The pandemic-fueled work-from-home system widened the focus on the gig economy. This work structure is divided into two subsets of a broader gig economy: the talent economy and the platform economy. However, this article addresses only the platform economy which commoditizes services through digital platforms and apps such as Uber, Deliveroo, and Airbnb.
What problem are we talking about?
Platform workers are classified as independent contractors and paid per task without additional benefits. Hence, they are poised to experience more social challenges than traditional workers such as bearing insurance, health, and accident costs on their own.
How important is this?
The gig economy currently employs over 43 million people, and is projected to reach 78 million by 2023. Clearly, this cohort of workers will be a major part of the future workforce!
There is a fierce debate on whether or not gig workers should be given a social contract that protects them like employees. Legislation across EU countries including Spain and France has reclassified gig workers from independent contractors to employees while gig companies are pushing back desperately to ensure their workers remain independent contractors.
Platform working, an offshoot of digital technology has generated public concern about workers’ welfare.
Gig workers’ classification as self-employed or independent contractors means they lack benefits including overtime pay, health insurance, and a basic minimum monthly wage. They are generally paid per task — the more work they do, the higher their earnings.
What causes the uncertainties?
Many gig workers work full time as platform workers due to the high global unemployment rate. Full time platform working is bound to increase as current unemployment rates have risen to a record 6.52 percent accounting for 33 million job losses in 2020.
Platforms also use algorithms to deliver higher payouts during peak periods as is the case of ride hailing and food delivery services. Therefore, workers have the difficult option to work overtime or risk losing the goldmine by working only during slow business hours.
What’s the need for employee benefits?
According to California’s AB 5 law, an independent contractor must only do work that is not central to company business. Without gig workers’ services, platform companies will inadvertently cease to exist. Hence, there’s a need for companies to begin the process of offering the appropriate social benefits to their workers who are rightly functioning as employees.
The realisation of the importance of essential workers dawned on many when the COVID-19 pandemic struck. Gig workers especially in the food delivery and courier businesses were soon designated as frontline workers.
What it means...
Gig workers are being exposed to huge health risks without adequate protective equipment from their companies. Reports show that 95% of the gig companies did not provide Personal Protective Equipment (PPE) for their gig workers during the pandemic while those that offered them made the workers pay for them.
They also have higher health risks due to their close contact with customers in their jobs. Comparatively, essential workers in the healthcare industry are provided with PPE at no cost, earn higher wages, and get other social benefits such as hazard pay and health insurances.
Gig work has become more important…
As the impact of the pandemic slows, more people who instinctively switched to platform services claim they will continue using them in the future. Therefore, this positions platform workers as a future workforce whose protection laws must be updated.
How can they be protected?
Pandemics and other public health emergencies don’t last forever but there must be protection laws for all essential workers in the face of future crises. These protection laws should factor in the proximity levels of workers such as gig workers who are more involved in commuting and contacting customers than other jobs.
Gig companies achieve scalability by attracting an unlimited number of gig workers to their platforms but have no control on how many of these workers continue to work with them for a long period. This results in an extremely fickle relationship between the platform and its workers.
What it means...
This working model is characterised by high flexibility that allows workers to work at their preferred frequencies. Platform companies only facilitate smooth work processes using algorithms and community rules. Hence, workers can easily leave their jobs without notice.
The responsibility on the company’s part and the employee increases if each gig worker is registered as an employee as more stringent working policies and working hours will be imposed.
How this justifies the lack of benefits...
The temporary nature of this working relationship justifies the unreadiness of gig companies to offer fixed benefits to their employees. Any imposition on platforms to provide employee benefits may eventually be a lost investment.
Gig companies such as Uber and Lyft are yet to turn a profit. Technically, these companies are having to part with a considerable share of their capital investment for every worker payout. It is reported that Uber loses 58 cents per ride.
The current loss in capital investment is part of a grand plan to gain market share in the near future and make huge profits later. A legal imposition of employee benefits means companies that are yet to be profitable will lose even more money in the short term.
Akin to an earlier consideration of an inability to provide social benefits for their workers, gig companies allow workers to work on a multiplatform basis without conflicts. This working freedom indirectly protects workers from the harsh truth that there is no job security or employee benefit for gig work.
Gigs are projected to be a key part of the future of work due to higher levels of convenience and work flexibility. The rising concerns about how this future work trend can become more socially beneficial to workers hinges on improved welfare and the risks posed by the global health crisis. Yet, gig companies maintain that there is no need to provide benefits for their workers as it undermines their business models and they can’t afford it just yet.
A question for you: With the identified importance of gig workers to the future economy, do you think they deserve the right benefits?
This article was written before the UK joined the growing list of countries to declare Uber’s platform workers as employees and no longer as independent contractors.