Digital Labour

The Continuing Relevance of the State in the Age of Digital Gig Work

Technological change has always had an impact on the sphere of work. Every new form of work that has emerged has been accompanied by optimism about its potential, and concerns about its damaging effects. The same is true of digital gig work – a form of work that can be performed and delivered digitally via online platforms. A primary concern has been the exploitative nature of digital gig work, especially the micro-distribution models in which individuals, as “contractors”, register with the platform to complete their tasks (Meyers et al, 2017). Although being able to work from anywhere, at one’s convenience, on a digital platform may offer certain flexibility, the absence of physically proximate fellow-workers also leads to the atomization of the workforce (Kuek et al, 2015). With the supply of labour exceeding demand, there are questions about the tendency of workers to undercut one another in their eagerness to obtain work, and whether that will lead to a race to the bottom in terms of wages, reduce the bargaining power of digital gig workers and perpetuate socio-spatial disparities (Graham et al, 2017).

Historically, including in the 20th century, states have taken an active developmental role to ensure improvements in labour conditions and in aggregate standards of living. Is it possible for the state to address similar concerns that arise in the context of digital gig work, when technology gives platforms a global reach? This is an urgent question as a 2016 study by the Oxford Internet Institute reveals that a significant share of the gig workforce is in the less affluent regions of the world, primarily undertaking menial and repetitive tasks, while two-thirds of job vacancies are posted by employers from the developed world, including the United States, the United Kingdom, Australia and Canada (Lehdonvirta, 2017).

Such demarcation between the source and destination of work, and the attendant concerns about the digital gig economy, are reminiscent of arguments about the New International Division of Labour (NIDL). NIDL theorists, such as Frobel et al (1980), were concerned with “bloody-Taylorization” following the growth in the offshoring of low-skill, low value-added manufacturing from the 1960s. Yet, for at least four Newly Industrializing Countries (NICs) in East Asia – Singapore, South Korea, Taiwan, and Hong Kong – becoming a part of the NIDL offered a path to technological ‘catch-up’ and ‘late-industrialization’. Those NICs showed how, despite starting off with less-than-desirable work, it is possible to develop indigenous capability to move toward more high-skilled, higher value-added activity. In all these NICs, the dominant institutional force behind the socio-economic transformation was the state.

Amsden and Chu (2003), for instance, point to how Taiwan entered the world semiconductor market by offering low-skill assembly work. Over time, state investments in the education system and technological acquisition, its provision of financial incentives including tariffs and subsidies, and the building of physical infrastructure, created an industry which gave Taiwan a “second-mover advantage” and made the country the world’s leading semiconductor supplier. Specifically, firms pioneered the pure-play foundry, an organizational model in which they became adept at original design and manufacture without necessarily marketing their own brands. Thus, contrary to the fears of the NIDL theorists, the East Asian NICs showed that developing countries have the agency to move beyond exploitative niches in the international division of labour with technological upgrading. More broadly, this highlights that, while concerns about the impact of type and conditions of work on socio-spatial disparities are far from misplaced, there are also institutional means of overcoming these concerns.

The concentration of digital gig work in less affluent countries is largely due to a lack of better local job opportunities. Concerns about the precarious nature of digital gig work are equally true for locally available work in the vast informal sector, with gig work at least offering better monetary returns. But this is not an argument for the status quo. Rather, it is a call to draw from lessons about how institutional means, especially the state, can be deployed to ensure that menial and repetitive digital gig work becomes a stepping stone to more rewarding work and not the only choice arising out of a lack of other options.

One possible initiative by the state is to build, or assist private players in building platforms for local needs which can find global use. With such platforms within its jurisdiction, the state can regulate them to ensure adherence to socially acceptable norms of pay and work conditions. Local language platforms could be encouraged to ensure that digital gig work opportunities are available to a larger section of the population. To undertake such initiatives, the state must minimally promote what the East Asian NICs did so effectively to overcome the debilitating aspects of 20th century manufacturing – investment in education (to ensure employability) and physical infrastructure, financial incentives, and opportunities for ‘learning by doing’. Since current technology and global conditions differ from what they were 50 years ago, the specifics of state interventions will vary. But history suggests the state can play a useful role in harnessing the potential of digital gig work for social transformation. These trajectories and trends are explored at length by the author in a paper being written for the DIODE working paper series.

