WageIndicator - Towards a Living Tariff: Even freelancers deserve a fair income

Author: Martijn Arets (Website - LinkedIn - Twitter)

"Whether you are an employee, entrepreneur or freelancer, you deserve an income you can live a decent life on," says Paulien Osse, co-founder of the WageIndicator Foundation. "That means enough money for food, a home, transport and health. May sound logical, but it is far from being so everywhere in the world."

WageIndicator Foundation has been calculating what a "Living Wage" is for workers for more than 10 years. By now for more than 166 countries. Large companies such as Unilever, IKEA and L'Oreal use WageIndicator's calculations to determine what a decent wage is for people they employ worldwide. About 3 years ago, the 'Living Income' was added, giving large companies insight into what suppliers such as small family-owned businesses like coffee farmers should earn at the minimum.

One group was still missing: workers who are not employed. Especially for them, the WageIndicator Foundation developed the 'Living Tariff'. As a platform expert and member of the WageIndicator team, I collaborated on the development of this concept. The concept and its online tool provide insight into minimum hourly rates for freelancers: from consultants and software developers to platform workers such as food delivery workers, taxi drivers and online translators.

Developing such a concept is not easy and it involved many WageIndictor colleagues, each from its own expertise. At a meeting in India with over 70 colleagues from 45 countries, I took the opportunity to interview key figures in the development of the Living Tariff tool. In the latest episode of The Gig Work Podcast, find out more about the development and conditions to introduce the Living Tariff globally.

'Living Wage is not for everyone'

First, co-founder of the WageIndicator Foundation Paulien Osse tells the story and idea behind the Living Tariff. She explains that it is based on the Living Wage: the income an employee should earn to make a decent living. Currently, WageIndicator has calculated a Living Wage for more than 166 countries. Every quarter, this is updated based on current prices of more than 100 products. While this data was first only available for a fee, the foundation has recently made the information publicly visible. 

"We see that it is becoming more and more common sense for companies to engage in discussions about a living wage," says Osse. "Our information provision contributes to this. But a living wage does not apply to everyone, for example entrepreneurs."

Paulien Osse, co-founder of WageIndicator Foundation

Income for entrepreneurs, a Tariff for gig workers

That is why WageIndicator also calculates a 'Living Income' for entrepreneurs. And it recently added the Living Tariff, especially for freelancers doing 'gig work'. That means short-term, short-period work for different clients. So these are workers who do not have an employment contract, for example platform workers.

The basis of the Living Wage is the Living Wage plus things that workers who are not employed have to pay themselves. These include wage tax, social security contributions, non-declared hours and costs to perform the work. As different costs apply to each profession and region, these tariffs vary from one situation to another. "It also has to do with type of work, pension costs and necessities such as a bicycle, laptop or computer," Osse explains. "Non-declarable hours such as waiting and administration time also count. Also important to know: the tariff is a floor. It is the minimum to live on."

'Too difficult? I wasn't satisfied with that'

Osse started with her own inventory and calculation. She then spoke to experts, such as payroll experts and professors. "Almost everyone warned me that calculating a Living Tariff was too difficult," she says. "But I had a mission, so I didn't settle for that. I compiled a list of data we needed to collect and got to work. First in the Netherlands, because this is the market I know best."

With financial help from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ, the German Association for International Cooperation) and support from international colleagues, we managed to launch the tool in six countries. Now WageIndicator wants to bring the tariff to the attention of more international platform companies and countries. "Yes, it was a lot of work. But now that the basic concept is in place, we can expand. This too will take time, as it requires a lot of social engineering. We need a strong network and knowledge of the local market to really make an impact."

Exploring differences between professions

What is involved in calculating a Living Tariff? Data analyst Nii Ashia Amanquarnor was closely involved in the project. "We did a lot of research into the cost differences between various professions," he says. "For example, a food delivery worker needs a car and a smartphone, while a software developer only needs a laptop. Furthermore, freelancers should be compensated for waiting time, administration hours and leave." Moreover, it is very unhealthy if you feel you always have to work, he stresses. "Every worker needs time off, weekends, holidays. So you need to earn enough to afford that."

Amanquarnor includes all those factors in the calculations. Furthermore, he and his colleagues ensure than the figures are up-to-date. It is impressive how 300 data collectors around the world continuously contribute to this huge database. "Every quarter, we recalculate the costs based on current data on inflation, for example. We do that per province."

Nii Ashia Amanquarnor, Data Analyst

User-friendly, comprehensive tool

How do you make all that data easy and quick to understand for freelancers and their clients? Data director Daniela Ceccon knows all about that. "The tool should be easy to use and provide specific information about your situation," she says. "For example, a Kenyan food delivery worker with a motorbike will see a very different calculation than a Dutch bicycle delivery worker."

The tool not only teaches you what your tariff should be, but also how much money you need to put away for tax, social security and pension. You also get insight into average waiting times and the number of holidays and leave days you need to take into account. Ceccon: "In this way, the Living Tariff also contributes to awareness. It teaches freelancers that they have to take many more things into account themselves than salaried employees."

If your situation is different, you can easily adjust numbers in the tool. "We researched what the average waiting time per hour is, say 10 minutes. If you know that you generally have to wait more, you can change that. You can also add additional costs, for example for software, transport or equipment."

Daniela Ceccon, Data Director of WageIndicator Foundation

Implementation and collective bargaining in Indonesia

So the tool can add value for all kinds of freelancers worldwide. How does implementation work in practice? That is what I discuss with Nadia Pralitasari. She was closely involved in the preparation and implementation of the Living Tariff tool in Indonesia early this year.

She explains that many Indonesians have traditionally not been employed. "The informal market has always been big and since the rise of super apps Gojek and Grapp, working via platforms is wildly popular," she says. "The Living Tariff tool gives workers insight into what they are worth within a few clicks. It's important information, but unfortunately this knowledge is not currently applicable to everyone."

After all, you need bargaining power to actually get that higher tariff. "Many gig workers just get the amount the app pays out," Pralitasari explains. "We think things should be different, but lobbying is not our job and the government does not see us as a discussion partner. We provide information. Fortunately, recently, government and business do talk to unions about the situation of gig workers."

This is why the WageIndicator team encourages platform workers to join unions. "We hope that our information and collective bargaining power will eventually lead to fair, living tariffs," he says.

Fiona Dragstra, Director of WageIndicator Foundation, and Nadia Pralitasari, Gig Economy Project Officer

'The real work only begins now'

What is needed to increase the impact of the Living Tariff? What lessons did the team learn? I finally talk to initiator Osse about that. "First, you have to realise that it takes time to develop a good foundation," she explains. "It requires research, conversations with stakeholders and you have to do a lot of testing. But it is definitely worthwhile, this can really lead to change."

Freelancers and gig workers are simply not employees and often not entrepreneurs who can freely negotiate their tariffs, Osse stresses. "My mission is to convince people step by step of the need for a decent hourly rate for everyone. The tool is just a tool, the real work is only beginning. It may take another 10 years before the Living Tariff is an accepted and widespread concept."

Conclusion

It was special for me to hear the story behind the Living Tariff from a diverse group of stakeholders. I am now even more aware of the potential impact of this tool. At the same time, it became clear to me that the website in itself is not going to bring change. That would also be too easy. Only when every stakeholder in the situation takes responsibility and recognises that everyone deserves a Livable Income will change. We need to recognise that the collective interest outweighs the individual or institutional interest. That is why I call on everyone to take this responsibility. I look forward to the growth and impact of this new tool in the coming years.