How are workers faring in the gig economy?

Janine Berg, Senior Economist

Janine Berg, Senior Economist at the ILO and Valerio De Stefano, ILO Technical Officer on Non-Standard Forms of Employment

Most workers in the on-demand economy are considered by the platforms that they work for as being freelance workers. What are the consequences for workers of being classified that way?

To find out, we carried out two studies—one economic and one legal—on the on-demand economy to tackle some of these issues as well as learn more about the implications of the growth of new forms of casual labour.

The first study surveyed around 1,100 workers from two large crowd-working platforms to learn about their employment patterns, work histories and financial security.

Of these, nearly 40 per cent listed crowd work as their main source of income. They generally appreciated the ability to work from home, with one in ten indicating that as their only option owing to care responsibilities or personal health issues.

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Nevertheless, these positive aspects contrasted with dissatisfaction over low pay, insufficient work and unresponsiveness from the platforms in the face of their concerns.

Read the studies:

Some 90 per cent of respondents said they would like to be doing even more crowd work—if only more were available and the pay were higher. Indeed, the average hourly earnings of US workers on one platform was nearly 25 per cent less than the federal minimum wage.

Part of the low hourly earnings stemmed from time spent looking for more work on the platform or from taking unpaid qualification tests to qualify for work when it became available.

“…it is time for governments and social partners to take a more active role in designing regulation that can ensure decent work for platform-based workers.”

By classifying crowdworkers and other gig-economy workers as self-employed, platforms do not have to make employer contributions into social security systems. But the implications for workers extend even beyond social protection.

As the second study showed, self-employed workers have difficulty forming trade unions and bargaining for better pay and working conditions. Under some jurisdictions, doing so as self-employed workers could be construed as forming a cartel, which violates anti-trust laws.

Another risk stems from the rating systems used to monitor them. How a worker is rated can affect their ability to continue working or to access better opportunities. But systems based on customer reviews can expose workers to discrimination, which they’re not always protected against.

Some policymakers have argued that the on-demand economy can’t be regulated like other forms of subordinate employment and have called for the creation of an ‘intermediate’ category between employment and self-employment, which would extend them some protections.

The study, however, warns against assuming that existing employment regulation is unsuitable for addressing forms of work in the gig-economy and outlines some potential shortcomings of the creation of an intermediate category.

Other tentative proposals are advanced such as the extension of core labour standards and rights to all workers regardless of employment status, in addition to increased recognition of the role of social partners.

Crowd-working platforms may not yet be regulated by governments, but that doesn’t mean they aren’t regulated at all or that the work conducted through them is a free exchange of services between independent parties.

Rather, the platforms set the policies for entry and dictate which trades are permitted, which sometimes includes setting prices and mediating disputes.

Given the likelihood that this sector will expand in the coming years, it is time for governments and social partners to take a more active role in designing regulation that can ensure decent work for platform-based workers.

 

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