References
Amsden, A. and Chu, W-w. 2003. Beyond Late Industrialization: Taiwan’s Upgrading Policies. Cambridge, MA: MIT Press

Frobel, F, J. Heinrichs, and O. Kreye. 1980. The New International Division of Labor: Structural Unemployment in Industrialised Countries and Industrialisation in Developing Countries. Cambridge, UK: Cambridge University Press.

Graham, M., V. Lehdonvirta, A. Wood, H. Barnard, I. Hjorth, and D. P. Simon. 2017. The Risks and Rewards of Online Gig Work At The Global Margins. https://www.oii.ox.ac.uk/publications/ gigwork.pdf (accessed 24th June 2018).

Kuek, Siou Chew et. al. 2015. The Global Opportunity in Online Outsourcing. Washington D.C.: World Bank Group.

Lehdonvirta, V. 2017.Where are online workers located? The international division of digital gig work. http://ilabour.oii.ox.ac.uk/where-are-online-workers-located-the-international-division-of-digital-gig-work/ (accessed 24th June 2018)

Meyers, L., B. Minic, L. Raftree and T. Hurst. 2017. The Nexus of Microwork and Impact Sourcing: Implications for Youth Employment. http://gcyerti.com/wp-content/uploads/2017/02/The-Nexus-of-Microwork-and-Impact-Sourcing_Final_ONLINE_02.28.17_v2.pdf (accessed 25 May 2018)

Digital Labour

Development Implications of Digital Platform Labour

A new paper – “Understanding the Development Implications of Online Outsourcing: A Study of Digital Labour Platforms in Pakistan” – analyses the experiences of some of the millions of gig workers who undertake digital labour in developing countries via platforms such as Upwork and Freelancer.

Using the sustainable livelihoods framework as the basis for analysis, it identifies four things from interviews with workers and other stakeholders in remote areas of Northern Pakistan:

a) Employment Push: The context of politico-economic vulnerability that pushes unemployed individuals into digital work including lack of alternative employment, political instability and concerns about Islamic extremism.

b) Barriers to Gig Work: The typical barriers to digital gig work for those in more remote areas of developing countries. These include poor quality of technical infrastructure such as power and broadband connectivity; a lack of relevant knowledge and skills or the means to obtain them; limitations of current financial payment systems; and cultural norms that do not see online freelancing as constituting a “job”.

c) Worker Trajectories: The four trajectories of digital gig workers who go through training schemes: sinkers (the majority who never undertake digital platform work), strugglers (who try but appear largely unable to make a living), survivors (who can earn small amounts from digital gig work), and swimmers (who flourish and are able to build a career path via digital platforms).

d) Role of Institutions: The “re-institutionalisation” of digital labour. Notwithstanding narratives of the de-institutionalisation of digital gig work, experience in Pakistan shows three institutional forces impinging on online outsourcing to marginalised groups. There are the digital platforms themselves; often seen as improving the context for outsourcing work.  There are interventions of formal organisations – development, government and NGO agencies – who help overcome asset deficits that would otherwise exclude these groups from online outsourcing.  And there are informal linkages between freelancers themselves which provide assistance and work sub-contracts.

Digital Labour

Mobile Microwork in South Africa

When Richard launched the DIODE network, I took this as a cue to initiate a mini-empirical research project and got Zaakirah Roomaney, one of my honours research students, to look at mobile microwork in South Africa. We just wrote up the findings as a conference paper which my colleague/co-researcher Pitso Tsibolane will present at AMCIS, New Orleans, in August. However, I thought it would be useful to mention some of our key findings here as well. (We’ll upload the paper after the conference.)

