Gig Economy, Empowerment or Exploitation?

We have to admit that we're living in a society with a growing need for cheap on-demand services accessible online often with a few clicks and swipes on your smartphone. All the food delivery and ride-hailing services we need are possible thanks to the legion of self-employed couriers, drivers, delivery workers, and freelance web professionals. Many are paid below the minimum wage to keep costs low and big companies earn more.

Although it's not really a new phenomenon, as freelancers have been in the market for a while, it only came into the limelight when more people joined the sector, as technology lowered the barriers to entry, thereby making "gigs" more accessible than ever before.

As the global pandemic has all but devastated the economies of industrialized and developing countries alike, the demand for digital services has increased as social distancing and travel restrictions have been enforced. More people have transitioned to work from home while companies have opted to outsource backend work offshore from India to the Philippines. However, many of these digital professionals are often paid way below the fair pay as compared to their counterparts in the United States, Australia, and Europe.

Digitizing the Informal Sector

Workers in the gig economy are paid per task, sale, or project so they have to work as much as they possibly can in order to maintain their level of income. If you come to think about it, the gig economy is basically digitizing the informal sector. It's not the traditional career choice for some but it provides additional income. 

From street food vendors to motorcycle transport drivers, jobs in the informal sector already have roots in most developing countries. It's only when the rise of the app-based gig economy that these jobs have all but become formalized and digitized. The shift seems seamless in this part of the world when developed countries treat the industry as unstable and unreliable.

Although certain aspects of the gig economy are dependent on the demand from the developed countries, it doesn't have to be poorly paid, part-time work. Such technologies can be used in developing countries to help people find full-time income-generating opportunities. In fact, more startups have emerged in countries like Indonesia, Nigeria, and India owing to their large population of young and educated workforce.

In some countries, it opens up opportunities for people who can't get into the formal sector that's why you see more people driving for GoJek, delivering food on Foodpanda, or writing articles on UpWork since they don't have to undergo stringent hiring process to get in and earn money. However, some question whether it devalues the work they do as compared to some people paid more in other countries.

What Statistics Say?

According to a World Bank report, the United States hires most of the gig workers worldwide at 40% while the rest are from the UK, Canada, Australia, India, Germany, Singapore, France, Netherlands, and Israel in that order. The majority of the gig workers come from India at 24% followed by Bangladesh, Pakistan, the United States, Philippines, UK, Ukraine, Canada, Egypt, and Nigeria in that order. Seven out of the ten countries providing the most gig workers are from developing countries where labor costs are low.

The UK's Department for Business, Energy, and Industrial Research released a report that shows that an estimated 700,000 people are earning less than the mandatory £7.50 per hour. More than half of these are ages 18 to 34 years old. The sad part is that the national minimum wage does not apply as they are considered "self-employed" workers, "unskilled" laborers, and "independent contractors" and not "employees." By classifying them as such, these companies won't pay certain taxes, benefits, overtime, or minimum wages. In many countries, many don't have the legal right to form labor unions or negotiate contracts. That will soon change when laws are put in place to protect the workers.

Meanwhile, women get the shorter end of the stick during the pandemic as many have disproportionally lost their jobs as female-dominated retail service has shrunk. Many have to abandon their 9-to-5 jobs so they can take care of their children. As a result, many were forced to seek employment in the gig economy. The pay gap in the gig economy is narrower than in the traditional workplace where a woman earns 18 cents lower for every dollar a man makes. By comparison, Black and Hispanic women earn 37 cents and 45 cents less respectively.

The Million-Dollar Question

Are people getting exploited in the gig economy?

Just like in any type of work, some make sure that their employees are well taken care of. In the end, some take advantage of people so they can minimize the cost of doing business so they can maximize their profit. Whatever it is to minimize the cost, it is more likely to pay people as little as possible or cut corners by removing benefits and insurance.

Gigs and side hustles can be an option for some but most people see it as a primary source of income in these difficult and uncertain times.

What most people don't know is that most gig workers are in a constant state of surveillance as they are required to download an app or software that monitors their activities continuously. As technology evolves, it changes the way we work by blurring the line between our private and work life. Although it helps ensure productivity and efficiency, workplace surveillance goes beyond its intended purpose as it learns more personal information and behavior that would be used in performance assessment and hiring decisions. Data is collected in every aspect of work so that anyone can be fired when certain trends in gathered data suggest that they are not "efficient and productive."

When unrealistic efficiency and productivity targets are set, gig workers are forced to work beyond their capacity to the point that it starts affecting their personal health and well-being. Often done without consent, many gig workers often don't realize that they are monitored. Since there is no official employment agreement between gig workers and employers, the risk of losing their jobs also hinders them from challenging the surveillance practices. Companies may argue that gig workers gave them permission to collect and use the data when they began working at the company.

Working for yourself is something most people would want to do. Who doesn't want to be their own boss? But is it exploitation masquerading as freedom? Bank of England chief economist Andy Haldane even suggested that the country could be turning the clock back to its pre-industrial revolution days when self-employment was widespread and there were no trade unions. In fact, labor relations terms have evolved as well so that companies no longer lay off staff, they just "downsize" or "reorganize." Backend business processes are outsourced to cut costs and overheads.

The Future

We all know that the future of work is evolving and everyone has to adapt to the tide of change. The world of work is no longer just the usual long commute to and from your nine-to-five office work. It has empowered a lot of people with freedom and flexibility but also allowed unscrupulous employers to take advantage of poor gig workers out there working hard to provide for their families.

The issue is that the major players in the gig economy present themselves as tech companies but operate as service providers. There is an ambiguity to their business model where they govern their workers with uncertainty while algorithms take control of how much you earn and the work you get. Something has got to change.