By Khiran O’Neill and Trevor Quan
Recently, the federal government has committed to improving Canada’s Employment Insurance (EI) program, in part because the COVID-19 pandemic has demonstrated the need for modernizing the EI system. A core aspect of this update is the goal of “supporting self-employed and gig workers hit by unemployment.”
In public consultations on the modernization of EI, ICTC recently shared some key takeaways about the intersection of gig work and EI, based on our latest research on the future of work, which included a survey of 500 Canadian gig workers. The survey was limited to people who make money using gig platform apps — digital platforms that connect freelancers and their services with customers.[1]
The gig economy complicates social protections: As the gig economy grows, it continues to challenge traditional employment-based social protections and may contribute to significant declines in use of EI (39% in 2019, down from 84% in the 1990s[2]). When the Canada Emergency Response Benefit (CERB) was developed, it protected many from job losses caused by the COVID-19 pandemic. Yet according to ICTC’s survey, gig workers were much more consistently denied CERB: 8% of gig workers applied for CERB and did not receive it, compared to just 1.5% of others surveyed. This is an example of how non-traditional forms of work may require additional forms of social protection.
Gig work offers accessible employment, but it shouldn’t be a safety net: Following COVID-19 shutdowns, workers who lost their jobs began turning toward the gig economy, which is typically easier to enter than the traditional job market. More than a quarter (28%) of gig workers surveyed by ICTC who were earning exclusively from the gig economy suggested that they did so because they’d lost a job and needed to find another source of income. This follows a commonly presented hypothesis that non-standard work is often used as a sort of social safety net.[3], [4] The resulting influx of gig labour reportedly pushed down wages and rendered gig work more precarious.[5] Workers who rely on the gig economy as a form of income security may find themselves without access to traditional work-related protections such as EI, paid leave, or healthcare benefits. While gig work can provide immediate income relief, it is not a viable alternative to EI. Participating in gig work is not a substitute for unemployment protection that accommodates time off for retraining or applying for new jobs.
Gig workers are a diverse population with a range of needs: Gig workers vary in their demographics, attitudes, and reasons for participation in the gig economy — but also depending on whether they earn all their income or just part of their income from the gig economy. Workers who choose to earn extra income in their free time and can afford disruption in earnings may face very different circumstances than those who are entirely reliant on gig work. Further, those using gig economy income to supplement other income are relatively unlikely to want to transition to full-time gig work: only 13% of such respondents said they would like to work in the gig economy full-time. It is important that updates to EI reflect that some people see gig work as a hobby, while others use it to cover critical expenses such as food and shelter.
Dependent contractors: Outside of Canada, the classification of gig workers (as either contractors or employees) has received significant attention.[6] While gig worker classification has yet to take centre stage in Canada, it needs to be addressed. Canada already has a third classification for some workers: the dependent contractor. This seems to be a good way to describe many gig workers, particularly those who depend on platform apps to perform their work. The presence of a third form of worker classification could allow for a compromise between a minimum level of benefits and EI on one hand (perhaps, for example, at a lower rate than EI for employees), and flexibility on the other. EI that currently exists for self-employed workers may provide coverage for gig workers (though, as Employment and Social Development Canada [ESDC] notes, uptake has been very low).[7] In the longer term, however, designating gig workers as self-employed may miss the opportunity to rethink worker classification and capitalize on the already existing “dependent contractor” classification.
Opt-in opportunities: As an alternative to the “dependent contractor” classification, gig workers could be given an option to decide their own classification. Given the variety of reasons for participating in the gig economy, an EI system that includes gig workers could allow for the opportunity to “opt-in.” If a worker wants access to EI, they could register as an “employee,” rather than a contractor, and make regular EI contributions (in this context, the platform app of the employee might be required to make a matching EI contribution as well). A successful example of this exists in a collective bargaining agreement with European delivery firm Hermes, in which workers can choose their employment status and thus prioritize flexibility or benefits.[8]
More data is needed: While it is clear that the Canadian gig economy is growing, estimates of its size vary substantially depending on how gig work is defined or measured: 8.2% of the working population performs gig work, according to a Statistics Canada report,[9] 17% according to the Angus Reid Institute,[10] and 30% according to a Bank of Canada report.[11] Consistent definitions and measurements of gig work are necessary to understand how it is evolving. It is important that in addition to public consultations, data on gig work (and other types of non-standard employment) — from both gig platform companies and government — inform the implementation of policies for these workers.
ICTC’s survey found that gig workers are strongly motivated by flexibility and choice. As such, they should have the choice to opt into social and employment protections. However, to maintain the sustainability of such a safety net, the pool of contributions will likely need to be expanded, and both gig platform companies and workers should share this responsibility.
[1] This is a narrow definition of gig work. The ESDC consultation describes gig workers as “workers who enter into short-term contracts with firms or individuals to complete specific and often one-off tasks.” “Backgrounder: Gig workers and digital platform workers”, Employment and Social Development Canada, March 2021: https://www.canada.ca/en/employment-social-development/corporate/portfolio/labour/programs/labour-standards/consultation-right-to-disconnect-and-gig-work/backgrounder-gig-work.html
[2] Colin Busby, David Gray, “A new voluntary EI program would bring more workers under safety net,” March 10, 2021, https://policyoptions.irpp.org/magazines/march-2021/a-newvoluntary-ei-program-would-bring-more-workers-under-safety-net/
[3] The Global Economic Crisis in Latin America: Impacts and Responses. “Global Recession and the informal economy,” Martha Chen, pg. 115
[4] Vyacheslav Fos et al., “Gig-Labor: Trading Safety Nets for Steering Wheels,” July 5, 2019, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3414041
[5] Haanbi Kim, “The Online Gig Economy: Understanding its Labor Market during a Pandemic,” The Economics Review NYU, October 29, 2020, https://theeconreview. com/2020/10/29/the-online-gig-economy-understanding-its-labor-market-during-a-pandemic/
[6] Carolyn Conn and Linda Campbell, “The Ethics of Worker Classification in a Gig Economy,” Research on Professional Responsibility and Ethics in Accounting, 2021: https://www.emerald.com/insight/content/doi/10.1108/S1574-076520210000024011/full/html
[7] “Annex 2: Employment Insurance benefits data tables,” Employment and Social Development Canada, April 2021: https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/monitoring2020/annex2.html#h2.11
[8] Orly Lobel, “The Debate Over How to Classify Gig Workers Is Missing the Bigger Picture,” Harvard Business Review, 2019: https://hbr.org/2019/07/the-debate-over-how-to-classify-gig-workers-is-missing-the-bigger-picture
[9] Sung-Hee Jeon, Huju Liu and Yuri Ostrovsky, “Measuring the Gig Economy in Canada Using Administrative Data,” Statistics Canada, December 16, 2019, https://www150.statcan. gc.ca/n1/pub/11f0019m/11f0019m2019025-eng.htm
[10] “Canadians unsure whether increase of gig work is a good thing or a bad thing for workers,” Angus Reid Institute, November 26, 2019, https://angusreid.org/gigeconomy/#:~:text=A%20new%20study%20from%20the,%E2%80%93%20but%20aren't%20now
[11] Olena Kostyshyna and Corinne Luu, “The Size and Characteristics of Informal (‘Gig’) Work in Canada,” Bank of Canada, June 2019, https://www.bankofcanada.ca/wp-content/ uploads/2019/02/san2019–6.pdf