We sent out a survey request and link via Facebook, soliciting people with mobile micro-work experience or interested in participating. The sample consisted of 125 valid responses of which 70% (n=87) of respondents were female and 30% (n=38) were male. The age distribution was positively skewed with the largest response from the 20-29 years age group which represented 45% (n=17) of the male respondents being male but a fully 71% (n=62) of the female respondents. The education level of the respondents was quite high with 62% of the respondents either have a Diploma or Bachelor degree or above and 37% of the respondents having completed secondary school. 74% of respondents had not participated in any form of microwork while 26% had participated in some form of microwork.

Figure 1 below illustrates the types of microwork that respondents indicated that they would most likely (want to) partake in (single response item). The majority of respondents (20%) indicated that would most likely complete surveys if they were to participate in microwork. The second most popular task amongst the respondents was rating services (14%, n=31) followed by mystery shopping (11%, n=33).

Microwork_SA_Fig_1

Figure 1: Tasks Respondents are “most likely to complete

Potential Contribution of Microwork

When we asked what they think the major contribution of microwork could be to a nation, 69 of respondents think that microwork has the potential to decrease unemployment while 35 indicated that microwork has the potential to help a country develop. Interestingly, 11 of respondents are of the opinion that participation in microwork is a new form of exploiting cheap labour.

Microwork_SA_Fig_2

Figure 2: Potential Contribution of Microwork

Key motivators for participating in Mobile Microwork

We also asked them about a number of potential motivating factor as well as barriers. Figure 3 shows to what extent they rated particular motivators/barriers as being important.

Microwork_SA_Fig_3

Figure 3: Motivators for (intended) participation into mobile microwork.

However, more interesting was when we ran a multiple linear regression test to see which of these actually were a statistical predictor for their intended future participation in mobile microwork. It turns out that only payment/remuneration is significant in the model (p = 0.006)> However, the overall multiple regression model has an R² of only 0.13 with an adjusted R² of a measly 0.03 i.e. we could only ‘explain’ 3% of the variance in intended future microwork participation from the usually cited motivators and inhibitors !

More interpretations and full details in the forthcoming publication of the AMCIS paper. Please feel free to comment or contact me directly.

Jean-Paul Van Belle; Centre for IT and National Development in Africa (CITANDA), University of Cape Town (UCT).

 

Digital Economy, Digital Labour

The Role of Digital Jobs in Solving Youth Unemployment in Kenya

iHub Research in 2014 published a report on Digital Jobs in Kenya. Fast forward to 2018 how far are we? A key insight presented in the report was that there existed a digital skills gap between theoretical skills, attained by youth through various programs, and practical skills, sought after by employers despite the existence of the key trends of: online work, big data analytics, and the mobile applications sector which present great potential for large-scale digital job creation in the future.

February 2018, unemployment is hitting record highs of 39.1% in Kenya, based on a report by the United Nations Human Development Index (HDI) 2017 and in its midst there’s been concerted efforts towards encouraging entrepreneurship, it’s clear that we need to innovate around solving the problem of unemployment.

In December 2016 the government of Kenya launched the online jobs portal, Ajira in a bid to take advantage of ICTs in eradicating unemployment; specifically targeting the youth, with the promise that it would equip 1 million Kenyans with digital skills so that they can secure employment. Ajira’s tag line which states “Online WORK is WORK” aims to raise the profile of online work, promote a mentorship and collaborative learning approach to finding online work, provide Kenyans with access to online work and finally to promote Kenya as a destination for online work.

Since its launch we’ve barely heard of progress, statistics or testimonies of the users of the platform. We do know that together with Kenya Private Sector Alliance, the Ministry of ICT as a result of funding from the Rockefeller Foundation are implementing the first phase of the Ajira mentorship program, to train and mentor future young online workers. Will this be the reason Ajira and the concept of digital work will successfully scale in Kenya?

