How can employers offer gig economy workers employee benefits?
A recent report from the TUC stated the gig economy workforce has doubled since 2016, with many people turning to this route to top up their income. While benefiting millions of workers globally, this rapid growth in the gig economy also presents challenges for employers as they look to offer benefits and perks that will be truly valued by this new workforce.
To remain competitive and viable to employees, employers must continue to attract the best talent. But when the talent is a freelancer or gig worker, then these new types of ‘employee’ are free to choose either the highest bidder or work with the company that they feel most affinity towards. With the rise in demand for more flexible working patterns and better work-life balance, the HR team is now faced with the dilemma of designing a new kind of ‘employee benefit’ scheme that will ultimately make the business stand out as first choice for freelancers of all types.
However, research shows that at present 54% of gig workers have no access to employer-based benefits which can put a strain on their financial and overall wellbeing. But instead of trying to revamp existing employee schemes to fit, employers need to think differently and ask themselves what gig workers and freelancers really need. With flexible working patterns comes fluctuating pay, and these workers need products that suit their needs and support with financial wellbeing. Traditional banking products tend to be more focused on those with regular incomes and a single employer, which makes it even more important that employers explore alternative financial products and tools which can help these types of employees. Indeed, research from Nesta Challenges indicates that around half (48%) of those on zero hours contracts want personalised guidance to help them manage their money, while 35% of self-employed workers say the same.
How can these workers be helped to make the most of their money, better manage their finances or access credit – particularly if the way they work and earn negatively impacts their credit rating?
Previously, financial wellbeing benefits offered by employers tended to be access to a traditional financial adviser. However, the digital revolution is also happening in the financial sector and with the advent of open banking financial guidance and advice can now come in the form of an app. Essentially, open banking allows a bank customer to provide a regulated third party with secure access to their account data. The third party can then analyse this data and offer personalised, tailored information and support to help people budget better, manage debt, compare deals, or access affordable credit.
This new access to data also provides interesting propositions for employers. For example, Portify and Wagestream are open banking-enabled products which are designed to support the modern worker. Portify is a holistic credit builder for modern workers with unconventional earnings patterns. It analyses someone’s earnings and spending behaviours to prevent overdraft and interest payments and offer a fee-free credit line. Although it is available for workers directly, it is also offered through employers such as Deliveroo, TaskRabbit and Syft to provide a benefit for employees.
Similarly, Wagestream is a financial wellness benefit which employers can offer their employees to allow them to stream a proportion of their income as it’s earned, save directly from their salary, track wages and get impartial, financial education in real-time.
Both Portify and Wagestream are finalists of the Open Up 2020 Challenge, run by Nesta Challenges, and have secured funding from the challenge prize to grow their solution and reach even more people.
As digital continues to change the way we live our day-to-day lives, it is also transforming the way we get paid, manage our financial life and ultimately our financial wellbeing. Open banking is a game changer for people in the UK and has the potential to revolutionise financial management for millions, particularly for those who have fluctuating income streams. But not only do these solutions improve the life of the gig worker – they’re also a cost-effective way for an employer to set itself apart from competition and attract the best talent. With the new decade set to bring even more change in working patterns, we expect to continue to see employers thinking outside the box and looking to innovative products that can benefit all their employees – whether full time, part time, or freelance.
A version of this article was originally published on HR Director: https://www.thehrdirector.com/features/employee-benefits-reward/changing-employee-benefits-in-a-modern-gig-economy/