By Marco Margiotta
Around the world, employers are experiencing first-hand the impacts of what’s being called the ‘Great Resignation,’ emerging from the COVID-19 pandemic. For our neighbours to the South, 4.5 million Americans quit their jobs in November 2021, which matches a series high from last September. This trend has caused many traditional employers to review retention incentives and salary bands to retain top talent amongst competitors.
While Canada is often compared to the United States, experts have shared this challenge isn’t as prevalent here. According to CIBC Capital Markets, the Canadian job changing rate remains ‘essentially unchanged’ from pre-pandemic levels, while the U.S. has seen a drastic increase in people leaving their job voluntarily. A couple of factors might be influencing this disparity — the structure of Canada’s wage subsidy program to incentivize workers to keep their current jobs, and that Canadians are not selecting early retirement as frequently as American counterparts. But, this does not mean the Canadian labour market hasn’t been impacted by the pandemic.
Recent research from BDC highlights that remote work has become part of the new normal, with Canadian employees citing increased efficiency (41 percent), decreased absence rate (36 percent) and improved work quality (29 percent) as key positive indicators. The country has also seen growth in the gig workforce, as this segment of the economy became essential through the pandemic. Gig workers have become a growing share of our workforce, now representing more than one in 10 Canadian adults as per data from Payments Canada.
Gig work, also referred to as contract work or independent contracting, consists of income-earning activities outside of a standard, long-term employer-employee relationship. This could include, but is not limited to, rideshare driving, delivery services, project-based website design or consulting. According to a recent study by Public Policy Forum, half of gig workers surveyed in Canada indicate they prefer gig work because of the flexibility it offers – a trend in line with Canadian work-from-home preferences.
To protect this growing segment and help prevent voluntary gig work resignation, talent leaders must find ways to support these workers. One key aspect is earned wage access, as income volatility can be high for this group. Here are three ways to help support earned wage access for contract workers:
• Pay wages on time. A Freelancers Union study found that 71 percent of freelancers have had trouble getting paid and 25 percent have not been paid at all for work completed at some point in their career. This can cause significant detriment to a person’s budget and ability to pay personal and professional bills on time. With timely access to wages, gig workers in the rideshare field can ensure a low gas tank or flat tire doesn’t derail their workday, week or month.
• Offer electronic, secure payments using an on-demand platform. The entire payments industry has witnessed a seismic shift in the last two years to mass adoption of digital banking, payments and financial services. Notably, the gig economy is highly engaged when it comes to digital payments options, and more likely to frequently use electronic payment methods than non-gig workers according to Payments Canada. The same research uncovered that gig workers prefer to be paid through electronic payments as this enables fast, secure and traceable payments for better financial management. A platform like Payfare facilitates on-demand and instant access to earnings for gig workers. We created a simple API integration for gig economy platforms like Uber, Lyft and DoorDash, so that workers get instant access to their pay through a free digital bank account, as well as to rewards and discounts on things like fuel. By using Payfare, workers also have access to free in-network ATM withdrawals, online bill payments, fund transfers and more, with no minimum account balance requirements or costly monthly service fees like with some traditional banks.
• Treat gig workers as entrepreneurs. Every worker in the gig economy should have the opportunity to become an empowered entrepreneur with dignity and financial security. The disconnect between the gig workforce’s payment preferences and current payment methods by Canadian businesses limits this opportunity. From first-hand company research, many rideshare drivers would either get their earnings early through a third-party payment processor with fees or they would use traditional bank accounts that had slow transfers. Bank accounts can also be costly for low-balance clients, leading them to turn to predatory check cashers and payday lenders to fill the gaps. Providing gig workers with the payments tools and expectations needed for maintaining strong financial health will set them up for success in the long-term.
Supporting earned wage access through on-demand payment means equipping Canadians with the financial flexibility they need to live and run their business. As Canada continues to manage the pandemic’s impact on the labour force, maintaining the recovery in Canada’s participation rate will keep the nation further away from the ‘Great Resignation’ trend. Our gig economy is essential, and we must work together to treat them as such.
Marco Margiotta is the CEO and Founding Partner of Payfare