The concept of digital work is definitely not one that is new in Kenya and definitely not across the world, from where we can learn great lessons. Already existing in Kenya is the platform KuHustle that has 32,000 plus online workers, with over 1,000 jobs posted worth over US$920,000.

In order to adequately take advantage of this opportunity it is paramount to address the barriers affecting the job market as a whole in Kenya and creating mechanisms to overcome these barriers. Based on estimates from the government before the launch of Ajira in 2016, it was assumed that there were already 40,000 Kenyans working online and as adoption of technology and the Internet is gradually increasing in the country, this number has most definitely increased and has the potential to continue to do so, with time.

Digital job platforms serve the purpose of easing the process of connecting employers to a competitive selection of employees from different locations, background and privilege so long as they have an internet connection. Meanwhile it seems in this central narrative that technology in the form of digital jobs will be the salve of solving youth unemployment. How true is this assessment?

There is no doubt that digital jobs will definitely enable and increase the possibility of a greater percentage of the young population in Kenya (who are possibly marginalised due to issues surrounding lack of access) to acquire formal employment at higher wages than they would have previously probably acquired. Beyond the basic digital skill gap that is being addressed through training and mentorship by government initiatives, there exists huge demand for specialised skills, such as developers, data scientists, which the current supply levels fail to meet and this is an example of some of the fundamental barriers affecting the job market in Kenya, that need to be addressed while also focusing on digital jobs.

By utilising this multi-stakeholder and multi-dimensional perspective in analysing the challenges currently being faced in the job market in Kenya today, this approach will propel us closer to solving the issue of youth unemployment.

 

Digital Labour

Be Mindful of the Short-Circuiting of Platform Work Narratives

The fight for fair and decent digital work involves multiple fronts. These include advocacy for accountable applications of technology, an inclusive policy-making agenda, and the construction of alternative narratives to those favored by companies or neoliberal governments or both, to list a few. The fight for fair and decent digital work is also deeply affected by local and national contextual factors such as the existing labor market and local income level. All seem to be uphill battles calling for joint efforts from concerned scholars, activists, and workers.

The latest globally uneven proliferations of platform-dependent jobs (e.g., gig driving and micro-work) raise serious challenges in terms of how to localize the multi-front battle for fair and decent digital work. For developing countries in particular, which often concern themselves with integrating into the global (digital) economy and development agenda, the discursive front of the fight for fair and decent digital work—that is, mainstreaming the worker-centered narratives about platform work—turns out to be tougher than other fronts.

Scholars like to use the trope of the “black box” (Pasquale, 2015) to describe the secretive and opaque way in which private IT companies utilize proprietary algorithms to manipulate consumers, users, and workers. Though scholars may perform reverse engineering to gather information on the inner workings of certain algorithms, systematic knowledge is hard to acquire. For example, the secrets of Uber’s surge pricing algorithm were revealed in 2015. However, the surge pricing algorithm does not function in isolation in shaping drivers’ working experience with the ride-hailing apps, while Uber may change how the algorithm works at its will. Thanks to the work of many scholars (see, for example, Rosenblat & Stark, 2016), the informational asymmetry between companies on the one hand and consumers, users, and workers on the other has been recognized as a structural feature of the power dynamics among workers, the platform company, and the regulatory authority.

Besides opaque algorithms operating in the dark, I have become aware of the back-channel circulation of narratives about digital platforms and jobs (workers) directly from private companies to governmental official reports without engaging with third-party institutions or scholars’ voices, not to mention the inclusion of workers’ perspectives. I call this phenomenon the “short-circuiting of platform (work) narratives.”

