Formalizing the platform economy | Political economics

PAkistan’s workforce of 76 million is one of the ten largest in the world. Nearly 90% of this workforce is in the informal economy, contributing $180 billion each year. However, workers in the informal economy do not come under the labor laws and inspection system and do not benefit from social protection programmes.

According to a UNDP report, nearly four million young people enter Pakistan’s working age population every year, but jobs are created for only one million of them. Moreover, although the Pakistani economy has created 1.84 million jobs per year between 2018 and 2021, about 60% of them are in the informal sector. With the resulting high youth unemployment and only a fifth of women joining the labor force, there is an urgent need to create more jobs. This has been the priority of current and successive governments.

From 2015, Pakistan has seen significant growth in the platform economy, and it is hoped that this could pave the way for much-needed job creation. This includes both types of platform work: on-site (e.g. transit, delivery, home and personal care services) and cloud work (software development, data entry, translation, digital design etc).

Considering that nearly 1.5 million workers are engaged in Pakistan’s platform economy, this represents 2% of its workforce. Nearly two-thirds of them are involved in cloud or online work, while one-third (0.5 million workers) work on “geographically connected” or “location-based” platforms.

Informal and atypical employment and job insecurity have always existed in many forms in Pakistan. However, the advent of the platform economy has taken it to new heights through its use of legal gray areas. Platform work is associated with notions of independence, flexibility and freedom. Thanks to the marketing techniques employed by the platforms, workers have been integrated into this vision of a new way of working and micro-entrepreneurship, ensuring an abundant supply of labour.

There are concerns that the platform economy, which is highly formal in terms of the government tax system but informal in terms of workers’ rights, is encouraging a race to the bottom when it comes to working conditions, especially in terms of long working hours. work, declining or negative incomes and lack of representation and social protection. These issues have been further exacerbated by the coronavirus pandemic, recent closures and shutdowns of high-profile delivery startups, and the devastation caused by flooding across the country.

With positive images and promise, platforms have grown in Pakistan, including those offering location-based work in transport (Uber, Careem, Bykea), food delivery (Foodpanda, Cheetay), e-commerce delivery (Daraz) and home/personal care services. (Gharpar). Following the model of independence and flexibility and micro-entrepreneurship, those who work for them are classified as independent contractors rather than workers. Yet the reality of work behind the image of modernity and “break with the past” is quite familiar from the history of the informal economy. The only difference is that the platform workers are governed by an invisible hand, an algorithm.

Since the end of 2020, the Center for Labor Research (Pakistan) has been collaborating with the Fairwork Foundation of the University of Oxford to assess working conditions in seven major geolocated platforms in Pakistan (twin cities of Islamabad and Rawalpindi) compared to five principles of Fairwork: fair pay, fair conditions, fair contracts, fair management and fair representation. The findings of the recently released joint report are insightful.

Fair wage

The research indicates that workers at only one of the seven platforms (GharPar – a personal care service provider) could consistently earn more than the minimum wage after costs, which for 2021 was Rs 22,602 per month for a semi- qualified. When evaluating minimum wages, the research considered not only the amount of hours worked, but also the cost of providing job-specific equipment and paying for work-related expenses. Given these additional costs – unpaid waiting time, travel costs (like rising gas prices), and vehicle maintenance – none of the other platforms would meet this threshold. Moreover, there was no evidence that workers at any of the seven rigs could earn Rs. 28,700 after deducting all costs.

Fair conditions

Platform workers face many risks in the course of their work, ranging from road safety to crime and violence. For example, there have been several reports of drivers or delivery people experiencing harassment, violence and even murder. During the research, there was only evidence for an international ride-sharing platform, Uber, that the company is fully aware of these risks and is taking steps to protect workers from some of the risks that arise in the workplace. course of their work, such as through road safety training, emergency assistance and ethical data protection measures.

Fair contracts

Not all platforms have clear and accessible terms and conditions. For example, the contract provided by the famous food delivery platform, Foodpanda, is public and accessible to its riders and has been made understandable to as many people as possible by translating it into Urdu. This was done in consultation with the Fairwork Pakistan team. The research further indicated that most platforms have clauses in their terms and conditions unfairly limiting or excluding the liability of the platform.

Fair management

There was no evidence that the seven platforms provided due process for decisions affecting their workers, including opportunities for workers to appeal disciplinary action in a meaningful way. Research indicates that workers often find the appeal process inadequate or feel disadvantaged in voicing their concerns.

There was insufficient evidence from the platform regarding measures to remove employment barriers for underrepresented groups or to have effective means to prevent users from discriminating against workers from disadvantaged groups.

Fair representation

No rating could be assigned to any of the platforms included in the search. None of the seven platforms formally adhere to the constitutional and fundamental rights of workers to freedom of association, document a process for the expression of the collective voice of workers, or ensure that workers are not penalized for forming and joined associations or expressed demands.

In view of the dismal working conditions of rig workers, Labor Research Center and Fairwork Foundation have proposed a Platform Worker Protection Bill of Islamabad Capital Territory to ensure that platform workers have access to all rights in the workplace. It covers all the principles of Fairwork.

The bill provides for the right to a minimum wage, restrictions on working hours and wage premiums for work performed on public holidays, during night hours and in bad weather, which is in line with the principle of fair compensation. As required by the principle of a level playing field, the proposed law includes provisions on the protection of the health and safety of platform workers, the right to various types of leave, including, but not limited to, annual leave, sick leave, maternity leave, as well as social security and various cash benefits. PESSI and EOBI, including old age pensions, data protection and data portability rights.

The proposed law guarantees the right to understandable employment contracts, obliges platforms to respect the labor laws of their national jurisdiction and does not allow the exclusion of liability of platforms as provided for in the principle of fair contracts. In line with the principle of fair dealing, the proposed legislation provides grievance redress mechanisms and protections against multiple forms of discrimination and harassment, including sexual harassment.

Similarly, as the principle of fair representation suggests, the bill provides for a compulsory works council requiring social dialogue at the platform level and, above all, the right to organize and bargain collectively. Once enacted, legislation can be replicated in other jurisdictions.

The legislation is beneficial not only for workers but also for platforms as it provides certainty in determining the employment and contract status of platform workers while recognizing the flexibility and innovation brought by platforms. The comparison map showcases some of the best practices in regulating the platform economy around the world. Pakistan itself has extended the scope of its anti-harassment legislation to all forms of employment relationships and includes gig workers. India begins to provide social security benefits to platform workers.

Of all types of employment and sub-sectors of the informal economy (agriculture, home work, domestic, street vendors, ragpickers etc), platform work is the easiest to regulate since it is the most documented sector of the economy where levels of documentation exceed those of the formal sector. It is time for the State to recognize its responsibility towards more than 0.5 million workers and account, by eliminating all forms of exploitation (article 3 of the constitution), by ensuring equal protection under the law (article 25A) and creating an egalitarian society based on the Islamic concept of fair play and social justice (goal resolution).

The author is the founder of the Center for Labor Research, Pakistan. He can be contacted at: [email protected]