By Radhicka Kapoor
Technological innovations and digital platforms have led to significant changes in the world of work, and in particular, the rise of the gig workforce. While the size of the gig economy is yet to be accurately quantified, most studies suggest that its size is only likely to increase in the coming years, as also the share of workers who rely on platforms as the primary source of income. Therefore, the decision of India’s G20 presidency to identify ‘Gig and Platform Economy and Social Protection’ as a priority area for consideration is pertinent.
Broadly, the platform economy operates through two business models, ‘Crowdwork’ and ‘Work-on-demand via apps’. Crowdworkers operate online through platforms that connect vast numbers of clients, organisations, and businesses across borders. On the other hand, ‘work-on demand via apps’ refers to place-based and geographically limited work, facilitated by platforms. Indisputably, the platform economy generates new avenues of employment. However, it also has potentially disruptive effects on labour markets. Platform economy jobs are often associated with job insecurity, earnings volatility, and lack of social protection schemes and career advancement opportunities. Importantly, by shifting health, financial, and production risks from the client and platform to the worker, this relationship makes workers more vulnerable and insecure.
The role of the G20 in making a clarion call for bringing decent work into the platform economy is significant. It is particularly relevant in the context of platform-based ‘crowdwork’, where, often, the employer or client assigning the work is in one country and the person performing the task is in another (it is often the case that much of the labour performing the work is concentrated in the Global South while the platform revenue is channeled to the Global North). Recognising these difficulties, the ILO’s Global Commission on the Future of Work called for an international governance system for digital labour platforms that requires the platforms and their clients to respect certain minimum rights and protections for all workers.
The first crucial issue that merits attention is that of the misclassification of platform workers as self-employed workers or independent contractors, which results in denying them their worker rights and protection. In certain cases, this classification may be appropriate, given the independent nature of the work , but in other cases, their work may be closely supervised and characterised by a dependent relationship vis-à-vis the “buyers” of their services (those requesting the services) and “organisers” (platforms). Reclassifying these workers as employees would entail responsibilities for platforms with regard to social security and minimum wages.
Responding to the increasing prevalence of platform workers being classified as independent contractors, there have been initiatives to address the challenge of misclassification . For instance, the state of California passed Assembly Bill 5 (AB5) in 2019 to regulate companies that hire gig workers in large numbers. According to the bill, companies must use a three-pronged test to prove workers are independent contractors and not employees. The test assumes that workers are employees unless the company that hires them can prove the following: one, the worker is free to perform services without the control or direction of the company; two, the worker is performing work tasks that are outside the usual course of the company’s business activities and three, the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
While there have been other such initiatives around the misclassification of gig workers, the G20 needs to have a comprehensive and inclusive discussion on the subject. In this context, Harris and Krueger’s proposal to create a new legal category called “independent workers,” for those who occupy the gray area between employees and independent contractors merits careful deliberation (https://bit.ly/3IsFaok). In some respects, independent workers are like independent businesses as they have the freedom to choose when and where to work as well as the choice to work with multiple intermediaries simultaneously. However, they are similar to traditional workers too, as the intermediary retains some control over the way independent workers, such as by setting their fees or fee caps. They may also “fire” workers by prohibiting them from using their service. Harris and Krueger propose that independent workers qualify for certain specific benefits and protections that employees receive, such as the freedom to organise and collectively bargain and employer contributions for payroll taxes. However, they would not qualify for unemployment insurance benefits, given that they have the discretion to choose whether to work through an intermediary.
Beyond the issue of worker classification, new ways need to be found to afford adequate protection to platform workers and thereby ensure decent work in the platform economy. This assumes particular significance in the global south, where the rise of the gig economy has led to greater informalisation of a workforce, which is anyway dominated by informal employment arrangements. To extend social security coverage to platform workers, the very same technology that has accelerated the growth of the gig economy can be exploited. Most transactions on the gig economy are done via the internet and can thus be tracked. For instance, Indonesia has introduced a digital mechanism to securitise digital platforms commonly used for motorcycle taxi rides in the country. When using the application, a small amount of the tariff is automatically deducted for accident insurance of both the driver and the passenger for the length of the trip.
India’s new Code on Social Security also envisages a social security fund for gig workers, which will collect contributions from aggregators. Several national-level initiatives have been undertaken to address the challenge of providing social security to platform workers, and the G20 is likely to deliberate on sustainable financing models for this purpose. Overall, the Indian presidency would do well to foster greater international coordination and cooperation on the portability of benefits (those connected to an individual, rather than an employer and can be carried from one job to another, without interruption), thereby safeguarding worker wellbeing for platform work done across borders.
(Senior visiting fellow, ICRIER)