“Nearly 100 years ago, in the International Labour Organization (ILO)’s founding documents it was underlined that labour is not a commodity.” However, things seem to have changed now.
The on-demand economy provides on-demand labour. For consumers, it offers convenience and improved affordability, for the workers it offers flexibility and independence instead of 9-to-5 work. However, workers are strictly controlled by user ratings and algorithmic surveillance.
The technology intermediaries well known by the likes of Uber, Ola, etc. have an underlying business model of information arbitrage, such intermediaries are not new and have existed for centuries but they have now been made more convenient through sophisticated technology.
The need to protect both consumers and workers.
The recent committee hearings of Facebook in the U.S, U.K, Singapore etc. show the difficulties lawmakers face in grappling with business models of the sharing economy. In an era of data leaks, failure of self regulation, lax/no government regulation there is a need to protect both consumers and workers. The CEO of Facebook himself underscored the need for regulation (it is not about no regulation but how much regulation, he said in US Committee hearings).
India, similarly need to look at appropriate regulation for on-demand economy before it is too late. Employment laws, social security and host of other issues need to be carefully looked at. We need to see the realities, problems and implications for the world of work and living.
At the core
Just as the core of facebook is data collection and then its usage for advertising/targeting, at the core of Uber/Ola business model is – regulation arbitrage and functional evasion of the employment laws. Almost all business risk is shifted to the so-called partners (drivers). On demand economy companies do not own cars, do not have the actual implementers like drivers on their payrolls and do not comply with labour laws. They portray themselves as simple matchmakers that use technology to connect customers with self-employed people who want to sell their services.
They are increasingly being referred to as entrepreneur creators. However, this is being contested globally, a recent EU court recently declared that Uber, contrary to its claims that “it is only a technology company” is actually a transportation service and hence must be treated as any other transportation company and follow similar labour laws. Hence drivers are not self employed./micro entrepreneurs but employees.
Employment laws play a central role in leveling the playing field. The Prime Minister of Luxembourg, referring to Uber had said. “Innovation doesn’t mean I don’t care, for me Uber is innovation — I really support innovation — but I don’t want to produce people where in 10 years they will have no salaries, no pensions, no security.”
New economy and new words
Words like disruptive innovation, sharing revolution and micro entrepreneurship are frequently used by marketers and this entices us, however they obscure precarious work and the algorithmic surveillance that ultimately controls the workers. When the ILO was formed, all founding parties agreed that “Labour is not a commodity” and it has formed the base of all work .Treating labour as a commodity is a path societies should not tread on. Employers on the sharing economy can hire or fire in minutes, indeed work is now traded as a commodity and the worker is even more isolated.
Two narratives -Luddite versus Supporting innovation
“There are two narratives about the platform economy,” One is about its greatness, a revolution where new technology pushes things forwards, creating new opportunities and new products at lower cost. In this narrative it is emphasized that policymakers need to stay away, because their meddling would stifle innovation.
The other narrative is about how bad some platforms are. They can be a medieval way of treating people, where algorithms decide, pay is bad, there is much insecurity and there is no guarantee you will be able to work.
Both narratives have elements of truth. On demand economy can be a way for people who otherwise would not be able to find work to enter the labour market. However, on the flip side wages can be low. The people working in the platform economy have no guarantee of finding work. For some this is an opportunity and flexibility, for others it means insecurity.
It is necessary to regulate the platform economy, but that it has to be done in a careful manner. The challenge is to secure good working conditions for the individual, a level playing field for businesses and tax revenues for the state. New technology is good, but the platforms must be developed in line with the labour market as a whole.
We need to act in right earnest with a consistent and innovative approach to its regulation, one that provides a level playing for businesses and these on demand economy platforms.
At the very least, we need to have a minimum wage where you award flexibility and make it part of the employment contract. A guaranteed number of hours a week or month could form the basis of the minimum wage.
The second step would be to allow for portability of user ratings. Since ratings determine whether you get a job or not. We need to provide a way for implementers (like drivers) to own their own rating and bring it with them from one platform to the next, it could become easier for them to move around platforms and negotiate work and pay. We can learn from the success of portability of mobile phone numbers and its immense effect on improving competition.
The third step is for the social partners to create an organization based on algorithms. This would mean the algorithms would no longer be boss, but be trade union driven.
The overarching aim is to develop legislation which does not differentiate between platforms and other companies. This also means not creating separate legislation linked to only technology .We know that on-demand work is a key part of the future of work, we must at the same time acknowledge that employment law has a key role to play in it. Policy makers need to deliberate and make regulations that provide a balance between innovation and worker’s welfare. It is important for us to get it right soon, before we have a prolonged labour unrest in the on-demand economy.
Ashutosh Pratap works for Skills and Jobs Policy. He was part of an expert committee on skill reforms . He is an MBA from ISB Hyderabad.