Technology enabled digital labour platforms are not adhering to labour norms, points out new ILO report

Technology enabled digital labour platforms are not adhering to labour norms, points out new ILO report

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published Published on Apr 11, 2021   modified Modified on Apr 27, 2021

Although services provided by the gig and platform workers touch the lives of each one of us, we have little knowledge about the role of digital labour platforms in transforming the world of work. Such digital labour platforms have created unprecedented opportunities for workers, businesses and society. However, they also pose serious threats to decent work and fair competition.

A recent report by International Labour Organisation (ILO) shows that the workers on these digital platforms often fail to get enough well-paid work to earn a decent income to sustain their families. Most of the gig and platform workers who rely on digital technology to get work don't enjoy social protection, which is particularly concerning during a worldwide pandemic. Such workers are not in a position to engage in collective bargaining so that the issues confronting them are addressed properly. Some of the key challenges that the workers on digital platforms face are regularity of work and income, working conditions, social protection, skills utilisation, freedom of association and the right to collective bargaining.

The report titled World Employment and Social Outlook 2021 reveals that a significant chunk of the digital labour platforms are concentrated in just a few locations, including countries like the United States of America (29 percent), India (8 percent) and the United Kingdom of Great Britain and Northern Ireland (5 percent). The total number of online web-based and location-based (taxi and delivery) platforms has increased by over five times from 142 in 2010 to more than 777 in 2020. Please consult chart-1.

Chart 1: The rise of digital labour platforms

Source: World Employment and Social Outlook 2021, released on 23 February 2021, International Labour Organisation, please click here to access
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Asia (US$ 56 billion), North America (US$ 46 billion) and Europe (US$ 12 billion) together attract about 96 percent of the investment in digital labour platforms as compared to 4 percent of the remaining investment by Latin America, Africa and the Arab States (US$ 4 billion). In comparison to delivery or online web-based platforms, a larger share of venture capital funds is invested in platforms providing taxi services. Only two platform companies among taxi platforms were able to get almost three-fourth of venture capital funds.

Globally, venture capital investments in digital start-ups have expanded sixfold between 2010 (US$ 52 billion) and 2019 (US$ 295 billion). Studies show that a significant proportion of these investments were made in companies based in the United States (US$ 136.5 billion), followed by companies in China (US$ 36.5 billion for January to mid-November 2019, which was a major fall from US$ 93.4 billion in 2018), Europe (US$ 36 billion) and India (US$ 14.5 billion). As opposed to that, investments in Latin America (US$ 4.6 billion) and Africa (US$ 1.3 billion) were comparatively less.

At least US$ 52 billion of revenue was generated globally in 2019 by digital labour platforms. Bulk of the revenue was generated in the United States (49 percent), China (23 percent), while the share was much lower in Europe (11 percent) and other regions (17 percent). The report mentions that the seven largest technology companies (i.e. Amazon, Apple, Alphabet that includes Google, Microsoft, Alibaba, Facebook and Tencent based in the United States or China) globally had a cumulative revenue of over US$ 1,010 billion in 2019, and most of these tech companies invest heavily in digital labour platforms.

Findings of the ILO WESO 2021 report

According to the World Employment and Social Outlook 2021 report, digital labour platforms mediate between the workers who perform the tasks and clients, and manage the entire work process with algorithms. The technology enabled new business model allows platforms to organise work without having to invest in capital assets or to hire employees. Due to the expansion in broadband connectivity and cloud computing along with innovations in information and communications technologies, digital labour platforms are able to connect businesses and clients to workers, thus transforming labour processes, with major implications for the future of work.

Because of agility and ability to organize work in a fundamentally different way, digital platforms differ from traditional businesses. The distinct features of the platform business model are network effects, primacy of data, algorithmic management, low investment in capital assets, venture capital funding, pricing strategies and rules of platform governance.  

On the basis of surveys done by researchers and statistical agencies in Europe and North America between 2015 and 2019, the World Employment and Social Outlook 2021 report says that the proportion of the adult population that has performed platform work ranges between 0.3 and 22.0 percent.

The 2021 World Employment and Social Outlook -- a flagship report of the ILO -- clarifies that the digital labour platforms can be classified into two broad categories: online web-based and location-based platforms. On online web-based platforms, tasks or work assignments are performed online or remotely by workers. These tasks may include carrying out translation, legal, financial and patent services, design and software development on freelance and contest-based platforms; solving complex programming or data analytics problems within a designated time on competitive programming platforms; or completing short-term tasks, such as annotating images, moderating content, or transcribing a video on microtask platforms. Conversely, the tasks on location-based platforms are carried out in person in specified physical locations by workers, and include taxi (Ola, Uber, etc.), delivery (Zomato, Food Panda, Ecom Express, etc.) and home services (such as a plumber or electrician), domestic work and care provision (like Urban Company).

