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Gig workers are paving the future of payments – Tearsheet

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Today, access to the internet and personal devices has never been common. The gig economy — in which an individual needs nothing more than a smartphone to become a multi-tasking entrepreneur — is well on its way. 

And it’s not showing any signs of slowing down. In 2019, Mastercard estimated that the gig economy was predicted to grow by 17.4% annually by the end of 2023. The sharp increase in reliance on digital solutions coupled with the economic downfall of the pandemic have only sped things up. By 2027, gig workers are projected to make up over half of the American workforce. And young people are leading the way — with nearly half of all millennials relying on online platforms to make ends meet.

The rapidly growing global workforce comes with a unique set of practical challenges. It requires navigating complex regulation, stubborn legislating, cultural divides, and evolving trends. As the pandemic wanes and the gig economy is here to stay, the payments space needs to pay close attention to the following changes and their impact for what’s next.

Real-time payments is top of mind for gig workers

On average, gig workers earn about 58% less than full-time employees. This means that getting paid on-demand is ever more important — both to meet their financial responsibilities, and continue affording the cost of doing business. Getting paid seamlessly and on-demand is top of mind for independent workers. So much so that 83% of gig workers said they would even pay an additional fee for real-time payments.

As employers acquire talent further and further around the globe, arranging efficient, on-demand payments becomes more difficult. Settling cross-border payments requires third party intervention, and traditionally this means slow, expensive, and high-friction international bank transfers. Depending on where the worker is based, this also means overcoming a secondary regulatory environment and finding solutions for unbanked populations.

Workers’ rights are changing

In the early days of the gig economy, employment platforms escaped the due diligences by classifying workers as independent “partners”. This left workers ineligible for employee benefits like minimum wage and pension. Since then, the courts in both the UK and Spain have ruled that gig workers are benefit-deserving employees. 

In the US, home to courier giants like Uber, Lyft, DoorDash, and Instacart, the legislative pushback is slower. But as the Department of Labor finds itself carrying the cost of unemployment for gig workers during the pandemic, the shift of burden to employers is inevitable. In California, for example, legislators voted in Prop 22 which keeps gig workers classified as independent contractors while providing them 120% of the local minimum wage and healthcare contribution subsidies.

In developed economies around the globe, legislation is changing to promote benefits and protections, such as paid annual leave, minimum wage, accident insurance, and healthcare subsidies. As gig workers gain equal legislative protections, employment platforms will rely more and more on payments companies to meet the worker needs.

Direct-to-bank payments

Expanding the availability of talent means cross-border payments. Direct-to-bank payments are workers’ preferred method of payment, but come with major challenges. Bank regulations are complex, requiring the receiving end to be licensed money issuer and able to meet international KYC and AML standards. On top of these are the fees incurred for all parties, that chip away at the incomes of both worker and employer. 

To meet the needs of gig workers and employers, fintechs are rising to the challenge of providing agile, nimble solutions. Nium’s gig economy payments solution and global network of partners, licences and real-time corridors helps ease the operational burden for businesses looking to hire and pay gig workers globally. 

“We believe we can be a global catalyst to increase global commerce, removing some of the payments friction which has traditionally held businesses back. The Nium platform simplifies the B2B payments experience by enabling critical financial services to be easily embedded — helping today’s local market players become tomorrow’s global giants.” — Prajit Nanu, Nium’s co-founder and CEO.

Retaining quality talent 

The gig economy is growing largely due to the flexibility it offers — from hours worked to the types and number of jobs held. In the height of the pandemic’s economic downfall, this flexibility helped millions of people support their households, and at times even provide greater income than they would through full-time employment.

With the gig economy here to stay, and the economy coming to rely on local and global talent, the long-term viability of the workforce will depend on businesses planning ahead. Minimum wage alone is not an effective retention strategy. To keep quality gig workers, companies will have to make efforts to offer fair protections, easy payments, and attractive compensation packages, like early delivery and retention bonuses.

The gig economy promises talent availability at scale. But seizing this moment means being equipped for cross-border payments, currencies and cultures. Read Nium’s eBook Paying it Forward: The Future of Payments in the Gig Economy to learn about the four trends to be prepared for this opportunity.

