Will we soon see a minimum wage for gig work in the UK?
The gig economy gives flexibility for employers and individuals, but pay isn’t always fair. Will we see a minimum wage introduced for gig workers in the UK?
Until now, the typical view of the gig economy has probably been one of a high-powered, opportunity-rich flexible workforce, moving from lucrative project to project.
While this may indeed be the case for a well-paid, cohort of gig economy high fliers, a rather sobering University of Bristol (UOB) study showed this was not the full picture.
Researchers found that 52% of gig workers doing jobs ranging from data entry to food delivery were earning below the minimum wage. On average respondents were earning £8.97, which is around 15% below the current UK minimum wage of £10.42, and were also not receiving basic employment entitlements like holidays and sick pay, which further diminished their earnings compared to the employed.
This UOB report lays bare the bones of the low-pay crisis at the bottom end of the gig-work sector and has been a long-time coming. For years, there have been question marks about the fairness of compensation in the gig-work sector, but there hasn’t been a cohesive, actionable report into the problem like this UOB study before.
For example, gig delivery firms like Uber and others have been in high-profile gig-worker rights disputes. The Supreme Court ruling led to Uber gig workers becoming legally reclassified from gig workers to employees and inheriting employment protections like the national minimum wage, holiday pay, and sick pay. However, there was no attempt to establish a minimum wage within the gig worker cohort itself.
So, now this highly actionable report into the low pay crisis in the gig economy has arrived what has been the reaction? At the time of writing, we were unaware of an official response from the Department for Work and Pensions (DWP), the obvious suitor.
But, if and when the DWP does publicly react to the report how soon would we see a minimum wage for gig work in the UK?
To help answer this question, we took a brief look at the most recent Low Pay Commission (LPC) annual report (published before the UOB study) which is what the government uses to set the National Minimum wage for employees only.
The most recent report includes only two mentions of the gig economy, and this is only to highlight the fact they do not include such workers in their survey. This shows that the government probably doesn’t have enough of their own actionable data on the gig-work economy now and won’t have it until at least the next report in Autumn/Winter, assuming the LPC is collecting it now, which is a big if.
It may therefore be at least a year after any LPC report before we see any relevant legislation, assuming the government takes such action.
But, if not forced by legislation, how likely is it that the gig work sector would voluntarily incorporate the real Living Wage, (adopted by 12,000 UK employers and half of the FTSE 100) into their workflow and compensation HR systems?
There is some precedent here. At a glance, Upwork is one of the only gig work platforms we can see to have introduced a minimum wage of $3 per hour. This is of course way below the UK Living Wage. Since they are not in direct competition with Living Wage Employers, (they are second jobs for many people), gig work platforms don’t need to economically benchmark themselves with them. So, we don’t expect to see an adoption of the living wage in the gig work sector to keep up with traditional employers.
Even if we reached a point where we were ready to introduce a gig work minimum wage how practical would it be to implement? It depends on what workflow and payment model we are talking about.
Hourly paid gig workers
For example, gig work sites like Upwork, Guru, Freelancer, etc. tend to offer a transparent hourly paid system of paying workers (through their proprietary payment and HR systems).
Gig work sites could therefore, if compelled, introduce a national minimum wage protocol to hourly paid workers quite easily.
Fixed-price gig work is problematic.
However, a lot of the work in the gig economy is charged by project and not by hour. This means that workers quote a fixed price on a project at the beginning and are paid a fixed amount irrespective of how many hours they work on the project.
If the gig worker spends more time than is expected on the project, their hourly rate can be reduced, often below the minimum wage.
So, the hourly rate for project-based workers is opaque, not easy to police and there is a high risk of low pay with this model of work. Gig work sites may find it more complicated to introduce a national minimum wage protocol here but if legislation came, they would of course be compelled to incorporate it into their payment and HR systems.
Considering all this, while we believe there is a strong moral case for a national minimum wage in the gig work sector until the government legislates and the LPC starts reporting on it can’t realistically happen.
Given 2024 is a general election year, unless the issue is seen as a strategic vote winner, concrete action might not occur until 2025. Of course, a week, (let alone a year) is a long time in politics and so we remain optimistic of more imminent action from the government.
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