The outsized growth of the gig economy in recent years has generated strong debate in politics and the general community around the issues of workplace protections, employment rights and financial security of gig economy workers. Now, an in-depth analysis of consumer spending data has revealed new insights into the impact of the gig economy, as discussed in the latest Actuaries Institute Green Paper, The Rise of the Gig Economy and its Impact on the Australian Workforce.
Listen to the summary podcast below:
The proprietary transactional data that data science firm Quantium analysed for the paper allowed the research to focus more closely on segments of the actual gig economy workforce and gauge its growth over time, and its impact on associated sectors such as private transport and meal delivery.
Despite its relatively small size, the gig economy grew nine-fold in the four years between 2015-2019, reaching $6.3 billion in total size last year.
This growth caused some cannibalisation of the private transport sector, but also drove private transport sector growth of 39% over that same time period.
Speaking on the Actuaries Institute Podcast with Public Policy Council Committee Convenor Anthony Lowe, Donald Freudenstein, a consultant at Quantium and the lead author of the paper, says the research confirms previous findings that gig economy workers are over-represented in more vulnerable sections of the Australian workforce – students, the formerly unemployed, and young age groups.
“Gig economy workers themselves, being classified as independent contractors, they’re not entitled to employer-paid superannuation,” Freudenstein says.
As independent contractors, gig workers also have no employment rights under the Commonwealth Fair Work Act to legal minimum pay rates, sick leave, or unfair dismissal protections.
A simulation in the paper shows that “if a worker spends five or ten years in the gig economy working full time, then they could be between $40,000 to $100,000 worse off in accumulated superannuation at retirement compared to a minimum wage earner,” Freudenstein says.
A sub-analysis of superannuation in the paper found that only 1.5% of gig workers make personal super contributions, which are particularly small relative to comparable workers.
However, discretionary spending among gig economy workers rose over the short term, particularly among workers from low-affluence bands.
During the period covering early COVID-19 lockdown restrictions in March of this year, spending on the gig economy declined severely, before increasing to 40% above pre-lockdown levels. This growth was driven by the meal delivery sector, which itself increased by more than 100% between August and October.
“There’s been some real significant growth and raises some interesting questions about how much of this gig economy growth will stick after this experience,” Freudenstein says.
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