The tumultuous period of circuit breakers and social distancing measures saw a massive boom in gig workers, with 60% of local food delivery riders entering the gig economy during the COVID-19 pandemic.
However, as COVID-19 slowly fades into the background and inflation continues to rise, the tough reality of being a gig worker is also revealed.
In a study released by DBS on 13 July, gig workers were found to be spending significantly more than what they earned from work.
Reasons For Increased Expenditure Attributed to High Inflation, Rising Interest Rates and Less Job Stability
The study by DBS reveals that the expense-to-income ratio for gig workers was at 112% as of May 2023. This is a shockingly worrying statistic compared expenditure of a median customer who spends only 57% of his or her income on regular expenses.
Due to high inflation from the rise in GST, as well as rising interest rates set by the US federal reserves, there has been a rise in living costs in Singapore. This leads to the need for a higher level of expenditure in order to cover one’s expenses.
Gig workers have been more heavily hit as a result, since they have a less stable income due to them having to rely on the volatile number of gigs available on online platforms.
With less income stability, these gig workers have to sacrifice their savings to cover their expenditure needs. This resulted in a drop in savings, with an average gig worker having savings equal to just 1.7 months’ worth of expenses as of May. In comparison, an average customer has about twice the amount of savings at 3.5 months worth of expenses.
While gig workers may not enjoy as much unemployment benefits unlike blue-collar workers in other areas, the government has worked to support these workers in accruing more savings.
Such efforts involve raising the CPF contribution rates to build long-term savings for housing and retirement.
In order to ease the transition to higher CPF contribution rates, government funding of up to 75% of the increase in CPF contributions will be provided in the initial years to lower-income platform workers.
Tweaks to the Workfare Income Supplement scheme have also been made to help cushion the hit on the take-home income of gig workers.