Government’s self-employed COVID response is an important start, but not a solution

Last night the government finally responded to the clamorous requests to address the nearly 5.8 million self employed workers without any form of income protection and left most vulnerable during this crisis.

It’s a major step to address the vulnerabilities and challenges during this difficult time for the self-employed and the government should be applauded but it’s not a long term sustainable solution. It also leaves large questions and gaps with a significant number of people who don’t qualify or can’t afford to wait until June for payment.

Long before Covid-19 made going to work a life or death choice, gig workers were already decrying the lack of benefits. It’s not good enough that self-employed workers are not treated with the same respect or receive access to the same benefits and protections as employees.

The government alone can’t fix the widening protection gap highlighted in this crisis — only by working together with the gig platforms themselves can we do so. Our mission is to fix this and we think there is a much better, longer term solution by partnering with the gig economy platforms.

Gig Workers Benefits and Protections Should be for Life, Not Just During Pandemics

Ever since Uber sent out their first cars on to the streets of San Francisco in 2009 to begin testing a novel new business model that would become known as the gig economy, we have been in the process of shifting millions of workers to a new reality of what it means to be employed.

That reality meant that whilst workers were their own free agents able to dictate when and how long they worked, they would forgo worker protections and benefits to be their own boss. In more benign times and in the early days of the industry when hourly wages were higher, that trade-off was tolerable and fuelled the dramatic growth of the gig economy, which, within a decade of its introduction, was estimated to be worth $4.8 trillion worldwide in 2018, according to Staffing Industry Analysts.

Now, as Covid-19 spreads across the globe, the gig economy is facing a moment of reckoning. The pandemic has exposed the harsh reality of what it means to be a gig worker without a safety net and made clear that for the last decade as the gig economy has boomed bringing consumers convenience and workers jobs, we have avoided the tough questions: where is the financial safety net for those working in the gig economy? Whose responsibility is it to protect them, and how can they cover themselves? If self-employed people cannot work, should they have to rely on the welfare state? Should the welfare state pick up the cost of protecting workers whose productivity has fuelled the revenues of gig companies? Where should the balance lie if all three share the responsibility?

These hard questions must be answered. The gig economy is here to stay. The platform model hasn’t just rocked lower-wage industries, but has infiltrated higher paid professional sectors adding doctors, lawyers, management consultants and accountants to the growing roster of gig workers. The emergency steps taken remain limited to the crisis at hand. Sick pay and other worker protections need to be in place to cover the up and downs of everyday life, 365 days a year, not just when a major pandemic threatens the world.

The government can’t alone solve this. Proposed political solutions, such as universal basic income or a “gig minimum wage”, are not only impracticable and unaffordable for the government but also fail to keep pace with change.

Traditional insurers have also failed to keep up with the seismic workforce shift. The world has changed, but insurance policies have not. It seems obvious that they should be adapted when new markets emerge, but traditional insurance companies have failed to modernise their products and distribution channels. The result is that even the professional sector of the self-employed lack insurance cover, as the current products on the market are inappropriate, inaccessible and too expensive.

After three centuries of next to no innovation in the insurance industry, technology can deliver a solution that is accessible and affordable and fit for the specific needs of the self-employed. Current insurance products for the self-employed are very expensive, because every individual is risk assessed on their own, rather than their risk being pooled as part of a large group like employees are. Moreover, many of them don’t pay out on the first day you’re sick or injured. In fact, often you have to be sick or injured for a month or more until you are covered — not at all practical for the gig worker. We’ve specifically created sick pay insurance to cover workers from day one that is accessible through a tech platform, that helps amass a bigger risk pool and drive down cost. It can cost a gig platform less than the price of a cup of coffee per week to give a worker income protection.

For gig platforms, there’s an important role to play in shaping how the fastest growing workforce is treated. If the leading gig-economy platforms combine forces with the public and private sectors, we can significantly accelerate progress and build the safety net for the self-employed workforce, before it’s too late.