The gig economy is expected to keep growing, as Singaporeans start to embrace flexible work options and opt for freelance work for more income.
During the Committee of Supply (COS) 2022 earlier this year, Senior Minister of State for Manpower Dr Koh Poh Koon said that the government has been progressively strengthening support for gig workers over the years.
Such support includes enhanced Workfare payouts for lower-income gig workers and working with insurers to ensure coverage for this segment of the workforce.
Dr Koh cited an Institute of Policy Studies (IPS) survey that polled 900 platform workers – it found that 84 per cent of these workers were worried about saving for retirement.
The Advisory Committee tasked to address issues faced by platform workers is considering the idea of making Central Provident Fund (CPF) contributions mandatory for gig workers to support their retirement and housing needs, and platform companies like Grab and foodpanda will have to chip in if that happens.
The rise of gig work
Covid-19 has accelerated the demand for platform services. But gig workers were already out and about before the pandemic – as early as five to 10 years ago – when platform companies like Grab, Gojek, foodpanda, and others entered the scene.
In 2017, then Singapore Manpower Minister Lim Swee Say commented during the COS debates on how the CPF has served Singaporeans well in supporting their retirement, housing, and healthcare needs.
He noted that the government expects CPF balances to keep improving in the years ahead, with wage growth and a higher labour force participation rate. The Minister then spoke about the gig economy and its workers.
“These are online labour-sharing or capital-sharing platforms,” that serve as intermediaries to match or connect service buyers with workers who take up these short-term jobs, he said.
On the economic front, these platforms create opportunities for businesses, workers, and customers. Businesses can tap on on-demand workers and serve customers more flexibly to reduce costs and increase revenues. For workers, they can earn an income under a more flexible work arrangement.
The Manpower Ministry back then was already closely monitoring the potential impact on the long-term well-being of the workers.
“Are gig workers adequately protected under Singapore’s labour laws? Will they be able to save enough for their housing, medical, and retirement?” These were the questions raised.
Surveys also reveal that four out of five freelancers do freelancing as their preferred choice. The freelancers cited more freedom, the ability to earn extra income, and being able to spend more time with family as reasons why gig work is a favourable choice.
What are gig workers concerned about?
Gig workers, are known as own-account workers in labour force surveys and are considered Self-Employed Persons (SEPs) by the CPF and Inland Revenue Authority of Singapore (IRAS).
In 2016, the number of primary freelancers was 167,000 – also categorised as workers who freelance as their main job. Secondary freelancers – those who freelance part-time alongside other jobs – when added into the mix, brought the total number of freelancers in the country to 200,000. This included students, housewives, and retirees.
In 2017, the total number of freelancers rose to 223,500. There were about 10,500 gig freelancers in the private hire car service and 10,000 others were freelancers in industries like media, consultancy, and food delivery.
In 2019, the total number of freelancers was 211,000.
In 2022, the Manpower Ministry stated that the proportion of SEPs has remained stable at between eight and 10 per cent over the past five years.
But we note that gig economy platform workers now make up about three per cent of Singapore’s workforce, or about 73,200 workers. This includes private hire car drivers and delivery drivers. Comparing 2017’s number of gig workers in private hire car service, food delivery, and others (around 20,500 workers), it shows a significant increase in workers in this segment, excluding other types of roles.
According to surveys and research from the government, the top concern freelancers have is whether they can find sufficient customers.
Other main concerns are over a lack of income security, timely payments from their clients, and savings for housing and retirement. Many of the younger people who start gig work as their first jobs have problems buying their first homes due to low CPF funds.
Platform businesses have been stepping up their support for the gig workers. For example, in March this year, Grab, together with Intellect and Ngee Ann Polytechnic opened a new mental wellness programme for the workers. The programme runs monthly and is curated with gig workers in mind. It aims to be a form of mental health support for its platform freelancers.
However, many gig workers still feel that some aspects of their jobs still lack the proper care given to them – there’s no standardisation in the remuneration across the board and welfare support.
What is the government planning to do?
Last year, the government set up an Advisory Committee on Platform Workers and a public consultation on strengthening protections for these workers.
During COS 2022 in March, the government said it has offered eligible lower-income SEPs enhanced Workfare payouts of up to S$2,800 in 2023. The government also worked with insurers to introduce medical leave insurance to cover self-employed drivers and riders.
Mediation services are provided to SEPs to address disputes with their service buyers and they can have their rights enforced at the Small Claims Tribunal.
The government also recognised the concern of platform workers who feel that they are unable to meet the current and future needs of housing and retirement adequacy.
It noted that more than half of platform workers in the public consultation felt that mandatory CPF contributions to their Special and Ordinary accounts would be important for their housing and retirement needs.
The authorities said that appropriate measures will be developed to ensure compliance if CPF is made mandatory.
How will mandatory CPF affect gig platforms?
Some platform companies have raised concerns that such a move will result in a sudden increase in business costs, said Dr Koh.
An option being considered is a phased approach which will allow time for the platform ecosystem to adjust.
Some ride-hailing and food delivery workers have been pushing for mandatory contributions to their CPF. However, there are also some workers who prefer not to contribute to the CPF due to the lower income they get from the nature of gig work.
Dr Koh said separately in Parliament last month that the Advisory Committee (that is looking at how to better protect these platform workers) had received feedback that 55 per cent of the platform workers support compulsory CPF. The survey received 1,200 submissions.
“Housing was the most commonly cited reason for wanting CPF contributions, followed by retirement,” he said.
If CPF becomes mandatory, platforms will have to contribute.
“While this will increase their business costs, it is no worse off than any other company employing workers in a similar sector, such as in logistics and transport,” said Dr Koh.
“Besides, platform companies already contribute CPF for their management executives and administrative staff today – a point which many of these riders whom I engage with make as well,” he added.
Appropriate measures will be developed to ensure compliance if CPF is made mandatory, he had said. The Advisory Committee will be studying the possible solutions.
As Dr Koh said in the COS speech: “The eventual recommendations will contribute towards a more sustainable equilibrium – one where the costs of labour protections are more equitably distributed and shared across each stakeholder in the platform ecosystem.”
What will the CPF framework for gig workers look like?
For one, the gig worker CPF framework will be similar to regular workers – deposits will be for retirement and housing only.
Some Members of Parliament have suggested allowing gig workers to cash out the monies as and when they need to, and that was met with resistance from the Committee.
The Committee notes that there are already similar private savings products that are available in the market for everyone, including platform workers.
“It is common for returns to be commensurate with the length of holding the funds in their accounts. It is impractical to “have our cake and eat it” by allowing platform workers to withdraw and deposit on demand like a savings account, while still enjoying interest rates higher than what is offered by a fixed deposit account by the banks,” Dr Koh had stressed during the COS debates.
Allowing withdrawals on demand would also go against the objective of improving their long-term retirement adequacy by setting aside savings for old age and allowing the compounding of interest to take place over time.
Separately, the government applauded the general consensus among platform companies to want to provide their gig freelancers some coverage against work injuries. This will create standardisation in healthcare support for the risks the workers face at work. The Committee is exploring how the overall Work Injury Compensation Act (WICA) framework can be applied in this setting.
Under WICA, workers can claim compensation for medical leave wages and medical expenses for work-related injuries.
Featured Image Credit: SUSS