Exploring the gig economy: An overview of benefits and drawbacks

The gig economy has risen in popularity in Singapore. It is an alternative to full-time jobs. The gigs are flexible and temporary and cater to a dynamic workforce. In this job market, workers earn money by doing short-term jobs. They work as freelancers or contractors. 

In Singapore, many gig workers are engaged in food delivery, online parcel delivery, and ride-sharing services. In this guide, we will explain what the gig economy is, look at its key features, and discuss the benefits and challenges of being a gig worker in Singapore. Here's what we'll cover: 

• What is the gig economy? 
• Key features of the gig economy
• Pros and cons of joining the gig economy 
• Legal requirements and labour rights of gig economy workers
• How will the gig economy evolve over the next few years?
• Final Thoughts
• FAQs

What is the gig economy? 

In Singapore, the gig economy refers to a labour market characterised by the prevalence of part-time and temporary positions, where businesses engage freelancers or independent contractors for short-term engagements. Organisations hire an independent contractor or freelancer for a short-term project. This way, they may need fewer full-time permanent employees.

Gig workers have more flexibility and independence than those with permanent jobs. However, they also have less job security and rarely get benefits such as health insurance and annual leave. 

As of 2022, Singapore's gig economy had 88,400 platform workers. They comprise about 3.6% of the resident labour force, a big rise from previous years. This is a 21% increase from 2021. Then, there were 73,200 platform workers, about 3.1% of the resident labour force. These numbers are from the Ministry of Manpower’s annual Comprehensive Labour Force Survey.

Key features of the gig economy 

Many younger workers are leaving their traditional jobs for temporary and flexible work. Explore the main features of the gig economy: 

Flexibility and autonomy

Workers in the gig economy can choose freelance jobs according to their schedules and interests. For example, they may only want to work three days a week for a better work-life balance. Or they may look for a job that allows them to decide their working hours. They can also choose several employers instead of depending on a single company. 

Project-based workers can work from wherever they want. For example, they may do freelance writing while they travel. Or they could work on a video-editing project from home. 

Diverse opportunities

In a permanent full-time job, workers have routine duties and tasks. Gig workers can choose different roles from various fields. For example, they may do a painting job, drive for a ride-sharing service, and pack and load items at a warehouse all in the same month. They can try out various jobs that need different skill sets. 

Short-term engagements

Employers usually look for gig workers to do short-term projects because it's more affordable than hiring a full-time worker. Employers can also select the best person for a job that requires specialised skills. Gig workers may prefer the project to last only a few months so they can do other projects after it ends. 

Pros and cons of joining the gig economy  

There are many advantages and disadvantages associated with the gig economy. Learn more about them before deciding to become a gig worker. Here are some of the pros: 

Benefits of the gig economy 

• Flexibility and control: Gig workers enjoy unparalleled control over their work schedules and environments. They have the freedom to choose not only when and where they work but also the projects they take on. This autonomy allows them to balance personal and work commitments more effectively, tailoring their workloads to fit personal preferences and life circumstances.
• Diverse opportunities: By working in the gig economy, individuals can access various jobs across different industries. This variety prevents work monotony, enhances their resumes, and broadens their professional experiences. Diverse job opportunities help gig workers to continually develop new skills and explore different career paths, potentially leading to unexpected and rewarding career trajectories.
• Entrepreneurial skills: Gig workers constantly enhance their marketability by learning to market their services effectively, negotiate contracts, and manage client relationships. These skills are vital for personal branding and success in the freelance market. Regularly adjusting to different job demands also sharpens their adaptability and problem-solving skills, making them more competent and versatile.
• Financial freedom: Professionals with highly specialised skills or those in high demand can command lucrative rates, often exceeding what they might earn in traditional roles. Moreover, gig workers have the flexibility to increase their workload to boost income whenever necessary, providing a potential financial advantage over fixed-income roles.

Even though there are many benefits of working in the gig economy, there are also drawbacks that you need to consider. Here's a list of them: 

Limitations of the gig economy

• Unsteady Pay: Gig workers often have irregular paychecks, which depend on how much work they find. In times when there's less work, they might earn less, making it tough to manage money.
• No Job Benefits: Gig workers don't get the usual job benefits like health insurance, retirement funds, or paid sick days that regular employees might get. They have to handle these things on their own.
• Work Uncertainty: Gig jobs can be unpredictable, affecting financial security. This uncertainty can also make it difficult to get loans or mortgages without a steady income.
• Reliance on Demand: The amount of work available for gig workers can change based on what people need or want. When demand is low, they might find themselves without work.
• Lack of Job Security: Gig jobs often don't have a contract that guarantees continued work or a warning period before the job ends. To deal with this, many gig workers take on several projects to ensure they have enough income.

Legal requirements and labour rights of gig economy workers 

Under Singapore's current regulations, gig workers are not afforded the same basic employment rights, benefits, and protections as traditional employees, such as those covered under the Employment Act. They are not included in the definition of employees under the Employment Act of Singapore. As a result, they do not have coverage under labour laws and regulations, such as minimum wage, Central Provident Fund (CPF) contributions, overtime pay, sick or personal leave, and health insurance.

