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Singapore has called for fintechs to provide stronger safety support for their staff, but globally, gig economy workers are often let down by the banking sector. Kimberley Long reports.
New regulations in Singapore will mean some of Asia’s largest fintechs will have to comply with stricter new rules on supporting their gig economy staff. But across the industry worldwide, these employees are missing out on vital access to financial services.
Under the new rules, to be implemented from 2024, staff working for the likes of ride-hailing firms Grab and its competitor Gojek will be required to provide pension support and compensation for accidents that happen while working. There are currently more than 73,000 gig economy workers in Singapore.
Jeremy Baber, CEO of UK-based prepayment card company Lanistar, says there is a need for greater reform and support for gig economy workers. “There are pros and cons to the gig economy. Obviously, for the individual, that assumed freedom to work when and where they want provides great flexibility, but it comes at a cost,” he says.
“We have all seen in the press the varied levels of payment for their service and the lack of basic protection, such as sick pay and maternity pay. There is a fundamental need to balance the benefits to ensure this sector thrives.”
Part of the concern stems from the low pay and job insecurity faced by gig economy workers. A study by the Institute of Policy Studies at the National University of Singapore found food delivery drivers in Singapore earned a median of S$1925 ($1445) per month, less than half the country’s median monthly salary for 2022. Of the 1000 respondents, 46% said they rely solely on delivery driving for their personal income.
There needs to be a fundamental shift in the risk profile thought process for people in the gig economy
A key issue is the lack of support from financial institutions. A report by French data platform Rollee found that 70% of UK gig economy workers had been denied access to basic financial services, such as loans. In addition, 57% stated they had to apply to three different lenders before being approved for a credit card or loan.
“There needs to be a fundamental shift in the risk profile thought process for people in the gig economy. Right now the financial sector will deem these people as high risk and therefore restrict product offerings accordingly, for example, reduced loans or credit,” says Mr Baber. He says that this is a mistake, because encouraging ambition in these workers will lead to growth income in the long run.
While concerns have been raised in Singapore about rising costs associated with greater benefits for staff, Mr Baber says these steps are important for supporting workers: “It is always a double-edged sword, but increased regulation will improve the protection of people employed in the gig economy. But at the same time, it will ultimately drive costs and stem growth. There has to be a fair balance of flexibility and benefits to ensure this sector continues to thrive.”
