COVID-19 has shown how desperately contingent and on-demand workers need sick pay and income protection.
This epidemic has sparked panic among the United Kingdom’s 6 million self-employed workers. It has exposed the harsh reality that so many freelancers, gig-workers, and solo operators are facing: they are incredibly vulnerable because they have no income protection.
The government and some companies (such as Google, Facebook and Uber) are starting to address this by providing contractors with some sick pay solutions during COVID-19. However, the reality is that this is a much larger and systematic problem, with self-employed workers not having a safety net or access to health and wellness support ubiquitous to employees.
96% of the quickly growing self-employed workforce, shockingly, have no income protection, according to insurer LV=. And, 93% have neither health nor critical illness cover, Scottish Widows research shows.
Two in five of these workers also told LV= that they could not afford to save. In other words, these workers are living from paycheck to paycheck, with zero financial buffer.
Without these fundamental protections or benefits, self-employed workers are in an incredibly vulnerable place with no back-up plans to support economic, physical health and mental wellbeing.
This raises a critical question we as a society can no longer ignore: in a labour market where the self-employed workforce has been growing steadily for the last decade, and where the gig economy continues to fuel this rise, who, ultimately, should be responsible for worker protections and how can we cover them?
The question is no longer IF a gig worker should be covered, but how?
While the government is looking to provide short term support, it’s unclear what this will cover and there are no easy public sector solutions to this issue.
What can we do as companies ourselves?
Ever since the on demand economy started gaining ground, there has been an ongoing debate about whether those who work for gig platforms are indeed employees of the platform, and should thereby be given worker protections mandated by the law. Or do platforms simply provide an online space where a provider and a consumer meet to transact, with workers classified as self-employed providers?
The debate came to a head last September when California signed into law Assembly Bill 5 (AB5) that re-classified certain gig workers from independent contractors into employees with benefits.
On the surface, the legislation looked like a win for the self-employed. However, the complexities of rigidly defining who was and who wasn’t an employee ended up hurting long distance truck drivers and freelance writers, whose professional associations promptly filed suit against the state to get them declassified.
There’s another way to solve this problem, one that doesn’t depend on reclassifying the self-employed, and one in which workers don’t pay out of pocket for their benefits — their platforms do.
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. This is 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. This 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.
It’s not just the right thing to do - there is a clear business case. In providing benefits for their self-employed workforces, our partners have seen a decrease in recruitment costs, decrease in worker churn, and increase in overall worker engagement. It’s a clear Win:Win.
As the coronavirus epidemic rages on, and the vulnerability of millions of self-employed workers is laid bare, we believe those companies and platforms who actively seek to protect their workforces through troubling times will benefit the most in the long term.
Let’s ensure that workers get the safety net they need and deserve, not just in the immediate term, but sustainably and over the long term.
Author Anthony Beilin is CEO and Co-Founder of Collective Benefits.
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