Thursday, 27 October 2016

Gig economy warrants a closer look: Tharman

Trend has led to more jobs worldwide, but these do not offer the type of benefits that traditional workers enjoy
By Yasmine Yahya, Assistant Business Editor, The Straits Times, 26 Oct 2016

The rise of tech firms like Uber and Deliveroo has created tens of thousands of jobs across the world, but Deputy Prime Minister Tharman Shanmugaratnam is concerned that they do not provide the kind of benefits that more traditional employees enjoy.

The army of part-time workers driving cars for hire and delivering your food in the so-called gig economy tend to be independent contract workers, so they miss out on perks like healthcare that others take for granted.

Mr Tharman said this is a trend that warrants closer inspection.

"I'm not yet a fan of the gig economy," he said during a dialogue at the McKinsey Innovation Forum at the Suntec convention centre yesterday. He was speaking with McKinsey & Company global managing partner Dominic Barton.

"Some of the people in what is described as the gig economy are those who've got no choice because they can't get a full-time job, they can't get a secure job. That's something which has to be tackled everywhere," he noted.

Furthermore, hiring contract workers "serves the interest of the company because they're really pushing risk onto the contract worker and I don't think that's a great social model", he added.

"We've got to avoid a continuing drift - risk being passed from companies to workers, who actually can't take much risk - the risk of instability in wages, and the risk of not being prepared for retirement because of a lack of social security contributions."

Mr Tharman's comments reflect some of the points raised in a McKinsey report published this month that said lifetime employment at one company is largely a relic of the past. But it also added that while the rise of the gig economy could create economic gains, it also raises questions surrounding benefits, income security and worker protections.

"Any proposal will have to tackle multiple angles, starting with who would pay for such benefits and how they would be earned and tracked for workers with multiple clients and employers," the report said.

Mr Tharman, who is also Coordinating Minister for Economic and Social Policies, said the Government's role, as it navigates the future of work, is to help speed up the transfer of skills and knowledge across companies big and small.

To do this, it has to avoid regulations that hamper economic dynamism. Then it has to coordinate the players in the economy "so as to thicken interactions within every cluster and speed up the rate of learning", he said. "Speeding up the rate of learning, cluster by cluster, is the new competitive game. The countries that speed up learning the most will win."

Workers, too, should think about how to augment their own abilities with technology, Mr Tharman added.

"The future jobs, the most rewarding jobs, are going to be those that involve thinking and making, thinking and designing, being on the production floor at the same time that you are leading strategy in an organisation.

"And that's happening in a whole range of sectors. So there's a lot more fluidity," he said.

Countries that speed up learning the most will win
Deputy Prime Minister Tharman Shanmugaratnam gives his perspective on how work is changing, why he is not yet a fan of the gig economy and the role of government in the new economy, in a dialogue with McKinsey and Company global managing partner Dominic Barton at the McKinsey Innovation Forum held in Singapore last week. Below is an edited transcript of their exchange.
The Straits Times, 1 Nov 2016

DPM Tharman It's becoming a more fluid workforce. The old workforce, if I describe it maybe too simply, had three layers. We had blue-collar workers doing operational jobs. White-collar workers doing jobs in administrative or marketing. And a group of people at the top doing thinking, strategising and leadership jobs.

The conventional story today is about "job polarisation" - the middle layer is thinning out, while the top and bottom grow. Technology is replacing tasks and jobs in that broad middle of the workforce. But that's only one part of the story.

There's a second part to the story - the real shortage of skills, and a shortage of people to fill jobs that are still there and still being created in the middle. Even in the United States, where the story of job polarisation is well told, employers are crying out for people - skilled people who can take on good jobs.

At least for the next 15 years, I think there are plenty of opportunities for people to be skilled up to take on those good jobs. But it's not the same as in the past - the layer at the top doing strategy, the white-collar layer in the middle and the blue-collar jobs below. Because blue-collar workers are going to be skilled up to take on jobs in the middle. And the people at the top can't just do thinking and strategising. Even the McKinseys of the world are no longer just doing high-level issues; you are now focused on operational strategies.

The future jobs, some of the most rewarding jobs, are going to be those that involve thinking and doing, thinking and designing, getting into operations at the same time that you are doing research or leading strategy in an organisation. So there will be a lot more fluidity. The old class structure of the workforce is breaking down.

Nurses will be able to do a part of the jobs that doctors and surgeons used to do, aided by technology. Everyone has to think about using technology, using data, and using them to augment our own abilities. And that's everyone, at the top and the bottom in the old structure.

