The gig economy has had a peculiar trajectory during the pandemic, which has been influenced by lockdown, border closure and government policies. It dipped severely in the beginning and then rose to more than 40% of pre-Covid numbers. This has largely been driven by the increase of the meal delivery services.
What exactly is the gig economy?
The gig economy refers to those of us who work in jobs that are deemed casual, freelance, part-time or short term. Such jobs include (but are not limited to) ride share drivers, food delivery drivers, musicians, artists, writers, graphic designers, AirTasker suppliers, developers, consultants, and hospitality workers.
Pros of the gig economy
From an employee perspective it gives people the opportunity to pursue side passions in addition to full-time employment or juggle work with study or travel or family commitments. It is this flexibility which attracts many people.
From an employer perspective it keeps costs down as they are only employing people when they need them, and it keeps their overheads down.
Cons of the gig economy
While it allows many to follow their passions, it also can leave people overworked and underpaid by employers who take advantage of the gig economy to make their profits at the expense of the people they hire. The security of consistent employment can also be diminished.
This means that often workers
- are frequently required to supply their own equipment and insurances and not remunerated for those in any way.
- Have fluctuating incomes each week/month
And finally, employers are not required to pay superannuation, which leaves people who work full time in the gig economy, unprepared for their futures.
What to consider when choosing to work in the gig economy
There are few things we’d recommend you do:
- Come and talk to us at SCCU to make sure you have the right kind of accounts for your income streams. You want to make sure you are maximising any interest available and minimising any fees.
- Start putting a minimum of 9% of your income into a superannuation fund. Even if you’ve never paid superannuation (and you’d be surprised how many people haven’t), it’s not too late to start. You might even prefer just to siphon off 9% into a savings account for a while if you worry about having no access to that money. But keep in mind that people that work in the gig economy even for a short term can end up to $100,000 worse off than those regularly contributing to their superannuation funds.
- Speak to a professional to make sure you have the right kind of insurance (such as health or vehicle insurance and/or income protection). For instance, your motorcycle insurance might not cover you in the event of an accident if you’ve taken out a personal cover and they deem you to have been working at the time of the accident.
- Work your budgets around your lean times, not your boom times. With irregular income you need to make sure you have money for the essentials irrespective of what you make each week.
- Make sure you have great networks. Working independently has it rewards but it can be a lonely endeavour. Make sure that you allow time to spend time with family and friends and consider involving yourself in groups of like-minded people to make sure you’re keeping in the loop about your industry.
Disclaimer: The ideas, discussions, options and details expressed in SCCU Blogs are for general informational purposes only and are not intended to provide specific personal advice or recommendations for any individual or on any specific security or investment product. We intended only to provide education about the financial and banking industry to make the complex simple, and help everyday customers realise their dreams.