Platform companies have the tendency to brand themselves as pioneers in offering technological solutions to social problems, and the leading Chinese ride-hailing company Didi Chuxing is no exception. It builds its platform work narratives around creating jobs and increasing income. Didi claims that the company created 17 million flexible jobs in 2016 and more than 21 million drivers earned their income on the platform from June 2016 to June 2017 (Didi, 2016; Didi Institute of Policy Study, 2017). Taxi drivers do not belong to the category of “new jobs,” despite the fact that a great majority of taxi drivers in China also work on the Didi platform (Chen, 2017a). The two reports highlight the company’s contributions to jobs-creation particularly in regions and sectors where China’s national development strategy for economic restructuring has brought about staggering figures of unemployment. These regions include the heavy-industrial sectors of the rust-belt provinces in northeastern China Take the 2016 report as an example; other than the vague number of 17 million and 5 million job opportunities for laid-off factory workers, the report revealed few details on specific work conditions or if the income earned through the platform accounted for living wages. The China Internet Network Information Center (CNNIC)—China’s authoritative agency on statistics about Internet use—cited Didi’s jobs-creation number (17 million) word for word in its annual report on China’s state of platform economy (CNNIC & Internet Society of China Sharing Economy Committee, 2017). In the absence of other figures or reports on drivers’ work conditions, CNNIC echoed the rhetoric of jobs creation and did not delve into the challenges facing drivers in the ride-hailing platforms.

China is hardly alone in the short-circuiting of platform narratives. This process is dangerous because it allows the language and figures of jobs creation, and more importantly, the framing of the platform’s contributing role in the economy, to travel in a narrative package from the private company to the governmental report. But the governmental report also serves as the reference for scholars and policy-makers. Without incorporating alternative perspectives and narratives on the relationship between platform technologies and workers and development, the governmental report may be at risk of losing its public accountability, which further prevents counter-narratives from surfacing into the mainstream conversations on how accomplish the goal of fair and decent digital work.

Works Cited

Chen, J. Y. (2017a). Technologies of control, communication, and calculation: taxi driver’s labor in the platform economy. In P. Moore, M. Upchurch, & X. Whittaker (Eds.), Humans and machines at work: monitoring, surveillance and automation in contemporary capitalism (pp. 231–255). London: Palgrave Macmillan.

CNNIC & Internet Society of China Sharing Economy Committee. (2017). Report on the Development of the Sharing Economy in China. Beijing.

Didi. (2016). Job Creation – VALUES. Retrieved September 5, 2017, from http://www.didichuxing.com/en/values/job-creation

Didi Institute of Policy Study. (2017). New Economy, New Jobs: 2017 Research Report on jobs on Didi Chuxing. Beijing, China: Didi Institute of Policy Study.

Pasquale, F. A. (2015). The Black Box Society: The Secret Algorithms That Control Money and Information. Cambridge: Harvard University Press.

Rosenblat, A., & Stark, L. (2016). Algorithmic Labor and Information Asymmetries: A Case Study of Uber’s Drivers. International Journal of Communication, 10, 3758–3784.

 

Digital Labour

The changing strategies by digital labour platforms and its impact on freelancers in the Global South

Policy makers in the Global South have discovered digital labour platforms (e.g. Upwork, Freelancer) as a potential source for employment. In his blog-post of June 28, Brian Nicholson mentioned initiatives in Pakistan and Nigeria that train young people for online work. In the Philippines, the Department of Information and Communications Technology (DICT) organises so-called ‘rural impact sourcing’ workshops around the country. Despite using the term impact sourcing, these events have no connection with the original conceptualisation of impact sourcing which highlights how social enterprises hire and train marginalized individuals for digital work. These events are often sponsored by the country’s main internet providers and aim to make participants interested in becoming ‘Online Filipino Workers’ (as paraphrase of the well-known term Overseas Filipino Worker). Apparently, for policy makers in the Global South, the digital labour market is seen as an infinite source of employment that should be tapped rather than restricted or regulated. Such workshops also still present digital labour platforms as ‘global labour auctions’ in which everyone can participate regardless of his/her location as long as there is digital connectivity (for which an internet provider that you can sign up with is right at hand).