If you just leave it to the market though, it could end up dividing society - those with the skills to work with technology who will be paid very well, and the rest. That's already happening in some places. But if we intervene to coordinate and skill people up, and if we have more fluid organisational structures, technology can actually be a democratising force - enhancing everyone's abilities, and not having people feel their working careers are ruled so predictably, or their potential is decided when they are young.

Q Singapore seems to be very embracing of technology changes. It is interesting because a lot of countries are not. But Singapore's Skills initiative, can you talk a little bit about what it comes with?

DPM SkillsFuture, as we call it, is about learning throughout your life. It's responding to two things. First, the obvious fact that jobs are changing and what you prepared for when you were young doesn't stay relevant very long. But it is also responding to something else, which is about people's potential to develop through life.

Societies everywhere have been too content with educating people in the first 18 to 22 years of a person's life. We now know, both from science and through observation of how the best companies do it, that there's so much potential to develop people throughout their working lives, whichever their job or vocation.

It's a different game. There's increasing value in bite-sized learning, short-cycle learning, that responds to the market, as well as what you think you need at each stage of your working life. So it involves a lot more interaction between learning, work and personal experiences and development.


Q What would be some of the manifestations of that? There are some potentially radical ideas about how we learn.

DPM There are a few thrusts to this. One is to think of people not only as workers in particular industries but as citizens, and to give everyone a SkillsFuture account, government-funded, so that they have ownership of their own learning. You can use it only for learning, but you decide how you use it.

We are trying to make that not a casual or hit-and-miss approach to choosing your courses and programmes. It requires some curating, some mentoring for individuals. We are trying to develop that layer now, of people who can advise citizens on how they can shape learning to suit their own interests and abilities.

But we haven't got there yet and are now developing that intermediate layer.

The second thrust is with employers. The leading companies, including some small, progressive companies, don't need lecturing on this. They know that investing in their people is their source of competitive advantage. But I would say it's early days, because this culture of investing in your people, not for the immediate needs of the job but for the long term, it's not widespread. It is not widespread in any society, by the way. And if you look at the US, investment in training has been coming down over the years.

We've got to grow this culture. One way is through closer interaction between leading players and the rest in the industry, particularly in the same supply chain. We're also helping SMEs (small and medium-sized enterprises) by subsidising training. And again, by curating and customising training where we can, so that they find it relevant to the business.

The core of our industry transformation plans is to work with the SME sector, those that are not at the frontier of innovation - work with them to develop their people, help them to make the most of new technologies so that they can converge with the frontier.

The gaps are wide. Actually in almost every major economy, the gaps between firms are wide in terms of technology, levels of productivity and in fact wages. The major source of inequality in many economies is inequality between firms - people get paid more in some firms compared with others in the same industry. The wage inequality between firms accounts for the bulk of inequality in the US, for instance.

Q It'll fit with this gig economy. So people will have a skills account, and if you work on your own, you're independent, you're going to be able to access that to learn.

DPM That's right. But I'm not yet a fan of the gig economy. There are pluses and minuses to it. Some in the gig economy are those who've got no choice because they can't get a full-time job. And there's a way in which technology is now enabling corporations to rely on contract workers rather than full-time workers. It serves the interests of the company because they're really pushing risk to the contract worker. I don't think that's a great social model. In many places, it comes without social security contributions.

There's another group in the gig economy who are truly independent. They don't want to be working for someone else, and they're often people with highly specialised skills. It started with things like Hollywood. Any film, they call on the best person for each task, say this particular form of camera work, and everyone knows who he or she is. They come together for the film, then they're off. But those are people who are really empowered by their own abilities, and not that many people are like that.

So we've got to watch this carefully. It's a growing trend in many places. We've got to avoid a continuing drift - of risk being passed from companies to workers, who actually can't take much risk - the risk of instability in wages and the risk of not being prepared for retirement because of a lack of social security contributions.

Q Going on to the corporate side, because something you've said before is the notion that there's a lot of change going on but there's sort of a leading edge of companies that are changing on the frontier, but at the core, not so much. Anything that you will be wanting to see, or you're encouraging?

DPM No one quite knows why, but the remarkable innovations that we are seeing at the frontier of almost every industry are not actually spreading through the broader swathe of the economy. That's one of the reasons why productivity growth all over the world has slowed.

Second thing that's happened is that even in the more dynamic economies like the US, fewer companies are starting up. And fewer people are moving location to take advantage of job opportunities elsewhere. Economic dynamism seems to have slowed down in general. So I would say the first priority is to avoid regulations that hamper economic dynamism, be they regulations that hamper start-ups, or regulations that hamper scaling up from small to big.