According to the WESO 2021 report, there are two types of workers who are engaged in digital platforms -- the core workforce who are directly hired by the platform, and the workers whose work is mediated through the digital platforms and carried out as a “gig”. Studies show that digital labour platforms have blurred the difference between workers and the self-employed. In case of online web-based platforms, where work is remotely done, the WESO 2021 report has tried to find out whether a worker is working for the same client over a continuous period of time. If a worker is working with the same client for a long duration, then it is clearly an employer-employee relationship. Also, what matters is the entire mode and process of working, which has been taken into account when the WESO 2021 report discusses the employment relationship question in the regulatory chapter. When it comes to location-based platforms, it is interesting to observe that the entire work process is algorithmically managed. The entire process of allocating work, monitoring work, and evaluating and rewarding work in case of location-based platforms, appears not to be meant for self-employed workers who enjoy control and autonomy over work. Rather it is clearly an employer-employee relationship that exists for most location-based platforms. Some of the recent court decisions that have come out have actually focused on this aspect of work (i.e. control and autonomy over work).     

The WESO 2021 report is based on surveys and interviews with 12,000 workers in 100 countries, and with 70 businesses, 16 platform companies and 14 platform worker associations operating in multiple sectors and countries. It must be noted that the ILO conducted several surveys across countries and sectors between 2017 and 2020. In the global surveys conducted on microtask (2017), freelance and competitive programming platforms (2019-20), about 2,900 respondents from 100 countries took part. On top of that, two country-specific surveys of workers on online web-based platforms were conducted in China (1,107 respondents) and Ukraine (761 respondents) in 2019. The WESO 2021 report says that surveys were also conducted among workers on location-based platforms during 2019 and 2020 with a focus on the app-based taxi sector in nine countries, and the app-based delivery sector in 11 countries, comprising about 5,000 respondents spanning the Arab States, Africa, Asia and the Pacific, Eastern Europe, and Latin America and the Caribbean. This was complemented by a survey of over 2,200 respondents in traditional taxi (nine countries) and delivery (four countries) sectors.

ILO's global surveys show that the digitised workforce is typically below age 35, male and reside in urban or suburban areas. Over 60 percent of workers on online web-based platforms are highly educated. As opposed to general expectations, over 20 percent of app-based taxi drivers and delivery workers are also highly educated. Surveys done by ILO from time to time show that in some countries, such as Chile and India, a considerably higher proportion of app-based taxi drivers and delivery workers are highly educated compared to those in the traditional sectors. The dearth of suitable employment opportunities may have compelled many men to take up tasks on location-based platforms.

The global surveys by ILO indicate that the share of female respondents among workers on online web-based platforms is relatively low for competitive programming (just 2 percent) in comparison to microtask platforms (37 percent) and freelance online work (41 percent). The share of female respondents among workers on online web-based platforms is higher in developed countries (47 percent) than that in developing countries (24 percent).  

ILO surveys show that platform work is the main source of income for most workers globally in app-based taxi (84 percent) and app-based delivery (90 percent) services, and for about one-third of workers on online web-based platforms.

Due to excess labour supply and scarcity of tasks, most workers are unable to get extra gig work. ILO surveys have found that most workers on online web-based platforms (86 percent) and delivery platforms (69 percent) wanted to get more work. On account of the restrictions imposed by the platform or client, many workers, especially those from developing countries, are excluded from accessing extra work and well-paid jobs, which has serious negative effects on workers’ autonomy, access to work, pay and other labour rights.

Platforms are getting popular because they offer flexible work schedules, freedom to choose tasks, and the choice to work anytime anywhere. Workers join digital platforms to earn extra income or due to the lack of alternative employment opportunities. However, workers face challenging working conditions (as mentioned earlier), including low earnings and income volatility, unfair termination of workers’ accounts, limited access to work and social protection, and barriers to multi-homing (i.e. connecting to more than one platform). Digital labour platforms have strict rules relating to multi-homing. For example, in India and Lebanon over 90 percent of app-based delivery workers said that they were either given or expected to buy the uniforms and bags necessary for working with the platforms. Wearing uniforms or carrying a bag of a particular company with logo restrict workers to work for other digital platforms.