In reality, digital labour platforms (like in this case of Upwork) no longer function as a labour auction. In the past few years a number of measures have been taken by Upwork through which it increasingly benefits and favours a small number of successful, high-earning freelancers. The ease of entry for freelancers had created a situation in which even for jobs with limited remuneration dozens or even hundreds of freelancers would apply. With the platform still retaining a fixed percentage of the agreed remuneration as its fee, the so caused downward pressure on price formation also ate into Upwork’s revenues. Obviously, from a business perspective, it is not in Upwork’s interest to have too many freelancers competing on the platform, causing a downward pressure on price formation and the gains from the work performed to be spread too thinly. The introduction of a $3 per hour minimum wage in 2014 had been a first step attempt at ‘price support’ and additional value capture by Upwork. However, in practice it led to more projects being offered for a (low) fixed amount instead of for an hourly compensation. Therefore, Upwork needed a more drastic shake-up of its business model in order to generate more revenues for its investors.

Upwork’s transformation of recent years is best summarized as a change from labour facilitator to labour arbitrator (see Govil and Patnaik, 2014). The platform now no longer only provides a meeting place for the supply and demand of online labour but is directly involved in the recruitment of freelancers for clients and also handles pay-rolling (through Upwork Payroll). In 2016, it introduced Upwork Pro and Upwork Enterprise. In Upwork Pro clients receive help with drafting the project requirements and Upwork selects and shortlists premium freelancers for the job. Upwork Enterprise is aimed at larger organizations and involves the full-scale management of freelancers by Upwork. Upwork’s commission is no longer a flat 10 per cent, but varies with the size of the project to incentivize higher-value, longer-term projects. The main change for freelancers is that they can ‘buy’ their visibility in the search machine by taking a paid membership of $10 per month, which obviously benefits the financially stronger freelancers. An additional measure is the ‘job success rate’ of freelancers, an algorithmic score that apart from the ‘old’ job performance rating also includes such factors as whether the freelancer has won repeat and larger contracts, and experienced disputes with clients. It clearly favours freelancers who have managed to land longer term collaborations with single clients over those who tend to earn from multiple small gigs (which is more common among freelancers working part time).

Successful freelancers are now invited to join a talent pool which connects them to larger client projects. A catch is that those who accept, are required to be available for Upwork only (committing at least 30 hours per week). On the other side (and seemingly inspired by Taylorist management principles), Upwork has started to suspend accounts of freelancers who lack distinctive skills or who are not generating enough revenues. New freelancers (particularly those with ubiquitous skills) are also no longer automatically accepted on the platform. This means that Upwork now more actively intervenes in the pool of labour it offers to clients, making freelancers vulnerable to sudden policy changes by the platform. Once freelancers work via the platform, Upwork expects their loyalty and exclusive, full-time availability. However, Upwork does not offer any kind of social protection in return. Upwork tries to control (and discipline) its labour pool through negative measures (such as the fear of terminating the profile or reduce the visibility in the search machine). Here you can wonder how well aware they are of the everyday lives and responsibilities of their freelancers in the Global South.

This blog showed the contradiction between Southern policy makers who (still) view digital labour platforms as an infinite source for employment, and the platform which is tightening the grip on its pool of freelancers and which makes it increasingly hard for new entrants to join. Recent measures by the platform work against freelancers from the Global South, particularly the many of them working in the low-skill segment of the digital labour platform. By providing more services and introducing more rules, platforms like Upwork increase their influence on how freelance labour is globally traded and, in the process, try capturing a larger share of the value that they help to create. Upwork’s evolution from a discrete facilitator towards an ever more manifest, some may say obtrusive arbitrator, shows that in fact a new intermediary, equipped with new measures for disciplining labour, has been born. Not only does this require new legislation, it also requires a debate with platform owners with regard to their responsibilities towards their community of workers.

