Gig work as cost trap? The Living Tariff Calculator helps self-employed people to calculate the hidden costs of their jobs — from standby time to equipment. Already tested in several countries, the tool now ensures greater transparency and fairness.
The gig economy, with its promise of flexibility, low entry barriers, and a sense of autonomy, has led many workers — particularly unemployed youth — to view platform work as an alternative to traditional employment. However, the lack of protections typical of formal employment exposes workers to poor working conditions and inconsistent pay. The concept of “living wages” could serve as a benchmark for fair compensation. For gig workers, the question isn’t just, “How much should I charge for my services?” but rather, “Are my wages enough to live and find my next job?”
Unlike minimum wages, which often fall short, living wages offer an active framework for self-employed gig workers to discuss the minimum income floor and the inconsistencies in earnings that gig workers face. A living wage includes essentials like food, housing, healthcare, education, and upskilling.
Yet, for gig workers, a living wage misses crucial out-of-pocket costs like equipment, fuel, unbilled hours spent waiting for assignments, non-payments, service charges, fluctuating demand, and higher tax rates as independent contractors. With no guaranteed income or social benefits, gig workers bear these financial burdens alone and often lack resources to calculate fair rates for their city.
For regulators, worker representatives, and workers, calculating these costs can be a significant challenge. This is where the concept of “living tariffs” comes in, providing a more accurate and fair approach to wages. A living tariff sets a minimum rate per task or time unit that accounts for the specific costs and uncertainties associated with gig work.
This approach is tailored to the on-demand nature of platform work and offers a more dynamic and equitable way to ensure workers can earn a sustainable income. Living tariffs could also include contributions toward essential benefits, such as health insurance or retirement savings, which are traditionally absent in gig work arrangements. While gig workers may not have formal employer benefits, a portion of each living tariff payment could be allocated toward a benefits fund, offering them a measure of financial security.
Living Tariff Calculator: fair wages for gig workers
The Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) and the Wage Indicator Foundation have built a simple-to-use, data-driven Living Tariff Calculator for gig workers. The Living Tariff Calculator empowers gig workers across countries to calculate, negotiate, and understand the actual cost of a gig.
Piloted in Kenya, Pakistan, Indonesia, and India, this tool represents a step toward fairer labor conditions worldwide. It allows workers to understand the minimum wage floor for their profession and city, as well as to customize the calculations based on their actual work situation.
The features are designed with flexibility in mind: users can input specific costs, customize expenses based on their profession, and adjust to factors such as location, allowing for a highly personalized and realistic calculation.
To ensure the tool’s accuracy and effectiveness, we initially prototyped and tested it in Kenya, Pakistan, and Indonesia, gathering feedback and refining its features. Since then, we’ve expanded its use to additional countries, including India and the Netherlands, and there are plans to develop the tool for other locations.
The Living Tariff Calculator is live and is being used by hundreds of workers and policy stakeholders as an adaptable and equitable solution to the question of fair wages in the gig economy.
For more information on this project and the living tariff calculator, contact Pooja Gianchandani at [email protected] .
