Around the world, government aid is finally catching up to the gig economy

April 29, 2020, 12:30 PM UTC

Diana Petra Kicherer had to stop teaching her usual 10 weekly classes in Geneva when yoga studios were closed during a nationwide shutdown to contain the coronavirus pandemic.

With no income coming in, she was relieved when the Swiss government offered assistance for self-employed workers like herself, who now make up roughly 10% of the labor force in the country. She filled out an online application in 10 minutes and the money arrived three weeks later.

“As independent people, we don’t have insurance,” Kicherer said. “I never thought I would be on state help.” The support is “absolutely amazing,” she said.

With governments bracing for economic contractions and joblessness not seen since the Great Depression, more of them are doling out part of their $8 trillion-plus stimulus to prop up the gig economy — supporting part-time and freelance workers who generally lack a safety net.

Countries like the U.K., U.S., France, Singapore and Australia are going well beyond the fiscal aid delivered during the 2008-09 financial crisis to target a part of the labor market that now makes up one-third of the global workforce, according to estimates from the International Labour Organization. The Netherlands, Germany, Austria and Japan have also allocated support for self-employed people.

It’s in part an acknowledgment of the change the labor market has undergone in the past decade as gig jobs surged with the emergence of digital platforms like Uber Technologies Inc. and Airbnb Inc. For governments, the programs are an additional cost pressure on stretched budgets, but ignoring this key part of the workforce would have dire consequences for peoples’ livelihoods and the wider economy.

Social Protection

“Considering the number of self-employed people in total employment, their economic contribution and their exposure—especially large numbers in informal sector—if they do not receive targeted support, the economic and social outcomes would certainly be more devastating,” said Dragan Radic, the head of the small and medium-sized enterprises unit at the Geneva-based ILO.

In low and middle-income economies, where informal markets tend to be bigger, self-employed people make up a sizable chunk of the labor force, according to the ILO.

But even in parts of the developed world, self employment has grown faster than overall employment, with countries already facing calls before the virus to update their social protection models. In France and the U.K., the share of the workforce who work for themselves, are members of producers’ co-operatives, or are unpaid family workers rose from 2007 to 2018, according to data from the Organisation for Economic Co-operation and Development.

Cash Payments

Governments worldwide are now funding the self-employed in ways they never have before. In a 2009 tally of OECD member states’ fiscal stimulus, only Iceland was mentioned as providing such benefits.

France recently set up a “solidarity fund” with contributions from the private sector to help self-employed and small business owners. The U.K. dedicated 9 billion pounds ($11 billion) to help self-employed workers in its fourth emergency package, while crisis-plagued Greece, which didn’t have a program a decade ago, unveiled financial assistance in response to Covid-19.

Australia is offering A$1,500 ($969) a fortnight for as much as six months for self-employed whose revenue is likely to drop by 30% or more. In Singapore, the government estimates that 100,000 self-employed persons will receive cash payments of S$3,000 ($2,114) each in May, July and October. And in Japan, where the self-employed make up about 8% of the working population, freelancers can claim as much as $9,300 from the government if they can show a minimum 50% loss of income in at least one month.

For all the billions of dollars thrown at this sector of the labor market, the rollouts have not been without their hiccups. Among the snags:

  • The U.S., with its patchwork of 50 state policies around distributing government aid, is dealing with mass delays and confusion, on top of charges that self-employed were crowded out of funding claimed by larger businesses
  • There’s a national, and international, argument about who qualifies as self-employed, with France ruling earlier this year that Uber drivers did not
  • In the U.K., a program to pay the self-employed the same proportion of their average annual earnings from the past three years is taking some time to get set up, with payments promised by early June
  • In Switzerland, some workers like taxi drivers were belatedly added to the program since they were initially seen as not legally forced to stop working—which hindered their eligibility

In Singapore, Paul Lew is running an online business selling wine and is setting up another website to sell medical products. He’s received S$600 as a cash handout that the government has paid all Singaporeans, and is considering whether and how he should apply for additional support.

He’s not worried about his own finances for now—he says he always keeps a “tight” control on what he spends—but believes the extra support is vital for the self-employed and small businesses in Singapore.

“Singapore depends a lot on this business,” he said. “A lot of them struggle— they struggle during normal times. And the package at least will help them over a couple of months.”

–With assistance from Lucy Meakin, Jason Scott, Yoolim Lee, Yuko Takeo, Jeannette Neumann and Sotiris Nikas