roles are normally paid per piece — such as a set rate to deliver a package or drive a fare to a location. Zero-hours contracts are paid hourly, but with no set minimum. Both are the result of companies trying to cut or limit staffing costs. Both can leave workers unsure how much they’ll earn – if anything. Both are not so well hidden exploitation ignored by government.

What’s the problem with the gig economy?

The companies ruling the gig economy say they bring the flexibility to work whenever you like. Critics — which include many of those working for the companies — argue that not only do workers lack protection and fair pay, but the roles aren’t as flexible as they seem, as workers are incentivised or pressured to work when the companies need them.

Workers are not paid benefits such as holiday or sick pay. Many reports suggest some aren’t making minimum wage. That’s legally possible because gig workers aren’t seen by the companies they work for as employees but contractors.

What are the consequences? 

When employees are underpaid, the government earns less in taxes. The loss is calculated at billions of dollars annually. If it is possible to calculate precisely as this “industry” is poorly regulated and controlled.

People “employed” in gig economy are not able to organise into unions. That leaves them exposed to cruel exploitation, not seen since IXX century.

As number of those forced to become part of the gig economy is growing we will see other negative impacts. These people practically have no chance of getting a home loan. Their superannuation payments are not enough to provide them with a decent retirement. There is also a question of some of them not getting superannuation at all.

Let’s summarize the issues

  • Lack of benefits may be the biggest downside. A gig worker won’t have health insurance or other benefits they would get from working as full-time employee
  • By labeling workers as independent contractors, a hiring organization will not need to pay those workers minimum wage, deliver benefits or pay for overtime.
  • Work-life balance can be disrupted if the worker isn’t used to making their own schedules.
  • Because temporary employees are cheaper to hire, the gig economy may make it harder for full-time employees to develop their careers.
  • Inconsistent income can also be an issue. Having enough work to maintain a stable income from gigs can be a continuous worry in terms of job security.
  • Taking on too many gigs may also add to difficulties in scheduling and may lead to burnout.
  • It will be more difficult to maintain relationships between workers, employers and clients long term.

Australian consumers and workers have embraced the ‘gig economy’. However this has spurred legal debate regarding whether these workers are employees or independent contractors. Only time will tell what approach the Australian government will take.



15 July 2020

Online platforms such as Uber and Deliveroo in Victoria have deliberately framed their arrangements with workers to avoid regulation while other businesses carry the cost of complying with workplace laws, reports The Age citing an inquiry into the gig economy. On September 2018 the Victorian Government announced the establishment and Terms of Reference for an independent inquiry into the Victorian on-demand workforce. Former Fair Work ombudsman Natalie James led a two-year investigation into Victoria’s gig economy at the behest of the state government, after widespread concerns were raised about the treatment of on-demand workers.

While some appreciated the flexibility on-demand work provides, James found the uncertain status of workers, who are not classified as employees and therefore do not qualify for workplace entitlements, protections and obligations, was at the heart of the system’s failures of workers. James said the federal government was best placed to drive change, given its responsibility for the national system of workplace laws. She recommended the development of a code of conduct to better protect on-demand workers, the removal of barriers to collective bargaining, and a one-stop-shop support agency to help workers when disputes arise.


Albo makes big gig economy policy pitch

Current LNP government’s position is clear and needs no clarification. They had many years to fix this issue. Their inaction speaks for itself.

It is time for Australian electorate to take this issue very seriously. It is affecting much and many more than just people forced into arrangements that are pure exploitation. Where is Australian “Fair Go” here?

Social Justice

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