When precarity meets pandemic: Gig work during COVID-19
This article was co-authored with Elvis Wong from Innovate Financial Health
A new survey of the financial health of Canadians shows that the COVID-19 pandemic is hurting individual finances across all income levels and regions of the country but that self-employed, or “gig”, workers are being hit the hardest.
The survey was carried out in early April by Innovate Financial Health and Bounc3 Ltd. The aim was to mobilize data rapidly in order to provide a snapshot to governments and other policy makers of how Canadians are coping financially in the midst of the pandemic.
Most survey respondents (75%) believe that the COVID-19 pandemic will have an adverse impact on the financial well-being of themselves and their households. Some state that it would take them months, if not years, to recover financially.
The survey indicates that many Canadians (39%) are seeing a decrease in their household incomes since COVID-19 began as a result of lower salaries or wages, bonuses not paid, or reduced working hours.
Those who rely on income from investments are seeing the value of their portfolios, and their investment income, drop significantly. Some older survey respondents said that, as a result, they would defer retirement because of severe declines in their investment portfolios.
Gig workers, those earning income outside of traditional, long-term employer-employee relationships, were the hardest hit. Some 83% of respondents in this category reported that their incomes had decreased, largely due to cancelled contracts and deferred payments for work previously carried out.
Canadian gig workers are also being hit harder than gig workers in other global markets. In the US, 62% of gig workers saw their income decrease and in the UK it was just 42%.
“Prior to the current pandemic, millions of Canadians were already financially vulnerable,” said Elvis Wong, Managing Director of Innovate Financial Health. “Now, gig and informal economy workers, those already at the economic margins, will be and are being hit hardest by this crisis. COVID-19 has quickly uncovered the gaps in our approach as a country to household financial insecurity and the missing links in our social safety net.”
The survey also shows that while gig workers may be the most affected by a drop in their income, relatively few of them (about a third) have applied for emergency benefits offered by the government. This was likely because benefits like the Canada Emergency Response Benefit (CERB) initially only covered workers who had not generated any income for 14 consecutive days prior to applying, not those workers who had worked during that period but who had significant reductions in earnings.
Recently, this gap has been addressed with the CERB being extended to cover workers whose monthly income has been reduced to $1,000 or less. With this change, it is likely that there will be a higher uptake of this benefit amongst gig workers, who report that they critically need the support.
Despite the survey showing hardship for many Canadians, most respondents remain optimistic about their future. Over 85% of respondents said that they fully expect to bounce back from the adverse financial effects of the crises. This optimism was consistent across all income levels, age groups, and employment types (e.g., gig and full-time workers). This optimism is important as it can power the post-COVID economic recovery.
What more could be done?
After analyzing the survey results, Innovate Financial Health and Bounc3 say that two broad measures to mitigate the economic impact of any future crises similar to the pandemic come to the forefront.
“First, the experience of gig workers during COVID-19 highlights the need to revamp our emergency response measures to ensure inclusivity and fairness,” said Dr. Olga Morawczynski, CEO of Bounc3. “Gig workers must be covered by government benefits from the onset, and these benefits have to be adjusted to better suit the realities of gig workers. Income replacement programs like CERB should not exclude those who have seen significant decreases in their income but are still earning something.”
Second, said Wong of Innovate Financial Health, “our social safety net needs to be revamped. If current trends in a reduction in the number of infections continue, it might soon be time to shift our focus to planning for equitable economic recovery, where the needs of gig workers should be given equal consideration and where our benefits system goes through a radical reform.”
Both Wong and Morawczynski say that the private sector has a vital role to play in this process. In their view, any company that uses gig workers should be responsible for contributing to their financial security. This could mean paying into a portable benefits scheme where workers access a range of non-statutory employment protections from sick leave to extended health insurance. These benefits could be retained by workers even if they move jobs or become unemployed. Such a benefits scheme would provide gig workers with the financial buffer to financially navigate their next big crisis and build financial resilience in the future.
Methodology
The survey was deployed on April 6, 2020 and close to 300 respondents across Canada participated in it. The majority of respondents was from Ontario (72%) followed by British Columbia (9%), Alberta (5%) and Quebec (5%). Most respondents resided in urban areas (70%), and a small portion lived in the suburbs (26%), and rural Canada (4%). There was variability amongst gross income levels with the largest portion earning between $50,000-$74,999 (26%) followed by $30,000-$49,000 (15%).
A similar survey was conducted across 8 markets (US, UK, Kenya, India, Nigeria, South Africa, Ghana and India) (see BFA). The survey can also be used to see how Canadians are navigating this pandemic compared to others around the world.