But we also need an active role for the state in coordinating among market players. It's not about regulation, or the old style of industrial policies, which was about grooming national champions or protecting local players. Those policies haven't worked out very well anywhere in the world.

This new industrial policy is about coordinating players so as to speed up the spread of new technologies and skills in a market economy. The Government is not guessing what the next technology or product is - the industry is doing that work at the frontier - but promoting, speeding up the rate of learning, cluster by cluster, is the new competitive game. The countries that speed up learning the most will win.

We've identified 23 key clusters in the economy. For each of them, we're working on the skills of the future, the technologies of the future, helping companies enhance productivity using technology and skills, and in the Singapore context, quite important, to help them internationalise. We're bringing those four strategies together in our Industry Transformation Maps for each cluster.

Q Back to the skills side, in terms of the providers of those skills, could they be the traditional ones?

DPM The anchors should be the traditional players because they bring reputation, credibility and governance. Each of our universities, polytechnics and ITEs (Institutes of Technical Education) now see continuing education as part of their mandate. They will be funded and held accountable for doing so.

But we need a marketplace of private players around them. Some interesting new players, like General Assembly, are coming up to fill gaps more quickly. The needs of industries can change quickly, but they do not get reflected in the formal university or polytechnic curricula until some time later. Speed to market, in learning, is itself a priority in continuous education. So we need a whole group of nifty players in education and training.

Q And just on "bite size".

DPM Three months and six months seem to be the periods of time that adult learners find easy to catch on to, and not daunting. But you usually don't stop at that. Having done that three- or six-month module, you'll work for a while and then go on to another module. So you stack up modules over time. For someone with a family, someone who's got other things to do with their time, it's manageable.

It's also more democratic because the hurdles required to get into a three- or six-month course are very different from those for a two-year master's.

Q So if you're to think out five years from now, where we'll get some very exciting innovation in the whole skills place, from other parts of the world - where would you like it to be?

DPM When people think of education, it won't just be the school or full-time institution they went to in their youth. They'll think of part-time campuses around the island, with high-quality education providers responding to their needs at different points of their life.

Second, we would want to see a broad segment of SMEs take ownership of training. On their own, it is difficult just meeting the demands of today. But with coordination, we will have industry- based training that is relevant to them, and with significant subsidies to back them up.

But what's most important at the end of the day is how we think of our potential as individuals, each citizen. Never thinking of our potential as decided when we're young, but something we develop through life. We know that people develop a passion for learning at different points in their life. Sometimes it's by chance. But everyone will have the opportunity to develop through life.

When you take it all together, it's more eclectic, more democratic in some ways, more capable of developing the human potential in each of us through life. And that's what expands our nation's potential too.

Make freelancing a viable career path
By Fern Yu, Published The Straits Times, 28 Oct 2016

As an undergraduate, I spent two years of my university life doing freelance writing jobs. But late payments, among other things, left me largely dissatisfied and so I swore off freelancing and applied for full-time jobs upon graduation.

This is why I was glad to read Deputy Prime Minister Tharman Shanmugaratnam's concern for workers in the gig - or freelance - economy. Speaking at a forum by consulting firm McKinsey & Company on Tuesday, Mr Tharman said that contract work served the interests of companies more, while workers faced multiple risks and few benefits - such as instability in wages, and a lack of social security contributions for retirement. This is something that should be looked into, he said.

Mr Tharman's comments echo earlier suggestions by labour chief Chan Chun Sing and labour MP Ang Hin Kee to protect freelancers' interests. In a speech made earlier this year, Mr Ang called freelancing a "frontier town", noting the lack of rules and how even existing ones are unclear.

This has not dampened the supply of freelance workers, for more people in Singapore are using global websites that match freelancers to jobs - Singapore users of increased by nearly 39 per cent last year.

Demand for freelancers is also likely to increase, given their ability to fill specific talent gaps and customise their services for different employers - useful in a climate of economic restructuring and a squeeze on foreign labour. This year's salary guide by recruitment firm Hays stated that of 3,000 employers surveyed across Asia, 85 per cent expected to increase or maintain their use of temporary and contract staff in the next year.

For freelancing to be a sustainable and viable career path, freelancers need a more conducive and fair working environment. Research and subsequent policy tweaks can help.

For starters, there should be greater clarity on what constitutes freelancing in Singapore. Ministry of Manpower (MOM) figures from June last year show that there were 169,500 "own account workers" - those who are self-employed and do not employ others. They form 7.9 per cent of the resident workforce, with 30 per cent of workers in the transportation and storage sector.