Table 1: Proportion of respondents globally in the taxi and delivery sectors covered by social protection benefits

Source: ILO selected country surveys of taxi drivers and delivery workers (2019–20), World Employment and Social Outlook 2021, released on 23 February 2021, International Labour Organisation, please click here to access
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ILO's selected country surveys of taxi drivers and delivery workers (2019-20) show that more than 90 percent of app-based taxi drivers, traditional taxi drivers, app-based delivery persons and traditional delivery persons globally didn't have disability insurance. Barring traditional delivery persons, over 90 percent of app-based taxi drivers, traditional taxi drivers and app-based delivery persons didn't have unemployment insurance. Over 40 percent of app-based taxi drivers, traditional taxi drivers, app-based delivery persons and traditional delivery persons did not have health insurance. Around 70 percent of app-based taxi drivers, traditional taxi drivers, app-based delivery persons and traditional delivery persons did not enjoy employment injury protection. More than 70 percent of app-based taxi drivers, traditional taxi drivers, app-based delivery persons and traditional delivery persons across the globe did not have pensions. Kindly note that all taxi platforms in the country are obligated to provide health and life insurance to taxi drivers. Please see table-1.   

WESO 2021 report mentions that a new code on social security has extended social security to all workers in India irrespective of their employment relationship, including platform workers. Leeds Index of Platform Labour Protest shows that there has been an increasing number of actions such as strikes, demonstrations and litigation around the world for better working conditions for workers on digital platforms since 2015, with at least 1,253 such actions occurring in 57 countries between January 2017 and July 2020. Each of the countries like Argentina, China, India, the United Kingdom and the United States had observed over 100 protests. These actions continued even during the Covid-19 pandemic i.e. in 2020.

Globally, workers on online web-based platforms earn on average US$ 4.90 per hour, which drops to US$ 3.40 when unpaid time is factored in. In reality, work processes and performance are shaped by algorithmic management which to a certain extent limit platform workers’ autonomy and labour rights. In order to make a decent living, workers end up working long hours, which has negative consequences for work–life balance and can lead to stress.

ILO selected country surveys of taxi drivers and delivery workers (2019-20) has found that nearly 56 percent Indian app-based taxi drivers were unable to refuse or cancel work without repercussions. Similarly, almost 77 percent Indian app-based delivery persons were unable to refuse or cancel work without repercussions.

ILO’s selected country surveys of taxi drivers and delivery workers (2019-20) indicate that seven out of 10 app-based taxi and delivery workers reported work-related stress. The main reasons for stress in the app-based taxi and delivery sectors were Traffic congestion; Risk of crime; Insufficient payment; Working shifts are too long; Risk of work-related injury; Time pressure to drive quickly; Long waiting periods; Insufficient number of rides/ orders; and Other. The main concerns regarding personal and physical safety in the app-based taxi and delivery sectors were Road safety; Weather conditions; Theft; Physical assault; and others.

In India, around 18 percent of respondents on app-based taxi platforms and nearly 44 percent of respondents on app-based delivery platforms experienced or witnessed discrimination or harassment, indicate ILO’s selected country surveys of taxi drivers and delivery workers (2019–20).

The WESO 2021 report by ILO mentions that the revenue model of taxi platforms is based on charging commission fees to the taxi driver. Although the commission fee charged by Uber is 25 percent in most countries under consideration, in some countries where there is intense competition, a lower fee is charged (such as 20 percent in India; 5 percent in Kenya). The commission fees paid by Uber and Ola taxi drivers are the same i.e. 20 percent.

ILO's selected country surveys of app-based taxi drivers (2019-20) show that 98 percent of respondents received bonuses or incentives on Uber on reaching or exceeding a certain number of rides in India, whereas just 12 percent received bonuses or incentives on working during high-demand hours. Merely 8 percent respondents in India received bonuses or incentives on Uber on reaching or exceeding an hourly threshold. No bonuses were received if the drivers were new or if one worked at night or holidays (i.e. asocial hours). For app-based taxi drivers in India, the weekly average of work has been as high as 82 hours and the same has been 81 hours for traditional taxi drivers, show ILO selected country surveys of taxi drivers and delivery workers (2019-20).