Gig workers usually enter a temporary contract with the employer and get payment for the task once they complete it. They may need to provide an invoice. People working gigs may face legal challenges, such as late payment or non-payment of wages. Employers may also terminate contracts with gig workers without prior notice. 

With the establishment of the Gig Workers Commission, workers in the gig economy in Singapore will now receive protections and benefits similar to those of formal employees. They can contribute to the Central Provident Fund (CPF) and enjoy worker protection. Here's a table illustrating the differences between formal employees and gig workers: 

Formal employees	Gig workers
Working hours	Fixed	Flexible; depends on work arrangements
Income	Fixed monthly salary	Fluctuates according to the job
Benefits	Health insurance, retirement plan, bonuses, and other perks	No benefits
Statutory rights	Annual leave, sick leave, maternity leave, protection against unfair dismissal, minimum wage, CPF contributions, overtime pay, and disability insurance	Disability insurance (under certain conditions)

How will the gig economy evolve over the next few years? 

With advancements in technologies, there will be more gig platforms and markets. This means there will be a larger volume and variety of work available for gig workers. The platforms may also be more specialised, making it easier for workers to find suitable jobs. According to a report by the Association for Entrepreneurship, AI can match people with relevant jobs by analysing skills, experience, and qualifications. It also quickly validates their documents and automates parts of the recruitment process. 

Collaboration tools, such as instant messaging platforms and cloud computing, make it possible for people to work remotely. Team members can work on a project at different times from different locations. For example, a freelance mobile app developer can meet with their team members or clients over video calls. The gig economy has been growing and is set to grow even more. At the same time, greater attention has been paid to regulating the gig economy and protecting independent workers' employment rights. 

Final Thoughts 

Participating in Singapore's gig economy can provide numerous benefits, including flexibility, diverse job opportunities, and the potential for financial independence, which is suitable for those who value autonomy in their professional lives. However, it's also crucial to be aware of the downsides, including unpredictable earnings, no employment benefits, and concerns over job stability. If you're considering entering this expanding market in Singapore, developing a broad set of skills is important to capitalise on diverse opportunities. By creating multiple sources of income, you can enhance your chances of maintaining steady work.

FAQs  

Here are answers to common questions about the gig economy: 

1. What are the advantages of the gig economy?
   Working in the gig economy can give you great flexibility and autonomy. You can choose when, where, and how much to work. You can also try out different types of jobs and learn new skills. With specialised skills, you can set high service rates and increase your earnings. 
2. How does the gig economy impact job stability?
   Gig workers may not have much job stability, as they usually do short-term projects. They may be unemployed between stints. However, if they work on long-term projects or do multiple jobs simultaneously, they may have more job stability. 
3. Are gig workers considered freelancers?
   Gig workers is a broader term, so not all gig workers are freelancers. It depends on their work arrangements. For example, a driver may work with a food delivery service provider and enter an employment contract. They're still in the gig economy, but they're not freelancers. If they provide a service for a fee and don't have an employer-employee relationship with any company, then they're a freelancer. 
4. What industries are most impacted by the gig economy?
   In Singapore, the gig economy significantly influences industries such as banking and financial services, construction and property, and trade, manufacturing, and supply chains, where freelancers and contract workers are often employed for specialised projects. The healthcare sector also utilises gig workers for roles like locum staff. The transport and logistics industry is particularly affected, with many working as delivery and ride-hailing drivers through platforms like Grab and Gojek. Additionally, the creative and technology sectors thrive on project-based, remote work opportunities, such as freelance copywriting for website content. 
5. How can gig workers access benefits typically associated with full-time jobs?
   They can insist on having a written contract between them and the clients to protect their interests. This helps to prevent unfair dismissal or non-payment of fees. 
6. Are there any legal protections for gig workers?
   In Singapore, gig workers aren't considered employees under the Employment Act, so they don't automatically receive the same legal protections as traditional employees. However, they are covered for workplace injuries if they contribute to the Central Provident Fund (CPF) under the Self-Employed Person Scheme, allowing them to claim work-related injuries and access related benefits. Looking ahead, with the establishment of new initiatives like the Gig Workers Commission, gig workers in Singapore may soon enjoy protections similar to those afforded to formal employees.
7. What are the potential financial challenges faced by gig workers?
   Gig workers might face financial instability due to fluctuations in market demand for their services. This could lead to periods when they can't secure enough work, reducing their earnings. Additionally, since many gig workers operate under short-term contracts, employers may choose not to renew these agreements without notice, potentially resulting in an abrupt loss of income.
8. Can gig economy jobs be a long-term career choice?
   Gig economy jobs can be a long-term career option if you actively engage in upskilling. By becoming highly specialised in a specific area, you can command higher service rates. Additionally, diversifying your skills allows you to take on various jobs, which can contribute to greater job security and more consistent income over time.
9. How do gig workers manage taxes and retirement planning?
   Gig workers in Singapore must keep track of their earnings and file taxes. They can do this through the Inland Revenue Authority of Singapore (IRAS) using the online myTax Portal. Additionally, they can register to become members of the Central Provident Fund (CPF) and make voluntary contributions to their accounts through the CPF Voluntary Contributions scheme.