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Flexible and vulnerable - the gig worker's dilemma

In the third article in our series examining the pandemic’s broader implications for society, Katie Frame looks at how worker classification has widened inequalities, and the role that investors can play in the recovery.

Fast reading

  • The pandemic has highlighted society’s dependency on the gig economy, and the exacerbated risks associated with precarious work 
  • Classification as an independent contractor means that wages exclude benefits that full-time or part-time workers would normally receive
  • Companies should ensure there are measures in place to compensate workers for lost pay if they are unable to work during the pandemic

The pandemic has highlighted society’s dependency on the gig economy to provide essential services, and the exacerbated risks associated with precarious work lacking basic social protections. In our previous articles in this series, we have addressed the impact that the pandemic has had on widening gender and racial inequalities. In this article we will explore how Covid-19 has had a disproportionate impact on those in non-standard or ‘gig’ work.

There appears to be a clear mismatch between society’s newfound appreciation and dependency on gig workers, such as through the increased demand for food delivery, and the protections that they are afforded in their jobs. Gig work provides the worker with flexibility, fitting around their schedule, and supplemental income, while the company benefits from the ability to control labour costs and respond quickly to changes in demand. However, the classification of the worker as an independent contractor means that wages exclude benefits that full-time or part-time workers would normally receive, such as a guaranteed national minimum wage, sick pay, holiday pay, pension contributions and health insurance. Gig workers also often lack the intangible benefits associated with jobs, such as career development opportunities.

It is this lack of social protection in the workplace that has exacerbated the risks to which gig workers and others in insecure jobs have been exposed during the pandemic. One study has shown that workers on zero-hours contracts and in other insecure jobs are twice as likely to have died of Covid-19 as those in other professions. Additionally, more than three-quarters of gig economy workers were concerned about health risks at work during the pandemic, compared with less than a quarter of other self-employed workers.

The lack of sick pay provision means that if workers fall ill, they may face choosing between losing their income or going to work while sick, increasing the risk of passing on the infection to others. Additionally, gig workers are more likely to be front-line employees - in the UK, 52% of insecure workers classed themselves as key workers. They face a double-edged sword, as they are more likely to be exposed to the virus through the nature of their work, while lacking adequate protections if they become infected.

Beyond the reputational and safety risks associated with gig work, legal risks continue to emerge. Recent legal proceedings, such as the ruling by the UK Supreme Court that Uber drivers must be classified as workers rather than self-employed and the ongoing debates in California about Prop. 22, further highlight the risks of inaction to companies and investors.

Our engagement

During the pandemic our engagement on gig and other contract workers has centred around company management of the most material human capital issues given the belief that increased productivity and business sustainability is achieved through investment in the workforce:

  • Fair pay - Companies should ensure that there are measures in place to compensate workers for lost pay if they are unable to work during the pandemic, for example due to their own health vulnerabilities, or if there is reduced demand for work on platforms (such as ride-sharing). This could be through emergency funds that are accessible to contract or gig workers, which could be funded by employees or the company, or a combination of the two. For example, Uber committed to matching all contributions to the Restaurant Employee Relief Fund. Additionally, companies should consider if it is appropriate to award additional hazard pay for those working in front-line positions and provide support for workers to access government financial relief schemes if they are available.
  • Health and safety - Companies should have measures in place to ensure that the appropriate type and amount of PPE (personal protective equipment) is readily available at no net cost to workers. Either the company pays for this or reasonably compensates workers where they may have to bear additional costs. Companies should also strive to put in place sick pay provisions for contractors and include pay for caring responsibilities, as well as extension options for employees who may be hospitalised with Covid-19. This could be through a variety of measures such as incorporating expectations into vendor contracts - as at Microsoft - through emergency funds that can be accessed in the event of illness, or through collectively-agreed insurance schemes.
  • Worker engagement - Companies should ensure that Covid-19 policies and processes are clearly communicated to and understood by workers. There should be clear independent channels for employees to raise their concerns, and companies should seek to engage with worker associations and unions to understand and respond to worker safety concerns.

Another key challenge for engagement on the treatment of gig and other contract workers is the lack of disclosure by companies. Often these workers are not included in company disclosures on workforce policies and performance, leaving investors unable to understand the extent of the risk to the business from precarious working conditions. Therefore, in our engagement we ask for enhanced transparency on the wider workforce, not just the directly-employed staff. Additionally, we seek to ensure that company actions go beyond rhetoric through the announcement of policies, and that companies regularly assess the design of their policies and procedures, as well as their implementation.

The pandemic has sharpened the focus on the risks that workers in the gig economy have faced for years. Companies and investors have a clear responsibility to continue to engage to ensure worker health, safety and wellbeing is prioritised, particularly for these most vulnerable workers. This will require the development of new forms of staff protection for gig workers, given their vital role in modern economies.  

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EOS Client Service and Business Development

Amy D’Eugenio,
Head of Client Service and Business Development, EOS