Govil, A. and S. Patnaik (2014). The Future of BPO: How Human Cloud and Infrastructure Cloud are changing the Game. Los Angeles: Avasant Research http://avasant.com/insights/digital/the-future-of-bpo-how-human-cloud-and-infrastructure-cloud-are-changing-the-game/

Digital Economy, Digital Labour

Early regulatory reforms can benefit developing countries in the digital economy

Over the last few years, the use of digital technologies has grown rapidly. The Internet has played a key role in driving this digital growth. However, whilst these new developments have created many advantages and brought varying degrees of development and ‘inclusivity’ in developing economies, issues of governance and policy are growing almost simultaneously with every new innovation and development in digital technologies. While a clear majority of these are issues of infrastructure (technical), online security and privacy (ethical), there are also other emerging aspects which require immediate policy reviews.

Take for example bike-sharing platforms. Cities in the UK have recently seen a splurge of hi-tech rental bikes on its streets. These ‘dockless’ hire systems allow users to pick up and leave the bike anywhere for just £1 an hour, locking and unlocking them with a simple smartphone app. The flexibility of use of these station-less smart bikes (unlike the Transport for London’s Boris/Santander bikes that need docking at specific docking stations) has popularised use of oBike (a Singapore start-up) and moBike (a Chinese start-up).

While this new pollution-free, high-tech bike-sharing transport system has provided many, especially those without the potential of owning a personal bike, an opportunity to travel around the city quickly and at minimal costs, this newly introduced digital economy business model has raised new regulatory issues.

The bikes are not quite as nature-friendly when they are left at any nook and corner.  In London, the masses of bikes created a huge hindrance for pedestrians, wheelchair users and those with buggies, as they began cluttering the streets and blocking paths. In Manchester, newly launched Mobikes were reported being sabotaged, stolen or dumped in canals and bins.

Such outcomes highlight emerging tensions for policymakers as they seek to encourage innovation and business start-ups, and promote sustainability.

The above refers to incidences in a developed country with supposedly advanced transport systems and planning regulations. If the same approach were to be applied in developing economies, leaving these dockless bikes lying around in the streets that are already overwhelmed with traffic, vendors and pedestrians can lead to even more drastic consequences, not ruling out the added possibility of these bikes being pilfered. Already, in China, where this business model was initially carried out, piles of these hire bikes were found dumped on the streets of Shenzhen. While the idea of introducing these bikes in China was for a sustainable cause – to help lower congestion and air pollution – it led to further unnecessary congestion and pile-ups.

Other parallels can be drawn with similar business models and platform companies, such as the food delivery courier Deliveroo, the car-hailing platform Uber, and the home-sharing app, Airbnb, where governance is a growing issue.

The recent legal actions against Deliveroo and Uber highlight the issues around  self-employed contractors without access to benefits such as sick pay, paid holiday, pensions, and protection afforded by the minimum wage.

Deliveroo claimed that the current law does not cater to the flexible working system where the company pays its workers by the job and not by the hour, and even called for a change in UK law to be able to give its workers more rights. Uber too maintained that its drivers are self-employed contractors rather than permanent employees and are not entitled to such benefits.

Despite these persistent claims, Deliveroo was forced to remove a controversial clause in its agreement which restricted couriers’ ability to challenge their self-employed status at an employment tribunal and work for other companies. Deliveroo was also made to remove a clause that obliged riders to give two weeks’ notice to terminate their agreement with Deliveroo. Uber on the other hand lost a court case when the employment tribunal ruled in favour of cab drivers and ordered Uber to pay drivers national living wage and holiday pay (though Uber is appealing the decision).

In a similar incident in 2012, an MTurk[1] worker filed an employment lawsuit in California against CrowdFlower, an intermediary firm between the MTurk platform and several end-clients. The microworkers claimed they were misclassified as independent contractors and paid less than the legal minimum wage. The suit obtained class action status and was settled in 2014 for $585,000 in favour of MTurk workers who had done more than a minimal amount of work for CrowdFlower.

