Managing digital labour platforms

The International Labour Organization (ILO) recognizes that the transformations in the world of work, thereby changing many aspects about the future work, is due to the emergence of accelerated use of digital labour platforms. This has not only been disruptive by nature when it comes to business modelling but also how the demand and supply of labour or knowledge worker are managed. Workers on the digital labour platforms certainly has benefits such as - opportunity to work from any place, at any time and take up whatever 'gig' matches the expertise of such workers, also known as giggers. This comes with associated risks also, such as – lack of clarity about status of employment, social benefits, medical support, and perhaps more controversially how the pay is decided (and reported). There are currently bigger debates in this area, particularly after the pandemic about why the giggers need to be classified as 'employees', what factors drives their motivation, and also longer-term consequences of engaging in these forms of work.

The gig or sharing economy's projected growth is around $2.7 trillion by 2025 and has clearly facilitated the expansion of micro-entrepreneurship opportunities since sharing platforms contribute to the overall economy as a new source of employment while opening up previously un-tapped sources of income. A 'gig worker' is someone who is employed on a freelance basis, carrying out short-term jobs or contracts, to one or more employers. Some of them may rely on 1) a website or app to help them find or organize their gig work, while others may 2) connect more with word-of-mouth in this business of reputation. The terms that are often synonymously used in the context are 'sharing economy' or 'collaborative consumption' or 'freelancer economy' or simply 'gig economy'. Some may use gig work to supplement the income they receive from a traditional job. The primary motivation of gig workers typically sources from the following - flexibility, additional income, freedom and other forms of job revolvement and job rotation opportunities.

Digital labour platforms are defined as digital networks that coordinate labour service transactions in an algorithmic way. Another key implication of digital labour platform for work and employment is that it lowers the entry barriers to the labour market, facilitates work participation through better matching procedures and facilitate flexibility of specific groups e.g., workers/ giggers seeking a better work-family life balance, people with disabilities or health conditions, older workers, long-term unemployed. Gig work could be classified into two broad groups - gig work in the 'web-based platforms' (e.g., software developers, sales and marketing support) and those who are 'location-based' (e.g., Airbnb, Uber). In both the classes, however, the service providers invests their own resources and users pay the fee while the company earns a commission from each transaction. Almost all gig economy business platforms that are B2C are smartphone application based. Therefore, digital competencies are becoming a significant resource and precondition for employment.

'Ease of doing the job' for Giggers?

It is now, therefore, quite a common practice that companies like Ola, Uber, and food delivery services promote and train digital entrepreneurial skills. This is easier said than done, particularly for specific age groups where the time and learning ability required to pick up a new set of digital skills is slower than the pace of change taking place frequently. Similarly, the rural-urban migration of workers who seek gig work, e.g., ride-hailing services being most popular, takes them longer to assimilate with new practices and technology adoption.

An ILO survey also identified several online digital labour platforms where a gigger had payment refused. The study evidences that platforms typically tend to have one-sided rating systems; mechanisms for evaluating the client/requester are not there. Many giggers feel frustrated with the inability to appeal unfair rejections in addition to struggling to communicate with requesters and platforms.

Online Talent Platforms and Information Asymmetry

McKinsey estimates that 540 million people could be seeking work through 'online talent platforms' by 2025, with a prediction that up to 230 million would find work. In 2017, a study estimates that around seventy million people have found work via an online platform. One-third of all work is estimated to be mediated via digital platforms. Across the countries in Europe, 9% of people in the UK had carried out paid work via platforms, with 9% in the Netherlands, 10% in Sweden, 12% in Germany, and 19% in Austria.

There is an argument that the gig economy platforms reduce information asymmetries by providing more information about a provider, such as a taxi driver (for Uber, say) or a residential host (Airbnb), than in traditional business models. However, research shows that sharing economy platforms are not only perpetuating information asymmetries but encouraging them for their own benefit. Most platforms, in fact, restrict access to information that would enable providers to assess the profitability of certain transactions, e.g., ride-hailing platforms do not permit providers to set preferences for either consumers or rides. Such asymmetries, it could be argued, are in place to prevent profit-based selection.

In Singapore, the Tripartite Alliance for Fair and Progressive Employment Practices guidelines for certain employment benefits available to term contract employees, thereby ensuring employees are sufficiently protected under existing employment law. Similarly in 2020, the Senate Bill 1469 in the Philippines or the National Digital Careers Act established a legal framework for the gig economy that will map out strategies to promote and strengthen digital careers and institutionalize employment standards for digital career workers.

What fuels online digital labour platforms?

The emergence of peer-to-peer business models has empowered countless individuals across the globe to earn money through sharing their under-utilized assets. There has been tremendous growth in the sharing economy, but most of it can be attributed to unskilled work such as driving (e.g., Uber, Ola), delivering (Swiggy, Deliveroo, or Amazon delivery riders), and doing simple errands (TaskRabbit, Just Dial). Besides the 'instant gratification' aspect, the major value for customers in the sharing economy comes from 1) Broader options and 2) Lower prices. A Deloitte study on the sharing economy in Switzerland found that 65% of respondents considered the lower cost to be a key benefit of sharing services.

From the user's perspective, we practice 'Collaborative consumption' which is based on sharing, swapping, trading or renting products and services enabling access over ownership. Other terms associated with this practice are access-based consumption, access-based service, non-ownership services, and more. In this context, the concept of 'exchange' is particularly important and over the years, we used the concept synonymously with sharing, bartering, and trading. An exchange is typically considered a dyadic process occurring between two parties. Collaborative consumption relies heavily on customers who are self-seeking while at the same time about the product or service that offers several 1) Community, 2) Financial, and 3) Environment-based benefits also. Socially collaborative consumption increases individuals' interaction with each other as a result of people meeting each other.

On a final note, however, it still remains rather intriguing to learn more about how firms engaged in collaborative consumption do better and succeed more than others. The rivalry is as intense as one would expect in any other industry. For the technology-based sharing platforms, they connect the demand for and supply of service and one of the success factors for them is to balance out the requirements on both sides. This includes retaining the peer-to-peer service providers as well as managing the demand and supply. Understanding both the growth and change dynamic of the successful platforms is important, particularly for new firms who aim to enter this market.

Missing pieces that are critical for the future of digital labour platforms

These platforms often need to maintain differentiation in product or service offering. It is as important as ensuring a constant quality level. Differentiating themselves from what competitors are available on similar platforms would help sustain businesses that wish to stay in the game. In the end, however, the success and future of these sharing platforms and gig workers depend heavily on 'digital reputation', which is in the hands of 'users' – should it always be? Or perhaps reconsider how job satisfaction, workplace motivators work for giggers, gigger engagement and retention amongst other factors would be of importance as we build the Future of Work? More importantly perhaps, as the ILO also suggests that such platforms and labour regulations need to clearly address employment misclassification, create a space for giggers to exercise their freedom of association and also support fair collective bargaining rights, and finally ensuring transparency in payments and fees assessed by the platform.

Dr B K Mukhopadhyay

(The author is a Professor of

Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)

Dr. Boidurjo Rick Mukhopadhyay

(The author, international award-winning development and

management economist, formerly

a Gold Medalist in Economics at Gauhati University)