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Workers

Gig Jobs: Lyfts To Wages Make It Tougher For Platforms To Deliveroo

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Gig economy companies say they excel in moving goods or people around. Critics say their core business is selling the labour of insecure workers at rock-bottom rates. Rising wage rates and falling unemployment will test the truth of both propositions if trends persist.

The UK labour market is at its tightest in more than four decades according to figures from National Statistics last week. US hourly wage rate increases beat forecasts in the US in September, though employment there is lagging expectations.

US ride-hailing app Lyft had to nearly double driver incentives in the second quarter, and expects to go on paying high sign-on bonuses. UK-based food delivery platform Deliveroo reports no problem recruiting riders, despite rising vacancies elsewhere. It claims to already pay well, with average rates above the minimum wage for the time between accepting and completing an order. On a broader definition of a shift, though, riders can reportedly earn as little as £2 an hour.

If companies do have to pay workers more, they will struggle — without efficiency gains — to absorb the extra costs. Platforms make an average contribution margin of just 3 per cent, or roughly $1.20 on the average food delivery order, says McKinsey.

They will not easily pass the costs on to customers either. Resistance will vary by market. Continental Europeans tend to be more cost conscious than Londoners, says JET boss Jitse Groen. Push up charges too much and customers will delete the app.

Rising labour costs were never part of the plan. Platforms have willingly subsidised workers to win a leading market position. The hope was those could then be phased out, as a platform’s increasing market power allowed it to “lock in” workers and prevent them moving to competing platforms.

Market pressure for higher pay will ensure labour relations remain fractious at gig economy businesses. Globally, so-called “platform workers” staged more than 10 protests a week on average in the 30 months to June 2020.

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Industry consolidation is under way in Europe, with half of gig earnings stemming from the five biggest platforms, according to the Centre for European Reform. Wage inflation could accelerate the process by forcing weaker competitors out. If so, expect more protests from gig workers. The pressure for politicians to intervene will rise.

The Lex team is interested in hearing more from readers. How dependent are gig economy companies on low wage rates? Please tell us what you think in the comments section below.

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Need for Greater Clarity in the Labour Codes to Accommodate Gig Workers – Industry

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There is a need for clarity and constant consultation between the government and the private sector New Delhi, Delhi, India – Business Wire India While the pandemic and onset of technology has created new opportunities of employment such as work from home, part time employment, contract workers, and gig workers, it has also provided opportunities to women and students to reap the benefits of the digital wave. However, as we find new job opportunities on the rise, the traditional avenues have been severely affected by the pandemic. In this regard, it will be critical to have a coherent and well thought out Labour Code. The new Labour Codes have a unique opportunity to foster recovery. It is imperative to find balance and provide accommodative support to the new forms of employment. The labour codes need to recognize small contract labourers and businesses and make provisions for them.

Lack of uniformity and varied regulations at the state level have had an impact on other aspects of employment as well. These variations are disruptive to businesses with operations across various states and may result in workload disparity and deterioration in quality of the production. The rules skirt over the realities of the digital economy and seek to transpose legacy regulation and limitation on growth. In line with this, Mr. Kazim Rizvi, Founding Director, The Dialogue, was of the opinion that, “Businesses, especially small organisations and startups, are still coming out of the repercussions of the COVID-19 pandemic. The labour laws, if implemented in the current form, will not only increase the pressure and compliance burden on the companies but also affect their financial output. The role of gig workers is vital in this new economy, and provisions must be made towards giving them adequate compensation and recognition.” The Panelists highlighted some key focus areas such as flexibility in work hours, need for clarity in the definition of core activity, social security for the gig workers and taking into account emerging job models that need consideration to help guide the discourse towards an enabling framework. Centre, state and other stakeholders have to work together in order to ensure that maximum benefits are accrued to the gig workers while being mindful that businesses are not overburdened. Given the subject matter these codes regulate, there is a constant need of dialogue among the stakeholders to improve the legislation while securing the workforce.

