Back in 2010, Emergent Research and Intuit conducted research that studied the range of demographic, economic, social, and technological shifts that affect and modify the way we live and function globally. One of the predictions was that “a world where gig work is as common as traditional employment” has now turned into reality and this trend is also known as the Gig Economy.
In 2017, the results from a survey conducted by the Ministry of Education supports this rising trend where a larger proportion of people took on temporary jobs or gig work after graduating. Based on statistics, there are approximately 180,000 freelancers in Singapore accounting for 8.3 percent of the Singapore labour force. The most often quoted reasons for joining the gig economy includes flexibility, freedom, and wider financial control.
However, joining the gig economy comes with its downsides too. The top concerns of gig workers include lack of income security, for instance, arising from work injuries. At the same time, they are apprehensive about their savings for housing and retirement. Currently, about 86% of freelancer aged 55 and above do not meet the Basic Retirement Sum as compared to 42% of regular employees in the same age group.
The Singapore government has been working actively to develop policies that offer better protection for gig workers. For instance, the Singapore government has recently accepted in principle the recommendations of the Tripartite Workgroup addressing challenges faced by freelancers in the country’s gig economy. Second Minister for Manpower, Ms. Josephine Teo, hopes that the new Tripartite Standard will “shape contracting norms and entrench best practices” over time. However, as a gig worker, what can you do to protect yourself before these policies come into place?
Set aside an emergency fund
Mr. Vasu Menon, OCBC Bank's senior investment strategist has advised gig workers to set up an emergency fund that will cover for 12 months of expenses. This is because as the economy goes through challenging times, freelance jobs may be harder to come by and dry spells might last longer.
Protect yourself against accidents and loss of income
With the rising of startups bringing convenience to consumers, we see more gig workers who are always on the move, such as drivers and delivery workers. They are at higher risk of accidents, therefore, it is wise for them to protect themselves with personal accident insurance.
As reported in Straits Times, a local freelance photographer Ukay Cheung, 43, who is the sole breadwinner sprained his back five years ago resulting in him taking a two weeks break. "As a freelancer, if you can't work, it means you have no income," he said. This is why he forks out about $200 a month on income protection rider on top of his personal accident insurance.
Review life and medical insurance needs
Given the escalating cost of medical care, reviewing healthcare insurance needs is one of the key things freelancers should do. Unlike their full-time employees' counterpart, freelancers do not enjoy medical benefits or hospitalisation coverage. Therefore, it is critical for gig workers to look into a hospital and critical illness insurance plans. You should ensure that you have an appropriate medical contingency plan so you can receive good medical care without having to worry in the event of a medical crisis.
For freelancers who are the key breadwinners at home, it is important to get life insurance. As the income stream of freelancers are irregular, there might not be sufficient financial resources for your loved ones if you pass away prematurely. If life insurance plans are too costly, freelancers can consider term plans to reduce their financial burden.
Set up a budget and savings plan
Mr. Christopher Tan, Providend's chief executive, has recommended for freelancers to set up a budget to save up for retirement and their children’s education. It is also good practice for freelancers to make regular contributions towards their Supplementary Retirement Scheme account. You can make voluntary contributions to your CPF Ordinary Account (OA), Special Account (SA) and Medisave Account (MA). Not only does it help you to set aside money for retirement, but it also earns you decent interest of up to 3.5% for your OA and up to 5% for your SA and MA per annum.
On top of that, gig workers can look into retirement plans provided by insurance companies. This is a savings and investment plan that supplements income during retirement. For example, when you take on the retirement plan, you will pay the insurance company a monthly premium from now till age 55 and the insurance company will give you a guaranteed monthly income from age 60 to 80 years old. This can help to alleviate the concerns of insufficient funds for retirement.
All in all, gig workers work in an environment of constant uncertainty where they are susceptible to the slightest change in the economy. Therefore, it is crucial for those in this group to plan for the future and prepare themselves early to mitigate the uncertainties.