This figure includes taxi drivers but does not capture other freelancers, such as those who have registered their business, as they are categorised as sole proprietors. Mr Ang estimated that the number of freelancers is now closer to 200,000 and expects this figure to rise.

Next, it would be worthwhile to establish the roles that contract workers or freelancers can perform, drill down to skill sets that are likely to be in demand, and establish whether their earnings are comparable to those of full-time workers in their industry. Also useful would be to study challenges faced when working for different employers.

This information will be useful to policymakers and those considering freelancing, so they can take the necessary precautions and manage their own expectations. For instance, one oft-cited problem that freelancers face is delayed payment.

Freelancers are not covered by the Employment Act as, according to Minister for Manpower Lim Swee Say in a parliamentary response on July 13 last year, "there is no employer-employee relationship between them and their clients". Freelancers thus have no (legally enforceable) payment date; they are typically paid upon the completion of a job. If that does not happen, they have to seek legal recourse through the small claims tribunal or state courts.

There are already several initiatives to help freelancers - last month, the National Trades Union Congress (NTUC) held its first freelancer fair to help freelancers network and connect them with relevant services, such as legal aid. The Attach and Train Programme (ATP) - organised by the Singapore Workforce Development Agency (WDA), NTUC U Creative and e2i - was also unveiled in June this year, allowing junior freelancers in the creative industry to be mentored in a company for a period of one to six months.

I propose two additional initiatives, drawn from my experiences as a freelancer and research conducted for an undergraduate project.

First, industry associations can create new or extend existing accreditation programmes to freelancers. The labour movement could work with them to do this, perhaps as a precursor to unionising freelancers in the future. Accreditation for freelancers can boost their credibility and give greater legitimacy to their status culturally, deflecting detractors who perceive their work as not being a "real" job. This is important in a society where tenured work has long been the standard arrangement. For companies seeking to contract freelancers, accreditation can be a form of "insurance". They should still do their own due diligence but it would help to know that the individuals they are hiring are deemed capable by an industry body.

Second, the National Jobs Bank, which is going to be revamped, can become an official online marketplace that offers government contracts to freelancers. While the National Jobs Bank lists jobs for freelancers and allows people to search specifically for freelance jobs, only private-sector freelance jobs are available. Government projects are currently available only via the GeBiz tender system, and only registered businesses and sole proprietors can bid for them.

The National Jobs Bank can develop a list of "market-rates" with the know-how of MOM, WDA and NTUC. This will help first-time freelancers price their services, ensuring they do not get short-changed or overcharge clients. Companies will also have a better understanding of fair remuneration for freelancers.

The recent narrative on freelancing has framed it as a solution for workers in times of economic uncertainty. But others like Mr Max Loh, Asean and Singapore managing partner of professional services company EY, suggest otherwise. At a recent Straits Times Future Economy Forum, he said that Singaporeans will be part of a maturing economy of freelancers and micro-entrepreneurs and, as technology increases productivity, they can expect more leisure time. This should give added incentive for us to look at how we can make freelancing work better.

The writer graduated from the National University of Singapore (NUS) this year. She is currently a research assistant at the Institute of Policy Studies, NUS, contributing to the work of the S R Nathan Fellow for the Study of Singapore.

Helping staff upskill is firms' key responsibility: Tharman
By Wong Wei Han, The Straits Times, 26 Oct 2016

Businesses here can become forces for social transformation if they help employees learn new skills and develop meaningful careers, said Deputy Prime Minister Tharman Shanmugaratnam yesterday.

He told a conference: "The most important responsibility of businesses going forward is to skill, re-skill and upskill every single employee in a way that (not only) makes sense for the business, but also develops their potential in life.

"The most important way, in my opinion, in which businesses can have a social impact... is for (them) to take very seriously the need to develop every individual employee's skills and potential throughout their careers."

Mr Tharman, who is also Coordinating Minister for Economic and Social Policies, was speaking to more than 400 guests at the opening of the Singapore Social Enterprise Conference, a two-day event organised by the Singapore Centre for Social Enterprise (raiSE).

His comments reflect the Government's ongoing push to encourage lifelong learning at a time when economic restructuring and technology are making many jobs redundant.

The nature of the workforce is also changing, with young people now "wanting to find work meaningful", while freelancers are becoming more common. This is a trend that social enterprises can use to their advantage, Mr Tharman noted.

"There's a significant number of people who want to work part-time and there are some among this group of people who would like to do something socially meaningful with some of their time," he said.

"So the so-called 'freelancer economy' - the group of independents in the workforce - is not just about the 'Uber-isation' of different business sectors.

"They include a group of people who potentially can be tapped and would like to have meaning in their lives by doing something socially meaningful."

