Economy, explained.
The phenomenon of Uberisation epitomises the transformative power of digital platforms in reshaping the nature of work (Rowan Freeman/Unsplash)
The new world of on-call, contract and temporary work is only sustainable if it is fair and safe for those who power it.
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The future of gig workThe future of gig work
The gig economy – characterised by on-demand, freelance and short-term employment in which service providers connect with consumers through mobile apps and websites – is revolutionising the service industry. It includes ride-hailing, food delivery and professional services. The phenomenon of Uberisation epitomises the transformative power of digital platforms in reshaping the nature of work and reflects a broader trend where service providers connect directly with consumers, bypassing traditional employment structures.
The gig economy is an ecosystem where the contribution of gig workers to our societies, communities and businesses needs to be respected and reciprocated. And as the market continues to expand, important questions about workers’ rights and protections are being asked.
Australia is on the verge of enacting significant changes to improve conditions for its gig workers.
Gig workers, who form the backbone of this economic model, typically operate as independent contractors rather than traditional employees. They use their own assets and tools to deliver services. They do not enjoy the same benefits and protections as employees, such as a guaranteed minimum wage, paid leave or a pension plan. Instead, they have greater control over their work hours and can choose to work for multiple companies simultaneously. The digital economy provides these flexible work arrangements and economic opportunities, but it also exposes gig workers to financial insecurity and underscores the need for regulatory safeguards.
Australia is on the verge of enacting significant changes to improve conditions for its gig workers. The forthcoming Closing Loopholes Bill aims to address minimum pay and unfair deactivation (the process of removing a gig worker from an app so that they are unable to earn income). The Fair Work Commission is slated to establish minimum standards for gig workers starting in July 2024. These workers will maintain their status as independent contractors. They won’t be entitled to the national minimum wage enjoyed by traditional employees, but they may gain access to minimum pay standards, penalty rates and superannuation benefits.
Gig workers often grapple with income instability and a lack of traditional employment benefits (Mufid Majnun/Unsplash)
This development reflects a push to bring labour conditions in line with the digital economy's demands. Australia's progressive legislation paves the way for a future where technology and labour rights coexist harmoniously.
Other nations are also actively working to bolster gig workers’ welfare. Governments and policymakers acknowledge the significance of addressing issues such as job security, access to benefits, and fair compensation. These initiatives represent a global trend towards recognising the importance of safeguarding the rights and wellbeing of individuals engaged in flexible, often precarious, employment arrangements.
European Union member states are in the process of crafting regulations designed to grant gig workers access to employee benefits. The aim is to establish a balanced and equitable competition between digital platforms and traditional bricks-and-mortar businesses. The draft rules introduce a pivotal framework for determining that digital platforms will be seen as employers if they meet at least three of seven criteria. These criteria include electronic performance monitoring, restrictions on work hours and tasks, exclusivity arrangements, capped earnings, rules on appearance and conduct, and limitations on subcontracting or substituting.
Despite their contributions to the economy, gig workers often find themselves without a safety net, exposed to financial instability and insecurity.
The Indian state of Rajasthan is introducing a new tax law targeting digital platforms. It seeks to bridge the gap between the growing digital economy and the wellbeing of its gig workforce. Under this law, up to two per cent of the revenue earned by digital platforms will be directly channelled into a welfare scheme designed to support gig workers’ welfare and social security. This initiative represents a noteworthy approach to addressing the needs of gig workers, many of whom grapple with income instability and a lack of traditional employment benefits.
The collaborative effort between the Employment Social Security Administration and digital platforms in Indonesia addresses the social security needs of gig workers, who can independently enrol under the non-wage recipient workers scheme with monthly premiums starting at $1.20. It covers critical aspects such as employment injury security, death security, and old-age security. A web-based registration channel has been established to simplify administrative procedures. The system also allows gig workers to manage premium payments through digital wallets.
Despite their contributions to the economy, gig workers often find themselves without a safety net, exposed to financial instability and insecurity. The time has come to recognise the evolving nature of work and take concrete steps to ensure that these individuals are entitled to fundamental rights. Collaborative initiatives and thoughtful regulation will bridge this gap, offering gig workers the security and protections they need.
About the author
Hilman Palaon
Dr Hilman Palaon is a Research Fellow at the Lowy Institute’s Indo-Pacific Development Centre. His work focuses on digital economy issues in the Indo-Pacific region, including financial inclusion, economic empowerment, and technology innovation.
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