The COVID-19 pandemic has brought home the extent to which technology is reshaping our economies and industries. One such industry is the gig economy, a labour economy of sorts where speed and convenience are the norm, characterized by temporary or short-term work opportunities that are sometimes completed within minutes.

According to the McKinsey Global Institute, the gig economy will contribute US$2.7 trillion to the global economy by 2025. A significant proportion of the gig economy is digitally powered by platforms and apps and fuelled by the ubiquity of smartphones. People seeking flexible hours, high autonomy, and options outside of traditional employment, including people left out of the traditional labour market, such as mothers caring for children and retirees who seek continued income, have benefitted from job and income opportunities that cater to their unique circumstances.

Like traditional employment, gig work can be performed on a part-time or full-time basis. However, unlike traditional employment, each gig – or job – is usually performed at the discretion of the gig worker. In the ride-hailing/delivery industry in particular, these gigs are completed in minutes. The decisions of which gig to undertake and how many are the prerogative of the gig worker, allowing for flexible hours and control over one’s schedule and clients to a degree inconceivable in traditional employment.

While gig work has its advantages, trade-offs exist. Since gig work is not affiliated with an employer, gig workers lack access to benefits and social security mechanisms that often accompany traditional jobs. Gig workers, like other categories of informal workers, face challenges in accessing services such as financial products, skills development or social support.

An in-depth study on gig workers and their financial health

To better understand the financial realities facing gig workers, UNCDF – Centre for Financial Health conducted a cross-sectional survey across five platforms in Malaysia and China, including Grab, between January and July of 2020. Grab is a super app that provides everyday services such as mobility, food, package and grocery delivery, mobile payments and financial services across eight countries in Southeast Asia. A total of 14,089 Grab drivers and delivery partners participated in a financial health, behaviours and services survey.

This report, entitled Financial Health of Workers in the Gig Economy – A Case Study of Grab Drivers and Delivery Partners, analyses the financial lives of Grab drivers and delivery partners and, by extension, those who participate in short-term employment. Based on the research findings, it offers recommendations to platforms, financial service providers and policymakers to help gig workers lead well-rounded financial lives.

A look at Grab drivers and delivery partners in Malaysia

Grab drivers and delivery partners are a diverse group across age, education and income. A little over third of those surveyed were between the ages of 25 and 35 years-old, followed by almost a third between 36 and 50 years-old. Youth between the ages of 15 and 24 years-old make up only 12.4% of the sample and are typically delivery partners via GrabFood. A majority of the sample, at 70.9%, have completed at least secondary school education, while the rest have a pre-university education or higher. 88% of the sample have an annual income of less than MYR 6,000 (US$1,462.34) from all sources.

Despite their diverse profiles, most Grab drivers and delivery partners are attracted by the flexibility that the platform offers, from work hours (63.6%) to control over who one works with (49.2%). Other strong reasons as to why the respondents chose Grab were to supplement their primary income source (48.5%) and making extra money to prepare for the future (32.5%). Only 13.4% of Grab drivers and delivery riders chose Grab for a lack of traditional options – for these partners, they did not have the luxury of choice and joined Grab out of need.

Financial health and financial behaviours, and how they work together

These varied backgrounds and motivations for joining Grab play a part in influencing the respondents’ financial behaviours. Those in the 15- to 24-year bracket, for example, tend to save more regularly and enjoy greater financial freedom because they have fewer spending commitments compared to their older counterparts. Their motivation for saving also vary; youth typically save for future assets such as obtaining a vehicle or a house while those aged 50 and above are saving for their retirement.

The key predictors of financial health outcomes, however, are the financial behaviours of moderate spending, regular saving and deliberate planning. Those who spend within their means most of the time, save frequently and engage in more deliberate financial planning enjoy financial security and freedom, are more resilient and feel in control of their financial lives most of the time, relative to those who do not demonstrate these behaviours.

These financial behaviours do not just predict financial health outcomes – they can also improve them, with those who do not practice such behaviours being more likely to borrow to meet emergencies and other unexpected expenses.

How financially included are Grab drivers and delivery partners?

Usage of savings accounts and debit cards is high among most Grab drivers and delivery partners, indicating a high level of financial inclusion, but the range of financial services that they use is limited. While a small proportion use a range of financial products and services including insurance and Malaysia’s Employees Provident Fund, the use of more sophisticated products such as investments is more prevalent among the well-paid and well-educated. And despite 56.3% of the respondents using e-payments through their smartphones, cash is still preferred with 75.4% of respondents using cash as their primary form of financial transactions.

Gig workers choose the gig economy for its flexibility and independence, yet face financial challenges both in adopting positive financial behaviours and using financial services, including digital. To provide gig workers with the most relevant and accessible services, the financial sector must appreciate the diversity of this segment, tailor its service offerings accordingly, and adapt its products and services to the nature of labour and income in the gig economy. Grab, a super app providing a range of income and financial opportunities, provides a fitting case study for those looking to help gig workers lead well-rounded financial lives.