Almost 84 percent of app-based taxi drivers in India reported that qualifying for bonuses has become increasingly difficult. The hourly earnings of app-based workers compared to their traditional counterparts in the taxi and delivery sectors in India has been 79 percent higher, show ILO selected country surveys of taxi drivers and delivery workers (2019–20). Hourly earnings (including waiting times) for app-based taxi drivers has been as high as US$ 1.1 and the same for traditional taxi drivers has been US$ 0.6. In some countries (Chile, India and Mexico), about 70 percent of the traditional taxi drivers reported a decrease in the number of trips and daily earnings. Traditional taxi drivers in India reported that they had to wait on average 93 minutes between two rides, while for app-based taxi drivers the waiting time was only 16 minutes.

ILO’s compilation based on respective platform websites, terms of service agreements, field surveys and interviews with restaurants, shops or supermarkets in the respective country shows that as opposed to taxi platforms, food delivery platform Swiggy charges 22-24 percent commission fee from clients (i.e. restaurants, shops and supermarkets), whereas Zomato charges 12-25 percent commission fee from clients.    

The WESO 2021 report reveals that Swiggy (India) initially hired workers on a full-time basis, but after establishing their market position, they terminated many of the full-time contracts and hired workers on a per-task basis, and have been progressively reducing the number of workers directly employed. Although some of the platform companies, such as Swiggy in India, provide accident insurance coverage, several respondents (interviewed by ILO) who had suffered an accident reported that they did not receive any support from these companies. Besides, such measures create challenges in terms of portability of social protection entitlements between jobs.

In India, delivery platforms may have workers on a full-time (working 10 to 12 hours a day) or part-time basis (working 4 hours a day), temporary shifts (2 or 3 days of work per week) or a per delivery basis, says the WESO 2021 report. On Swiggy and Zomato, a substantial proportion of respondents were working on a full-time basis (74 percent and 96 percent, respectively). These full-time workers enjoy “minimum income guarantee”, which means that they receive a guaranteed income if they complete a minimum number of hours and orders that has been set by their respective company. The full-time workers may also have higher bonus rates in comparison to part-time workers on these delivery platforms.

In India, about 43 percent delivery workers felt that their current rating was not an accurate reflection of how well they performed, states the ILO WESO 2021 report.

Following incidents related to sexual assault of passengers in India, Uber introduced background checks of taxi drivers. ILO's in-person interviews with a small sample of 33 customers in Chile, Ghana, Kenya and India between October 2019 and March 2020 indicates that convenience, ease of use, low prices, transparency and reliability were some of the reasons for using app-based services.

The WESO 2021 report states that the microtask workers earn 64 percent less in India, and 81 percent less in the United States in comparison to the traditional labour market. In both these countries, there exists a gender gap in wage rates for microtask workers.

Some of the countries that outsource tasks on freelance platforms are located in the global North, including Australia, Canada, Germany, New Zealand, the United Kingdom of Great Britain and Northern Ireland, and the United States. A large proportion of the outsourced freelance work, which requires completion of such tasks at a faster pace and lower price, is performed by workers located in developing countries, particularly in India (US$ 26 million), which accounts for around 20 percent of the total market, followed by the Philippines (US$ 16 million) and Ukraine (US$ 13 million).

The tasks performed on online web-based platforms can be classified into the following occupational categories: software development and technology; creative and multimedia; writing and translation; clerical and data entry; sales and marketing support; and professional services. Between 2018 and 2020, India's share in total online labour supply on major online web-based platforms has increased by about 8 percentage points. It is presently the world leader in terms of online web-based labour supplier. The country is a major online web-based labour supplier for tasks like software development and technology (which is happening due to extensive offshoring of IT, BPO and software services to India thanks to the conducive policy environment), creative and multimedia, sales and marketing support, clerical and data entry, etc.

The top five countries who demand for tasks on online web-based platforms are the United States, United Kingdom, Australia, Canada and India.

A small random sample of workers from the Online Labour Observatory indicates that during October 2020 to January 2021, the participation of women on online web-based platforms is lowest in India (21 percent), while it is higher in Ukraine (39 percent) and the United States (41 percent). In India, the share of women across all occupations (i.e. occupations on online web-based platforms) is lower in comparison to other countries, including in occupations such as writing and translation, which are female-dominated in Ukraine and the United States.

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In India, both labour demand and labour supply on online web-based platforms went up from mid-March 2020 onwards, reveals the WESO 2021 report. The upsurge in demand was largely propelled by clerical and data entry, professional services, and software development and technology. It has been found by the ILO WESO 2021 research team headed by Uma Rani that the demand for tasks on online web-based platforms was almost 50 percent higher than it was at the beginning of 2020. The need for software solutions that could enable a smooth functioning of a remote working environment led to an increased demand for software development and technology related online work. It has been observed that there was also a steep growth in the number of registered workers across all occupations, except for professional services. The general increase in labour supply for work on online web-based platforms was unaffected by the seasonal patterns.

