How to go about moonlighting? | The Financial Express

How to go about moonlighting?

Moonlighting policy may necessarily incorporate aspects on leisure, nature of employment and transparency.

How to go about moonlighting?
To a great extent, in developing countries, especially in private companies, the price of leisure increases with an increase in wage rate and vice versa.

By Surjith Karthikeyan & Jayasree S

‘Moonlighting’ refers to an individual having multiple jobs for additional income and usually a job beyond normal working hours. There are views for and against moonlighting. Some employers welcome the same from the angle of cheap and flexible labour availability whereas others are against it citing confidentiality concerns of an existing job, cheating the primary employer who is providing long-term employee benefits and facilities. However, there is no denial of the fact that employees who are bound to confidentiality agreements with employers may never resort to moonlighting.

Moonlighting is a key component of work experience of American families wherein more than 5% of all workers contribute to it according to US Government figures. Studies reveal that though economic motives are mainly behind a second job, non-economic motives like exploring new career options, affinity or taste for a particular job also matters. Here comes the significance of ‘leisure’ which could be defined as a condition wherein one has free time from the demands of work/duty. While leisure is enjoyable, workers benefit from job through the income earned from the same.

Moonlighting and leisure

Leisure and moonlighting indeed have complex relationships. To a great extent, in developing countries, especially in private companies, the price of leisure increases with an increase in wage rate and vice versa. However, there is a time limit beyond which one could not work for such jobs due to reasons which include inter alia, work nature like physical presence requirement, family and other sociological reasons. This motivates worker to do part-time online jobs suiting their hobbies/talent, which attracts enough salary, encouraging them to substitute work for leisure, which in economic theory is termed as substitution effect of increase in wage rate. There are chances of an employee pursuing his own accounting business or consulting activity having principal interest similar to the organisation he works, thereby exploring and utilizing the wage increase across the similar business environment. This phenomenon is termed as substitution effect of wage increase in the primary job of an employee.

In contrary to the above relationship, an income effect of an increase in wage rate of one’s primary job may result in increase of his real income. This motivates the worker to buy more goods and at the same time more leisure, indeed forcing the workers to work less hours as his family needs get satisfied by working for less hours at high wage rates. This income effect may at specific cases be larger to overcome the substitution effect explained above.  There are specific cases too wherein, due to family responsibilities, one prefers more income to more leisure by working more than forty hours in a week without compromising confidentiality provisions of primary job. In view of the above, a cautious approach by the primary employer in formal sector is warranted to ensure that wage rate may neither promote own business/consultancy nor laziness among workers in their primary job. Thus, a combination of job security coupled with well-drafted job agreement may be ensured for the workers by primary employer to prevent moonlighting especially for formal jobs.

Informal and contractual jobs

While informal jobs are prevalent in developing economies, contractual jobs are indeed high in developed economies. The fourth industrial revolution may witness more of such contractual and sub-contractual working environment. Certain high skilled contractual jobs demand high salaries whereas semi-skilled or unskilled ones are less paid. Both these sectors may be of confidential nature depending upon the nature of work performed by the workers but at the same time may need to be adequately compensated. Recently, in India, Swiggy has welcomed and supported moonlighting for their workers, as their job environment is either semi-skilled or unskilled in nature. More sectors may need to come out with such enabling environment for their workers but at the same time moonlighting be made within the formal working environment, thereby contributing their economic activity to national income. Informal jobs as part of moonlighting in the informal sector may need to be formalised to built a secure working environment especially in developing countries.

Another most common form of moonlighting could be explained with an example wherein an owner of a house paints his house himself either by taking leave or after working hours in his primary job. Similar environment may also be witnessed wherein a company worker owns a farm and contributes his leisure time for farming activities. These informal job environments are indeed complex and thus demands formalisation of all economic activities.

Formalising moonlighting

Opportunities are to be enabled by the companies for workers in their primary job to work overtime on those areas which suits their talent or skill. This may be coupled with double overtime salary for those working hours, thereby attracting them and not resorting to moonlighting. This may necessarily be practised in companies which have job agreement with labourers, having confidential provisions in it. This endeavour may result in an optimal environment for both the company and the worker. 

Most of the jobs undertaken by moonlighters are either contractual work of self-employment which aren’t within the taxation purview, as the amount of income which escapes taxation cannot be measured accurately. Research in US also reveals that decisions regarding number of jobs are decided at the family level based on the family member characteristics and needs, interest, employment options etc. Further, economic need, opportunity and personal characteristics are key behind the ones who resorts to moonlighting. Thus, a policy decision on moonlighting may necessarily factor in the above criteria and components. Last but not least, moonlighting policy may incorporate provisions necessitating transparency from employees on declaration of moonlighting and approvals from parent company.

(The authors Surjith Karthikeyan is a civil servant at the Indian Ministry of Finance and Jayasree S is a research scholar. Views are personal.)

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.