We know that ‘gig workers’ operate in highly precarious and insecure job environments. That’s because we have been researching the working lives of delivery drivers, for the past seven years.
So, it may not come as a surprise that we think they need better legislative protections.
What’s perhaps more interesting is that the ‘average’ Australian also thinks gig workers deserve a better deal at work. We have studied that too.
The Minister for Employment, Tony Burke, is likely counting on that sentiment as he navigates his Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 through the parliament. Senators may wish to consider what our research has shown as they debate this bill in the coming months.
What does the new legislation cover?
The unsafe working conditions of food delivery workers has been tragically demonstrated by the deaths of thirteen food delivery workers since 2017.
As part of the Closing Loopholes Bill, the government seeks to introduce some minimum entitlements and other safeguards for “employee-like” gig workers. The segments of the gig economy that are in the Minister’s crosshairs are food delivery, rideshare driving and care work.
Effectively, the government wants the Fair Work Commission to deal with some of the most contentious issues associated with gig work, including the ability to set minimum pay. It will also be possible for gig platforms and organisations representing the interests of gig workers to negotiate collective agreements.
Currently, gig workers have little capacity to dispute their ‘deactivation’, which is often ordered by an algorithm. The Bill will address this through the introduction of an ‘unfair deactivation’ provision, which is somewhat akin to unfair dismissal claim. It will enable these vulnerable workers to go to the Commission and challenge their removal from a platform, without having to incur significant legal costs.
What do Australians think about working conditions in the gig economy?
Our recent research paper reveals that many Australian consumers do not fully understand the working conditions in the gig economy. When these conditions were explained, however, there was broad support amongst the Australian community to have some minimum standards for gig workers, such as food-delivery riders.
Seventy-two per cent of consumers, for instance, indicated that they would like to see these workers receive something akin to minimum wages, which will be an outcome of the proposed reforms. In addition to a formal avenue to dispute unfair ‘de-activation’, respondents supported other entitlements like workers’ compensation, a form of employer superannuation contribution and regulated hours.
Will the proposed reforms increase the cost of gig services? As the Minister acknowledged in his Press Club address, there will likely be a moderate effect on prices for these services. This is a result of the relatively low profit margin industries in which gig economy platforms operate.
Employers, their associations, and platforms are starting to express their discontent with the proposed reforms. One of the arguments they are putting forward is that they will produce increased business costs and job losses.
In our earlier research on consumer attitudes towards working rights and entitlements for food-delivery workers, we found that consumers had some, limited, willingness to pay extra to improve working conditions for these workers. While increasing prices may somewhat reduce demand, this is not the only relevant consideration.
Firstly, consumers’ willingness to pay is merely an expression of intent, and not exactly the same as their actual consumptive behaviour. Given that food-delivery services are a luxury expense, broader macro-economic trends like inflation and cost-of-living pressures are likely to have a far greater effect on the demand for these services.
In the care sector, demand is unlikely to disappear. The funding that care users receive from government is based on the relevant modern award rates. So, what appears most at risk is these platforms’ bottom line.
Second, for many years employers have been advocating for the reduction of Sunday penalty rates, arguing this would result in job growth in retail and hospitality. However, research shows that when Sunday penalty rates were reduced in 2017 and 2018, this did not lead to an increase in employment.
In reverse, employers and their associations have also for many years been arguing that increases in the minimum wage would lead to job losses. There was, for instance, vehement employer opposition to a significant increases in 2022 and 2023. As it turned out, the sky did not fall in when the minimum wage was lifted by 5.2% in 2022. Even though the minimum wage in modern awards was again lifted by 5.75% in 2023, Australia currently finds itself in a period of historic low unemployment.
Rather than job destruction, conventional economic wisdom would further suggest that providing low-paid gig workers with additional income will, if anything, boost economic demand, due to their high marginal propensity to consume.
The cost of food-delivery services is likely cheaper under current arrangements where gig workers have no entitlements. As the Minster quipped: “slavery is probably cheaper too.”
Quality over quantity
This leads us to our final point and a debate that employers, their associations, and platforms thus far have shunned. Namely, what is the quality, rather than the quantity, of the jobs that we wish to tolerate as a society?
As it stands, we risk entrenching an underclass of a working poor, with limited protection and few rights. Our data suggests this is not what most Australians want. We do expect the workers protected by the Government’s bill to at least experience working conditions that will allow them to sustain themselves. The legislative changes provide some long overdue safeguards for vulnerable gig workers.
While the proposed Bill is complex and far from perfect, there will be scope in the coming weeks and months to refine it – most notably through the upcoming negotiations that the government will need to have with the Senate crossbench.
Nonetheless, it is a positive step forward to protecting some of the most vulnerable workers in the community and it is unlikely it will result in the large-scale job destruction some predict.
Image: Jon Tyson