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The Gig Economy: Unions Emerge Victorious in Regulation

Commentary: Unions have a lack of trust and understanding towards the entrepreneurial spirit. They strive for uniform outcomes and play on the fear of worker exploitation by employers. The introduction of the government’s “Closing Loopholes” bill aims to eliminate contract hire and enforce equal pay for contract workers compared to full or part-time employees. Minimum wages for “gig” workers are also proposed, but only in certain industries. Additionally, proposals for the Fair Work Commission to set minimum standards for truck drivers have been put forth. While the cost is estimated at $9 billion, the true cost to employees and the overall community extends beyond just a nominal increase in wages and includes factors like flexibility and job satisfaction.

Personal Experience with Gig Work: As someone who has been a gig worker for most of my life, starting with a lawn-mowing business in university, I can attest to the convenience and benefits of gig work. Though I didn’t view it as a series of gigs at the time, but rather as a business, I believe many gig workers see it the same way today. People enter gig work for various reasons, and in my case, it was the flexibility of a part-time job while attending university. This decision eventually led to building a small business that I was able to sell. I wasn’t forced into gig work, and the more effort and intelligence I put into it, the more I earned. Starting at $5 an hour, I eventually made $30 an hour by the time I sold the business a few years later. While my primary source of clients back then was the Yellow Pages directory, platforms like Airtasker, Freelancer, Gumtree, Google, or even personal websites are likely the go-to sources for gig workers today. Some platforms serve as advertising hubs without built-in e-commerce features, while others, like Uber or DoorDash, are structured more like traditional businesses, with contractors resembling employees. It is these platforms that the government is targeting.

Motivating Change with More Tax Dollars: It is interesting that gig work has long been prevalent in the transportation industry, with taxi drivers receiving a share of what they earn rather than a wage and driving vehicles branded with a company’s logo. Legal disputes have attempted to classify self-employed truck drivers as employees. Last year, a ruling by the High Court determined that as long as there is a clear and comprehensive contract, individuals can be considered contractors even if some of their actions resemble those of an employee. This decision not only affects employment but also taxation. Contractors enjoy advantages that employees do not, such as income splitting with a partner to lower tax rates. Both the Australian Taxation Office and the federal government disapprove of this practice. However, it is puzzling that the government’s focus seems limited to specific companies such as Uber and Mable, while exempting Airtasker. The exemption of Airtasker may be attributed to its significant donations to the Labor party during the last election. The government justifies the new laws on the basis of “safety,” citing road accidents involving gig workers. However, the logic behind this reasoning is questionable, as the dangers of the road apply to various occupations, not just delivery drivers. The government’s attempt to limit the legislation may be a diversionary tactic, intending to expand its scope once enacted.

The Benefits of Gig Work: The gig industry has valid economic reasons for growth and success. Many trades, professional services, and sales firms, whether small or large, operate using the gig model. Local solicitors or architects, for example, often engage in gigs. The gig economy aligns resources with demands most effectively. If a business only requires occasional coverage for a gap, gig workers are a valuable asset. Depending on the required skills, gig workers may earn more than traditional employees. Employers benefit from not having permanent employees and often compensate contractors through higher contract rates. Gig work also allows individuals to transform underutilized personal assets, such as cars, into business assets and generate income during leisure time. Many Uber drivers, for instance, utilize downtime to save for personal goals like purchasing a house. Gig work also provides flexibility for workers with family priorities or those who cannot justify the same wage as more experienced workers. If these workers are brought under the employee category, the same technologies that facilitated their employment opportunities may also aid in unionizing the workforce. Unions struggle to accept that incomes can be determined by market forces rather than set rules, suspecting exploitation is involved if wages are lower or higher. Ultimately, supply and demand dictate wages, whether they are regulated or not. Unregulated wages tend to rise over time, allowing workers to accurately price their worth. Technological advancements, rather than trade unions, are the main drivers of increasing living standards. Unions have historically denied these realities, and it would be naive to expect a change in their perspective. Now, with a government that shares the same mindset, unions have a favorable environment, though it may adversely impact the living standards of the rest of society.

Note: The views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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