Edible Garden City co-founder Bjorn Low, who attended the conference, is an example. Formerly an employee at a digital marketing firm in London, he gave up his job to learn farming.

His company was founded four years ago to use urban farming as therapy and an employment opportunity for people with autism. It has developed around 50 food gardens in underused urban spaces in Singapore. "We are now developing a production site of 8,000 sq m and we hope to hire 20 beneficiaries at the place," he said.

There are 303 social enterprise members at raiSE, which has committed around $3.3 million in grants and helped to create 205 jobs, according to its recently released annual report.

Making the 'gig' economy work for workers
The challenge lies in offsetting the loss of benefits like healthcare and saving for retirement
By Tan Wu Meng, Published The Straits Times, 26 Nov 2016

The so-called "gig" economy is growing, where people can do independent work for multiple hirers in the span of a day or week. Online platforms like ride-hailing service Uber are one example.

These changes present opportunities for Singapore workers - and challenges.

One area of opportunity lies in Singapore's ageing population. Caregiver duties will be a growing part of life for family members with frail elderly relatives.

Traditional whole-day or half-day work shifts may not allow them to balance caregiving and work - but a gig economy might.

For example, a retired nurse may want to keep busy without having to work full shifts.

Short deployments at a clinic or as a private nurse could earn her extra income, while drawing on her lifetime of experience.

Online marketplaces can help workers with skills and time, matching them with areas of demand and need.

This is especially helpful for tasks that can be done remotely.

The gig economy can also help small firms which cannot afford in-house departments or full-time employees for work in areas like design, editorial or translation.


The traditional payroll relationship between employer and worker involves benefits such as sick leave entitlements and healthcare support.

Workplaces and payroll employment are a fulcrum for state regulation and intervention, whether in maintaining safety standards or mandating Central Provident Fund (CPF) contributions by employers. But the gig economy is changing this.

Delivery drivers can be hired as payroll employees - but now, the relationship can be re-defined as a contract for service: the driver signs a contract to provide delivery runs.

Fundamentally the same kind of work, yet the firm can shift many responsibilities and risks to the worker - whether CPF contributions, insurance, or compensation in the event of an accident on the job.

The firm reaps the same benefits, but the worker has become more vulnerable.

There are deep implications for labour relations, healthcare and retirement adequacy.

Policies such as CPF are linked to the employer-employee relationship, especially the employer's CPF contribution.

Yet, by redefining a worker as a "freelancer" or contract service provider, the employer can disrupt this and avoid paying CPF.

This has knock-on effects for home ownership, Medisave and retirement.

In an ideal world, the market would enforce discipline on firms, so that workers receive adequate CPF and benefits regardless of status - payroll employee, contract service provider, or gig worker. But labour markets can become segmented.

Even in a tight labour market, there can be groups of workers who cannot find work, or who are underemployed.

In contrast, a gig economy that takes good care of workers can, in turn, benefit employers, by drawing talent and skills back to the workforce.

These workers might otherwise have stayed on the sidelines due to commitments that get in the way of full-time work.

Singapore is small enough to reinvent policy nimbly so that workers' interests are well protected in a gig economy.

Here are a few ideas.

We could test new ways to assess an employer's CPF contribution responsibilities.

Imagine a formula that looked at the hours of work spent on micro-jobs, or the remuneration each month from a contractor arrangement, then specified how much the firm should contribute in CPF for the worker.

If an employer treats a worker like an employee, then re-defining the job as "self-employment" should not be a loophole to avoid responsibilities.

This could act as an "operating system" to help workers build up CPF retirement savings even in the gig economy.

Once in place, it would open the door to policy measures. What if a minimum employer CPF contribution were specified, for each hour worked or each unit of labour?

This could also be a platform to facilitate employers to purchase insurance and pool risk, so that workers are not left in the lurch should a workplace accident occur, or without pay if urgent sick leave needs to be taken.

The idea of risk pooling is not far- fetched - MediShield Life already provides a form of portable medical insurance for workers, whether in the conventional payroll or gig economy labour markets.

Trade union collective bargaining and tripartism will be even more important in the years to come, to help rebalance the asymmetries of the gig economy.

The public sector can also help shape market norms by providing adequate benefits when hiring contract workers, while ensuring that every subcontractor gives their own workers a fair deal - regardless of how the job is defined.

Some of these suggestions may have seemed far-fetched a decade ago, as would have the notion of a gig economy. But history has shown that the world can change in unexpected ways.

We must keep up, and disrupt the disruptions, so that these changes can work for our workers.

The writer is a medical doctor and a Member of Parliament for Jurong GRC.

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