While the above cases show a positive outcome to cases against gig economy operators in developed economies, where ministers can order a crackdown on these firms, such sophisticated and organised systems are often absent or lacking in developing economies with similar problems. Lawsuits can be highly unaffordable for those in developing countries, not forgetting that these gig economy workers may also be illiterate (e.g. cab drivers, courier personnel etc.) and unaware of their legal rights. Corruption within the legal system may also hinder gig workers in these economies from filing cases, where companies are powerful and able sometimes to bribe their way out of such sticky situations. These drawbacks open the door for greater exploitation of workers within developing economies.

Laws need updating to cater to the new business models of the digital economy. However, with innovation moving faster than regulation being brought in, legislation is rarely achieved quickly. What little legislation exists only serves narrow interests and provides minimal protection for workers and users. So what are the implications for developing countries? And how can developed economies lead the process for change to benefit developing countries?

For one, developed economies are leaders in setting standards and perhaps need to do more in terms of ensuring that these high standards are met not only within its own jurisdictions but also across borders where such international companies operate. Governments in developing economies also need to be more proactive in understanding and regulating new models of work as well as working with platform firms to curtail exploitation. The weak labour laws and governance in developing countries can sometimes be an attraction for companies in the West keen to penetrate markets in developing countries. This often leaves workers in developing economies open to exploitation and at a severe disadvantage as their governments are more interested in attracting new business investments and businesses in gaining entry to new markets. It is common knowledge that online microworkers in developing economies are paid less than their counterparts in developed economies for the same work. It highlights the need to reform existing regulatory frameworks.

Further, with relatively weak institutions and capacity for implementing policy in developing countries, the issues can be even more detrimental. Shocking stories of rapes by Uber and Ola cab drivers have been a regular headline in the news in India, and growing. This resulted in a temporary ban on these services in New Delhi, as it was discovered that Uber had not carried out proper verification checks on drivers. But little has been done in terms of legislation to avoid these incidents in future. Such negative occurrences can be a hindrance to the growth of the digital economy in developing economies that can otherwise benefit from the use of digital technologies.

It is also well-known that there is a massive digital divide between developed and developing countries, urban and rural regions, when it comes to anything digital. Within developing economies, rural areas and women and girls are often found to be excluded from participation in the digital economy due to various infrastructural and cultural issues.  Thus, new business and employment models are not quite accessible to these women or to those at the bottom of the pyramid who live below the poverty line and struggle to buy a meal a day, let alone have the income to pay for bike hire. There is a danger that such business models, while bringing new benefits, can also create a wider divide among urban-and-rural regions, and consequently between developed-and-developing economies.

As new business models of the digital economy make their way to the Global South, the importance of developing sound digital economy policies in developing/emerging countries must be emphasised. Emerging/developing markets are the engines of global growth and generate some of the most attractive investment opportunities globally. The IMF have projected that emerging/developing economies will grow by 4.5% in 2017, versus just 2% in developed economies. If governments in such emerging and developing economies want to entice and sustain foreign investors and innovators, they would need to focus on serious legislative strategies early on, that would not only benefit businesses but also citizens. While developing countries can ‘learn’ from some of the experiences of developed countries, they would still need to design policies that meet their own needs and which fit their local setting. For instance, policies in developing countries need greater focus on regional and gender inclusivity and other technical and social issues to reduce inequality and enable participation of the underprivileged in the digital economy. Regulatory reforms are also needed that ensure platform operators’ responsibility when it comes to protection of users against exploitation and hazards.

It is evident that the challenges of regulation exist not only within developed economies but also in developing economies, when it comes to digital platforms. New legislation needs to be put in place as developments in digital technologies grow. While one may insist that it’s “a grey area”, reform in existing regulatory frameworks is paramount and urgent, especially in developing countries with weak institutional settings, inadequate education systems and large pools of labour. It will ensure that such aspects as the sharing/gig economy will serve as an opportunity rather than be used as a tool for exploitation.

[1] MTurk or Mechanical Turk: The oldest and most well-known microwork platform owned by Amazon