Rise in ‘bogus self employment’ will lead to old age poverty

Rise in ‘bogus self employment’ will lead to old age poverty

A rise in ‘bogus self employment’ means many individuals are missing out on employment benefits such as a pension, according to Trade Union Congress policy and campaigns support officer Jack Jones.

Speaking this morning (June 15) at a Work and Pensions Committee hearing on protecting pension savers – five years on from the pension freedoms: Saving for later life, Jones said there has been pension participation among self employed individuals, but it is important to focus on the ‘bogus self employment’ - people who should be classed as workers or employees.

Giving the example of Uber who, as a result of GMB legal action, are having to class their drivers as workers and give them a pension, Jones said there needs to be work here to give these types of individuals the chance to take place in an occupational pension.

“We need to look a bit more about where you can get recognition agreements among gig economy employers, and whether that can be used as a way to encourage those employed, maybe even where workers are still classed as self employed, to provide pensions for them,” he said. 

According to research by the TUC, around 4.4mn people are working in the gig economy.

Jones said about 15 per cent of the workforce do platform work, at least once a week. 

“For those that have full time jobs, some will be supplementing their income. We found almost 23 per cent of people have done platform work at some point.”

Currently, the Pension Regulator is encouraging gig economy companies to class staff as workers and said it's working with gig economy employers covering about 150,000 to 200,000 people that will be auto enrolled, which Jones said is a ‘small proportion’.

Jones said: “We do want the kind of a presumption of worker status unless companies can prove otherwise rather than what you've got at the moment where it's based on you accepting how the company classifies their workers unless it's challenged. 

“That would be a significant step in the right direction.”

No employment bill in the Queen's speech

Earlier this year, there was no mention of an employment bill in the Queen’s speech which Jones said the TUC was "very disappointed" not to see.

“It's something we've been calling for for a long time and obviously the government has been claiming it is in the works for quite a long time as well,” he said. “We think that's very important.”

Meanwhile, Communication Workers Union’s deputy general secretary Terry Pullinger, said there absolutely needs to be a bill to help gig economy workers.

Referencing a statistic from Money and Pensions research in 2020, he said 69 per cent of people have got little or nothing in respect of retirement planning and only 7 per cent believe they are prepared for retirement. 

“It is going to be a stampede to old age poverty in this country if people don't do something,” he said. 

“It isn't just what type of scheme you have, it's got to be about employers and the employment model because that's only become popular over the last few years with the bogus self employed model.”