Shutting down gig economy won’t ease tough times

According to recently released figures by the Australian Bureau of Statistics, about 950,000 workers held multiple jobs in March.

It won’t surprise anyone to learn the number of people working more than one job is on the rise. With cost-of-living pressures intensifying, many households are finding it difficult to make ends meet. One obvious response is for at least one member of the household to take on another job.

According to recently released figures by the Australian Bureau of Statistics, about 950,000 workers held multiple jobs in March. This is out of just more than 14 million employed people. The number of multiple-job holders has risen by about 88,000 in just 12 months.

Of course, working more than one job is generally not easy, requiring extra effort and taking up more time. But here’s the rub: the way the labour market is configured, it’s not difficult for hard-pressed workers to pick up another job, often involving only a few hours a week and no precommitments, because of the flourishing gig economy.

Sadly, the Labor government’s intention is largely to shut down the gig economy because the jobs are not secure, they don’t always pay minimum wages and workers are unlikely to join a trade union.

The way to understand Labor’s forthcoming second tranche of industrial relations changes is to recognise Labor’s (and the trade unions’) strongly held view that the only legitimate form of employment is permanent employee of host employer. All other variations – casual, independent contractor, labour hire – are illegitimate and have to be curtailed or prohibited.

There is a grudging acceptance of the role these other forms of employment fulfil in a limited number of cases, but that’s about it. Employment relationships must be governed by employment/industrial relations law, not commercial contracts.

It’s worth taking a look at independent contractors and the gig economy to establish the important role they do play.

In August last year there were about 1.1 million independent contractors, making up 8 per cent of employed people. They work in several areas, the most common being construction, administrative/support ser­vices and professional, scientific and technical services (which takes in IT).

Interestingly, the number of independent contractors has not grown in line with the number of employed people. In August 2014 there were 993,000 independent contractors, accounting for 8.6 per cent of employed people.

As a result of two recent High Court cases, the legal position of independent contractors is settled: there is no real scope for the principles of employment law to impinge on these commercial contracts save in clear cases of sham contracting. (Sham contracting is an arrangement in which an employer deliberately connives to engage a person on a contract rather than as a direct employee.)

Sensing the possibility that the Labor government may be inclined to overturn these cases, the ACTU has released a highly misleading document, Explosion in Sham Contracting Shows Reform Needed to Protect All Workers. In fact, the analysis does not bear out this extravagant claim.

According to the ACTU, “This surge in sham arrangements has been aided by the rapid growth in gig and platform work through the pandemic, and two High Court decisions in 2022 that overturned the definition of employee, making it easier for big business to mislabel employees as contractors – a loophole enabling them to cut pay and conditions.” The document maintains there is more sham contracting than ever; sham contracting is defined as “not able to subcontract own work”.

But when you go to the questions asked in the survey, they do not relate to sham contracting at all. They are simple questions about whether the independent contractor had more than one active contract; whether they could subcontract out work if they wanted; and does the respondent have the authority on how to do their work.

In other words, the ACTU document is an unwarranted man­ip­ulation of survey results to “prove” a predetermined conclusion.

The ACTU campaign is also targeting the gig economy, with most of its participants working as independent contractors. According to the blurb, “gig workers lose up to $400 million per year in super because they are not classified as employees … And 45 per cent of transport workers in the gig economy (are) paid less than the minimum wage, according to the Transport Workers Union.”

Of course, there has always been gig work, ranging from the engagement of consulting engineers for specific projects to live performances on Saturday night at the local pub; from relief teachers to plumbers unclogging blocked drains. What has changed is the use of technology platforms to connect sellers and buyers, and these now cover a range of areas, including ride sharing, food delivery and household services. Think Uber, Menulog and Airtasker.

There is no doubt that the number of participants in these platform-based arrangements has grown significantly, reflecting the convenience and flexibility for sellers and buyers. Even so, the number of individuals who rely on these platforms for their principal source of income is small. In Victoria in 2020, for instance, it was estimated that less than 0.2 per cent were using the platforms as their main income sources; most of them had full-time jobs.

Having said this, there are some outstanding issues associated with these platforms, including the need, in some instances, to provide insurance protection in the event of service providers being injured during work. An independent dispute resolution procedure is also appropriate given the potentially arbitrary decisions by platforms to exclude some individuals or punish them in other ways.

But this is not what the ACTU has in mind. Its ambition is to have gig workers defined as employees and entitled to the full range of benefits, including minimum rates of pay, holiday pay and superannuation. How this would work is unclear – many individuals sign up with several platforms – but this is not deterring the union leaders.

The real danger is that we end up with the highly unsatisfactory British situation where gig economy service providers are defined as workers (not employees) and they are entitled to some, but not all, employee benefits.

The broader issue at the moment is the role the gig economy is playing in terms of offering flexible options for financially stressed households to boost their incomes to make ends meet, including paying the mortgage and other bills. We know from the principal platforms that the number of individuals signing up has surged, which is in keeping with this interpretation.

Unfortunately, Employment and Workplace Relations Minister Tony Burke is unlikely to be swayed by the need to keep this option open for as many individuals as possible. Rather, the second tranche of industrial relations amendments is likely to see several changes that will restrict the gig economy and cause some of the platforms to withdraw or reduce in size. That’s the inevitable corollary of misguided regulation.