On the contrary, one observes a completely opposite trend in case of location-based platforms during 2020 in Chile, India, Kenya and Mexico. ILO's rapid-assessment surveys (2020) conducted among 348 respondents (i.e. 151 delivery workers and 197 taxi drivers) in these four countries in August 2020 indicate that nearly 68 percent of respondents had to take a break from working, while 32 percent worked throughout the pandemic because of economic compulsions, and often despite feeling very concerned that they were at risk of contracting Covid-19 infection in the line of duty. For 24 percent respondents, the break from work lasted for less than one month, while for 59 percent of respondents it lasted for two or more months. Work interruption in the taxi and delivery sectors (both app-based and traditional) took place because of lack of demand, restrictions on movement and fear of contracting the virus, or, in a few cases, the fact that respondents or their family members had contracted it. At the time of the interviews conducted by ILO, 26 percent (89 respondents) of respondents had not yet returned to work but were planning to do so once the situation would allow it. ILO's rapid-assessment surveys (2020) have found that a majority of respondents in Chile and India received in-kind support from the government and also received some financial support.

Around 81 percent app-based workers in India who were working at the time of ILO rapid-assessment surveys (2020) reported that the platforms had introduced measures to reduce health-related risks during the Covid-19 pandemic, including compulsory mask wearing, contactless and cashless delivery, limiting the number of passengers, and sanitising hands, equipment and vehicles, among others.

The WESO 2021 report by ILO also discloses how the competition legislation and the business practice in India might differ substantially.

The WESO 2021 report also mentions the technological solutions that the small businesses and other minor players can avail to enter into e-commerce and e-retail at low cost. For example, the Open Food Network (OFN, https://www.openfoodnetwork.org), a global open source software platform operating in the retail sector, is a virtual space in which farmers, wholesalers and communities can set up their own online stores and collaborate in selling their produce. The aim of the initiative is to create fairer and more transparent food supply chains, and to move towards regenerative forms of agriculture so as to build resilient natural systems. The Open Food Network (OFN) operates in a number of developing and developed countries, including Australia, Belgium, Brazil, Canada, Colombia, Costa Rica, France, India, Norway, South Africa, the United Kingdom and the United States. Similarly, various platform cooperatives operating in a number of sectors, from taxi (such as Green Taxi Cooperative and ATX co-op Taxi, in the United States and Eva in Canada) and delivery (such as Coopcycle2) services to house-cleaning (such as Up&Go, New York City) and e-commerce (such as Fairmondo, Germany) are collectively owned and have been gaining in popularity over the past decade, says the WESO 2021 report. Platform cooperatives are designed and owned by their members, who usually pay a small fee from their earnings towards the maintenance and development of the platform. Given that work on these platforms is co-determined and decisions are taken based on participatory democratic processes, platform cooperatives are more likely to be transparent and accountable to their members as compared to digital labour platforms in which many functions are algorithmically managed (that often lead to labour exploitation and unfair business practices).

Among other things, the WESO 2021 report has made the following suggestions:

* Workers’ employment status should be correctly classified and it should be in accordance with national classification systems;
* There should be transparency and accountability of algorithms for workers and businesses;
* Self-employed platform workers should have the right to bargain collectively;
* All workers, including platform workers, must have access to adequate social security benefits, through the extension and adaptation of policy and legal frameworks where necessary;
* For the benefit of platform workers, fair data use and improved data protection should be ensured apart from reforming taxation systems; and
* Platform workers should be able to access the courts of the jurisdiction in which they are located if they so choose.

References

World Employment and Social Outlook 2021, released on 23rd February 2021, International Labour Organisation, please click here and here to access

Can digital labour platforms create fair competition and decent jobs? International Labour Organisation, Published in February 2021, please click here to access

Press release: Rapid growth of digital economy calls for coherent policy response, dated 23rd February, 2021, please click here to access

Video: Launch of the ILO's World Employment and Social Outlook 2021 report, ILO, dated 23rd February, 2021, please click here to access

India Largest Supplier Of Workers On Digital Platforms: ILO -Somesh Jha, 23rd February, 2021, please click here to access

 

Image Courtesy: World Employment and Social Outlook 2021



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