Participation in the gig economy has grown rapidly over the last few years and is undoubtedly an industry that has been impacted by COVID-19. Since the onset of the pandemic, the gig economy has expanded exponentially due to an increased reliance on gig workers to provide greater convenience to consumers — like getting groceries and restaurant meals delivered directly to their doorstep — especially at a time when safety concerns have been heightened and consumers have a preference for all things contactless.
In Canada, the significance of the gig economy workforce within the broader economy has grown rapidly. In fact, new data from a recent Payments Canada report estimates that gig workers now represent more than one in 10 Canadian adults, and more than one in three Canadian businesses employ gig workers.
Key factors fueling this shift in the labor market include the prevailing economic impact of the pandemic, with many businesses across a range of industries either suffering loss of revenue, going into hiatus, or closing altogether. For example, four percent of businesses shut down temporarily in 2020 and remain shut, and a further 37 percent remain only partially operational.
The gig economy can offer flexibility for its workers and is often seen as supporting a work culture and mindset of empowerment, autonomy and nurturing an entrepreneurial spirit. Others may be drawn to it simply because it’s the only more immediate work they can find. While gig work can and has opened up opportunities for people to find work arrangements that suit them, it can also come with its own set of challenges.
Transitioning to working in the gig economy inevitably impacts how a person is likely paid for their services. When we dig deeper and look at the current state of the gig economy from a payments perspective, what we are seeing is a pretty significant mismatch between how workers are getting paid and how they want to get paid.
Ironically, gig workers and the businesses that employ them want the same thing from a payments solution standpoint – fast, convenient, secure, and traceable payments methods. But despite having payment options at their disposal that meet these needs, Canadian gig-workers and the businesses that employ them have identified the need for improvements.
In fact, almost 40 percent of Canadian gig workers want to see improvements to how they are paid. Two key areas that they identified for improvement are to be paid faster and be able to trace these payments more efficiently. While there are existing payments options that provide those benefits such as direct deposit, small- to medium-sized businesses — which make up more than 98 percent of Canadian businesses — continue to primarily use Interac e-Transfer (by 42 percent of SMEs) and cheques (by 32 percent of SMEs), leaving gig workers’ preferences unaddressed.
For one in five Canadian gig workers, it currently takes at least a couple of weeks to receive payment after their work is done. Moreover, the gig workers who do get paid on the same day that their contract is done are predominantly paid by cash (59 percent), which creates challenges in terms of traceability.
This points to a significant opportunity to evolve the payments solutions within the gig economy to benefit both workers and their employers. As the popularity of gig work and its impact on the economy continues to grow, we must look ahead and find new ways to support those within the gig ecosystem.
The modernization of Canada’s payments systems can support meeting this need and improving the overall efficiency of the gig economy, and in turn, the Canadian economy.
Increased use of direct deposits will help facilitate the gig economy in achieving faster and more efficient, secure and traceable payments. Longer term, the creation of the Real-Time Rail (RTR), which will provide immediate, 365/24/7 payments that are final and irrevocable and will allow for new payment experiences, such as real-time payroll. With real-time payments, business owners will be enabled to pay individuals for the time they’ve worked immediately after their shift. The RTR supports the opportunity to be paid by the hour, by the day—basically on-demand. This can be critical for those who need to access funds immediately.
At Payments Canada, we are committed to provide Canada with a payment infrastructure that is fast, reliable and works for businesses of all sizes and consumers of all types. The modernization of Canada’s payments systems is transforming the payments ecosystem and will result in a more competitive and innovative payments environment that will benefit all Canadians. Visit payments.ca to learn more.
