Research and advocacy of progressive and pragmatic policy ideas.
Time for better terminology, especially for policymaking
By Edwin Goh & Nelleita Omar20 November 2020
Certain types of gig work have become increasingly important for employment in Malaysia, particularly in the wake of the COVID-19 pandemic. Since the enforcement of the first Movement Control Order (MCO) in March this year, gig platforms like Grab and Foodpanda have experienced a surge in the demand for delivery services as well as delivery rider applications. This trend has not gone amiss among researchers, policy thinkers and the media, and we have seen a number of editorials, research work and media reports focusing on the welfare of gig workers.
However, there is one common issue inherent in these writings and discussions which needs to be addressed immediately: how the term ‘gig worker’ is used. The term is often used as a catch-all phrase, which unfortunately conceals important differences amongst the wide range of work and workers. If left unaddressed, it can be problematic for effective policymaking.
Historically, the idea of gig work is not new. In the recent past, workers on contract were commonly known as independent contractors or freelancers who take on projects or ‘gigs’ instead of being locked into part-time or full-time employment. The term ‘gig worker’ only became popular in Malaysia in the early 2010s when ride-sharing platforms Uber and Grab entered the market, and since then we’ve seen delivery riders and e-hailing drivers also being labelled as independent contractors.
Nevertheless it remains that the term ‘gig worker’ as is used today embraces many different types of jobs and skillsets, from delivery riders to freelance graphic designers. The 2021 Economic Outlook Review defined ‘gig workers’ as anyone who engages in temporary jobs such as contracts or short-term gigs. The Department of Statistics Malaysia (DOSM) categorises all ‘gig workers’ as independent contractors or own-account workers, an employment class that covers a wide scope of workers.
We argue that for clearer policymaking, these official definitions need to recognise and spotlight one crucial differentiating factor. Yes, there are differences in job nature, skill level, demographic profile and more. But the one key aspect that truly differentiates workers in this broad class is the power relationship between the worker and the gig platform.
For those who work as ‘white-collar’ freelancers such as graphic designers, copywriters, programmers and others, gig platforms like Upwork and TaskRabbit serve as a marketplace where the workers showcase their services, portfolio and rates to attract potential clients. Though constrained by the usual laws of supply and demand, workers here have relative control over the jobs they take and the rates they charge. The gig platform takes a commission but does not directly determine or offer jobs to the workers.
On the other hand, those who perform gig work like e-hailing and delivery have a very different relationship with their gig platforms. Based on proprietary and in-house algorithms, gig platforms offer rides or delivery jobs to workers within the location radius and other factors. Prices of each ride or delivery job are set by the gig platforms. In theory, workers are free to accept or reject the jobs offered but in many gig platforms, penalties are built into the system for low rates of job acceptance.
A July 2020 paper by the UCL Institute for Innovation and Public Purpose offers a useful way to differentiate gig workers based on an employer’s or platform’s degree of control vs. an employee’s or worker’s dependence. Workers who are not dependent on any specific gig platform for work or have their jobs controlled by the employer truly fit the description ‘independent contractors’ (Figure 1).
On the other hand, workers who depend on a gig platform to receive jobs or have aspects of their job controlled by the gig platform are better described as ‘dependent contractors’ or ‘reliant contractors’ (Figure 1).
Source: UCL Institute for Innovation and Public Purpose.
It stands to reason that ‘independent’ vs. ‘dependent’ or ‘reliant’ contractors require different social safety net support and labour protections.
Given the wide variety of workers and the difference in power dynamics, using ‘gig worker’ to describe any worker on short contracts risks producing shallow legislation with unintended consequences. One noteworthy example is the passing and enforcement of Assembly Bill No. 5 (AB5) in California in late 2019, which re-classified gig workers (including independent freelancers) as full-time employees.
The implementation of AB5 inadvertently cost many contract workers their livelihoods. Many freelancers had their contracts terminated as they could not commit to the work commitments set by AB5. Some companies also could not afford the additional labour costs incurred from converting such contract workers to full-time employees, particularly health insurance costs. Moreover, the rigid employment definition used in AB5 also penalised part-timers who enjoyed the flexibility of gig work such as those in the arts community.
A year after the enforcement of AB5, Uber, Lyft, Doordash and other gig platform companies put forward California Proposition 22 (Prop 22), a private bill designed to overturn AB5 and re-determine the employment status of gig workers/freelancers. A majority of those who voted (58%) chose to redefine ride-sharing and food delivery gig workers as contractors, but contractors who are eligible for a minimum earnings guarantee of at least 120% of the state’s hourly minimum wage as well as some healthcare coverage.
The legislative debates and switchback from AB5 to Prop 22 is a reminder for policymakers not to overlook the key differences between so-called ‘gig workers’. The support and assistance needed by truly ‘independent contractors’ like freelancers will not be the same as the more dependent or reliant gig workers like delivery riders. ‘Independent contractors’ may need more support in drafting good service contracts and protection against unscrupulous clients. ‘Dependent or reliant contractors’ may require more active measures such as social safety net coverage and protection from overzealous platform algorithms.
Malaysia’s 2021 Economic Outlook Review marked the gig economy as a new growth area (hat tip: the report also cited our past research on gig workers to highlight the reality of this work as an important source of income that lacks social protection*). As a way forward, the government has set up a committee with representatives from the Ministry of Human Resources, Ministry of Youth and Sports and the Ministry of Domestic Trade and Consumer Affairs to study legislative options in protecting gig workers.
*At the time of writing, gig workers were only eligible for voluntary protections, such as Self-Employed Employment Injury Scheme (SEEIS) and i-Saraan.
While countries around the world, including Malaysia, continue to study the options for gig worker regulation, one thing that has been clear about gig workers so far is that they are not the same. Based on the gig workers’ power relationship with gig platforms as well as the nature of gig work and their skill levels, they face different types of vulnerabilities.
As such, the government needs to have separate terminology for each worker segment to formulate appropriate and effective legislation – a paper by the Institute of Labour Market Information and Analysis (ILMIA) provides a good starting point and this differentiation should be acknowledged in future policies.
Crowd work is web-based, on-demand labour, where tasks are completed behind a computer anywhere. Some of the examples are copywriting, translating and coding work.
Gig work is platform-mediated, location-based labour, where selected individuals are connected to tasks by a platform or work-on-demand app, and the work is completed offline. For instance, e-hailing, food delivery and household services.
Source: Gani, H. (2020). The gig economy: Platformisation and fragmentation of work. Institute of Labour Market Information and Analysis (ILMIA).
At the centre of policy discussions about gig worker regulations is the problem of classifying workers with different vulnerabilities. How lawmakers define and understand the nature of different worker segments will determine whether future policies or legislations truly address their needs.
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