Status of employees in a gig economy

The term “gig” is jargon for “temporary job.” A labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs is considered a gig economy. The term ‘gig’ traditionally was used for the job of musicians. As a simplistic definition, wherein an economy, organizations, companies, and private firms hire their worker on a contractual basis -- when the post is not permanent for their generic post, is called a “gig.” With time, the gig economy is occupying a large pie of the economic share.

The gig economy has now ventured into two major segments. Knowledge-based gigs include jobs such as machine-learning data scientists and independent management consultants. On the other hand, service-based gigs include tradespeople and delivery drivers.

Technology and software platforms are driving a sizable portion of the economy, which enable the ‘sharing economy’. The popular idea of the “sharing economy” of recent times mooted the concept that workers are independent contractors with digital platforms. Workers would have more flexible working hours and higher earnings. The transport workers’ assets such as vehicles convert into productive assets, for example, by driving them for a cab service and earning some extra money. All the significant tech-based companies such as Uber, Facebook, Google,  etc., are all jutting out their hands to temporary workers. In Bangladesh, start-ups such as Pathao, Shohoz, or international organizations such as Uber are keen on hiring people temporarily, and workers are also responding to it.

In the US, about 40 per cent of the workers were found in the gig economy in 2020. Freelancing is the most common form of employment that is being developed and is one of the most prominent constituents of the gig economy.

In 2017, a report published by Oxford Internet Institute (OII) showed that Bangladesh is the second-largest country dominating the freelance market only after India. Sales, marketing support, software development, web development, and graphic design were the basic arenas of the Bangladeshi workers. They occupied about 16 per cent of the whole share.

In Bangladesh, temporary jobs are not usually considered jobs at all. Their social value is low due to a temporary position where our people couldn’t get out of their tiny box of life. They haven’t had the mindset to absorb the gig economy’s environment at all. Although many students are now doing part-time jobs in different sectors, including superstores, restaurants, and NGO projects, others are freelancing in the e-commerce industry. The gig economy allows students to gather some necessary experience before having a full-time job. They can work in retail stores, ridesharing platforms, call centres, etc. Statistics from ridesharing app Pathao reveal that around 37 per cent of service providers on their supply-side are students.

In the gig economy, freelancing is creating hype among the youth. More and more young people are getting interested in learning graphic design, web and software development, digital marketing, 3D animation, and visualization. Bangladeshi freelancers are working in both local and international markets. Therefore, they are contributing to our remittance inflows as well.

Most gig workers lack employee protection measures such as health insurance and sick pay, and since they generally work hand-to-mouth, they may not have had savings to fall back on.

The workers in the informal and gig market have already received global attention.

Traditional labour law distinguishes between employees or workmen and independent contractors. The former enter into a defined relationship with their employer, characterized by pre-set working hours, fixed wages, employer supervision, and so on. On the other hand, the latter are deemed to negotiate their own terms with anyone willing to hire them. Under labour law, only the first category of workers is entitled to access the entire range of labour rights — from the right to a minimum wage, health and safety conditions, and the right to collective bargaining.

However, the employee/contractor binary is based upon an outdated vision of work, where the factory or the shop floor was the predominant site of “work”. The platform economy is nothing of the sort. Thus, platform giants such as Uber, Ola, and Swiggy invoke the fact that there are no fixed hours of work, workers can log in and log out as they please, and there is no physical workplace. These platforms then claim an effective exemption from adhering to labour laws.

This account, however, is a flawed account of the platform economy. In particular, it does not consider how forms of physical control in the workplace have shifted to forms of digital control in the modern economy. Central to this are the apps through which platforms function. For example, in the case of Uber, the app plays a central role. It serves as a gateway into the labour market. It is used to set prices over which drivers have no control. The platform is also used to award ratings, and the consequences of having one’s rating downgraded below a certain point can result in less lucrative work or losing access to the app. Platforms retain significant amounts of control over workers.

In some cases, through digital surveillance, even more control than traditional workspaces and are in positions of power and dominance. Conventional tests of employment, therefore, are no longer enough. Many of the experts believe that there is no justification for granting them immunity from following basic labour laws. However, platform work remains very different from older forms of mainstream employment for all these reasons.

In a recent judgment by the UK Supreme Court, it was decided that Uber drivers are workers and not self-employed contractors providing transport services. The ruling was preceded by hearings before the Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeals, all of which ruled against Uber. In a gig economy, generally, there is no entry barrier. Gig workers have the flexibility to choose the type of work they wish to undertake, and their payment is determined by the type of job, the level of difficulty, and the duration of the assignment. Gig workers have more freedom to use their time, and they can take a day off whenever they want. Because of these conveniences, gig jobs attract people, particularly young people, and these jobs have become the most popular contemporary trend.

In Bangladesh, digitalization such as internet access and smartphone availability has played a vital role in the growth and expansion of the gig economy. Due to rapid technological improvements, many complicated and time-consuming jobs have been eased and accelerated, making gig work easier. With the abundance of gadgets available, being a worker in the gig economy becomes highly accessible for technically competent persons. Hence, ridesharing and food and grocery delivery applications have become a part of our daily urban lives. According to a study conducted by the Policy Research Institute (PRI), Bangladesh’s ridesharing industry is worth Tk.2,200 crore. It represents 23 per cent of the transportation sector. Within the next five to seven years, the estimated market value of ridesharing start-ups is likely to reach one billion dollars.

In the recent years, the number of gig workers in e-commerce companies has risen significantly. As reported by the Oxford Internet Institute, Bangladesh is now the second-largest supplier of online labour globally, with a 16 per cent share of the global online workforce, following India, which has a 24 per cent share of the global online workforce. Since the inception of worldwide online freelance work, Bangladesh has been a popular outsourcing location.

In determining whether Uber drivers are workers, the Court took into consideration the following factors: (1) Uber set the fare, which meant that they dictated how much drivers could earn (2) Uber set the contract terms, and drivers had no say in them (3) Request for rides is constrained by Uber who can penalise drivers if they reject too many rides (4) Uber monitors a driver’s service through the star rating and can terminate the relationship if after repeated warnings this does not improve. These factors led to the conclusion that Uber drivers were indeed in a position of subordination to Uber and had to work longer hours to ensure better wages.

The judgment has significant legal implications and will entitle the drivers to benefits under the applicable employment laws. The Court ruled that Uber should treat the drivers as employees from the moment they sign into the app until they log out. The UK Supreme Court’s judgment sets a precedent that deserves paramount importance as ridesharing apps and courier and delivery service apps, commonly referred to as ‘gig economy’, gain popularity worldwide.

The judgment also bears significance in relation to Uber’s responsibility of paying VAT on fares. Although Uber had maintained that it is a booking agent that hires self-employed contractors that provide transport and is not a transport provider. In the recent judgment, Uber anticipated that it would have to pay VAT as a transport provider and incur significant additional expenses in paying the drivers for compensation and other benefits.

A number of ridesharing companies started their operations in Bangladesh like Uber, Pathao, Amarbike, Taxiwala, Garivara, Chalo, Sohoj ride, Obhai, Obon, and others. Let us wait for the decision of the Bangladesh authorities over application of the labour law and VAT law in this service sector.

The writer is a legal economist and adviser, Bangladesh Competition Commission. He can be contacted at [email protected]