Speaking on this, Mr. Ram Rastogi, Digital Payments Strategist, stressed that, “The e-commerce platforms have revenue-sharing arrangements with the people on their platforms. Thus, there needs to be a differentiation for people working full-time and people working in flexible models. Labour codes shouldn’t deter industries that are performing well and consider a performance-based pay model.” He further stated, “Gig workers do the most hard work and make only a small fraction of what permanent workers make. Policymakers should think about them before coming out with the codes and should encourage state governments to work on policies for them.” Suchita Dutta, Executive Director, India Staffing Federation, “Formal Contract work and employment is growing in India. It is helping people pick up new skills and become more industry relevant. While Formal contract labour is well protected for social security and all applicable labour laws including wages, the Gig workers still find the similar format of protection. To realise the full potential of the labour codes, there needs to be continuous dialogue across the sectors to tap the maximum impact for the benefit of gig workers.” Avik Biswas, Partner, Indus Law, “The gig economy workers, for the first time, has been statutorily recognized in India. While the objective of the Codes vis-à-vis the gig economy can be predicted given the way several international regulations on this subject has been structured, we are however still at a stage where a lot more clarity is required on the operative parts of the regulations and how they would substantively affect both companies and workers alike. The obvious way forward appears to be the necessity of a constant dialogue and consultation between the government, employers and other relevant stakeholders.” There is a need for the government to acknowledge the various types of workforces across different sectors. The one-size-fits-all approach may not work since the codes haven’t taken into account rising digital industries such as e-commerce. Additionally, this code might be exclusionary in nature to the small businesses and gig workers in the country especially in states like Maharashtra where people receive work on contractual basis. Hence, it is essential to examine the grey areas in the codes and rework the same.

PWR PWR

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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Instacart Gig Workers Are Going On Strike Nationwide

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Image for article titled Instacart's Embattled Gig Workers Are Going On a Nationwide Strike

Photo: Michael Loccisano / Staff (Getty Images)

Protesting what they characterize as low wages and a lack of consistent communication from corporate, gig workers on the grocery delivery app Instacart are poised to begin a nationwide work stoppage on Saturday.

The strike, which is being organized by members of the grassroots labor organization the Gig Workers Collective, has long been threatened by Instacart workers sounding the alarm about subpar working conditions at the company, and follows a September campaign beseeching customers to #DeleteInstacart until the company took steps to address workers’ concerns.

Both campaigns have called for Instacart’s corporate honchos to address a five-pronged list of concerns laid out by workers, which includes establishing a base pay for each order completed, a return to a commission-based pay model, reinstatement of the 10 percent default tip (the current default tip is 5 percent), the establishment of occupational death benefits for workers who die on the job and a customers rating system that doesn’t allow workers to be penalized for factors that fall outside of their control.

“We know that in order for us to see change, we need to hit Instacart where it hurts,” Willy Solis, a member of the Gig Workers Collective, told Vice. “We’re organizing the walk-off because the company continues to ignore us. Our goal is to get Instacart to engage with us.”

In addition to changes to their salary and benefit structures, workers have also campaigned in recent months for better safety precautions to be brought into practice at the company, particularly in light of ongoing concerns regarding the spread of COVID-19.

For many, frustrations about inadequate working conditions have been compounded by Instacart’s $39 billion valuation while gig workers have struggled to deliver groceries throughout the pandemic at great risk to their own physical and mental well-being, the company has made it increasingly difficult to earn a reasonable hourly rate on the platform without relying on tips from customers.

It’s worth noting that once they go on strike on October 16, gig workers at Instacart will be in good company. In addition to the more than 10,000 John Deere workers who went on strike earlier this week after rejecting the terms of a proposed six-year collective bargaining agreement, workers from Kellogg’s and nurses and other union members from the health care firm Kaiser Permanente have also been on the picket line during what has been unofficially dubbed “Striketober.”

Johnnie Kallas, a Ph.D. student at Cornell University’s School of Industrial and Labor Relations, told NBC News that the recent strike actions are the combined result of two major forces currently shaping the labor market: “Workers have more labor-market leverage with employers needing and struggling to hire, and then a lot of these workers have been on the front line of a global pandemic for the past 19 months and were touted as heroes, which has given them lots of leverage,” he said.

For its part, Instacart has been vocal in the past about the fact that worker-led strikes have ‘absolutely no impact’ on the company’s bottom line—meaning that if anybody’s going to hit the corporate fat cats where it hurts, it will likely be the customers rather than the shoppers themselves.

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