The Gig Economy And Aging Population: How To Reform Our Pension Systems?

In the UK, where the size of the gig economy has doubled in the last three years, roughly one in 10 people now work flexibly, for platforms such as Uber or Deliveroo. They gain freedom and autonomy and, according to research, value the opportunity to work on broader goals.

The gig economy is booming worldwide, but regulations have not kept pace with the changes in working behavior. Gig economy workers typically don’t get the perks that come with being an employee, such as sick pay, holiday pay and pensions.

Late last year, the OECD warned of gaps in the pension arrangements between standard and non-standard workers and called for governments to “quickly put in place more inclusive and harmonized pensions for all”.

Long-term pension pressures

Over the next 40 years, pension systems across the world will be put under increased pressure by an aging population. In OECD countries overall in 2020 there are 31 people over 65 for every 100 people of working age. By 2060 that figure is expected to have almost doubled, to 58 per 100 people.

At the same time, recent pension reforms have loosened age requirements to receive a pension, increased benefits or expanded coverage – all measures that add to, rather than relieve, long-term pressures on the system. The OECD warns: “Backtracking on reforms that address long-term needs may leave pension systems less resilient to economic shocks in the future and unprepared to face population aging.”

Add to that the growth of flexible working, where employees are unlikely to have one at all unless they arrange their own private pension, and you have a recipe for many people who will not be able to support themselves in retirement.

The Way Forward: Portability

For that reason, we need new and innovative solutions. One of the ways forward is to ensure that all forms of social protection, including pension rights, become fully portable. Workers in diverse forms of work, such as agency workers, should have the same opportunities to build up a pension as people in full-time, open-ended employment,

The logic of portability is already applied in areas such as investment in employee skills and lifelong learning. Countries such as France, Italy, and Singapore have pioneered models that provide, to a certain degree, employees with their own personal, portable, and transferable training accounts which finance skills training throughout their careers.