It’s Time to Regulate the Gig Economy

By Janine Berg an economist with the International Labour Organisation and Valerio De Stefano, a lawyer with the International Labour Organisation. Originally published at Open Democracy.

Over a century ago, labour laws began to be instituted in diverse countries throughout the world. These laws were intended to provide protection to workers in what was recognised as an unequal relationship of exchange, but it also gave authority to managers to organise and direct their employees’ work. While the world of work has changed since these initial labour regulations were instituted, the fundamental reasons for the existence of labour protections – to ensure safe and healthy workplaces, to give workers a voice, and to provide minimum protections with respect to working time and earnings – remain valid.

Although it would seem straightforward that the laws protecting workers should also apply to workers in what is described as the ‘gig economy’ or ‘platform-based work’, there is much debate – and confusion – on this issue. This lack of clarity stems in part from the novelty of platform-based work. There has also been an effort to conceal the nature of platform-based work through buzzwords such as ‘favours’, ‘rides’, and ‘tasks’ as well as the practice common to many platforms of classifying their workers as independent contractors.

Platform-based work includes ‘crowdwork’ and ‘work-on-demand via apps’. In crowdwork, workers complete small jobs or tasks through online platforms, such as Amazon Mechanical Turk, Crowdflower, and Clickworker.  In ‘work-on-demand via apps,’ workers perform duties such as providing transport, cleaning, home repairs, or running errands, but the workers learn about these jobs through mobile apps, from companies such as Uber, Taskrabbit, and Handy. The jobs are performed locally.

Working as a ‘Favour’

Depicting work in the platform economy as a mere ‘sharing of favours’ conveys an image of the gig economy as a sort of parallel dimension, where chores are amateurishly carried out as a form of leisure, with no relation to ‘work’. The reality, however, is different. For most workers, platform-based work is an essential source of income. The ILO recently surveyed workers on two important micro-task platforms: Amazon Mechanical Turk and Crowdflower. Forty percent of respondents answered that crowdwork constituted their principal source of income. Workers averaged 30 hours of week on the platform.

Related to this is the assumption that the workers are genuinely self-employed persons, independent from the platforms and their users. Indeed, much of the rhetoric around the gig economy is that the workers ‘are their own bosses’ – a new breed of ‘micro-entrepreneurs’ who work when and how they want, answering to no one and growing their own businesses. While there are some platforms that serve as marketplaces for buyers and sellers of goods, for platforms selling ‘labour services’ the worker is rarely operating independently.

Platforms mediate extensively the transactions they have with their workers, and also between the customers and the workers.  Platforms often fix the price of the service as well as define the terms and conditions of the service, or they allow the clients to define the terms (but not the worker). The platform may define the schedule or the details of the work, including instructing workers to wear uniforms, to use specific tools, or to treat customers in a particular way.

Many platforms have performance review systems that allow customers to rate the workers and they use these ratings to limit the ability of lower-rated workers to access jobs, including by excluding workers from their system. The amount of direction and discipline that clients and platforms impose on workers, in many instances amounts to the degree of control that is normally reserved to employers and is normally accompanied by labour protections such as the minimum wage, limits on working time, and contributions to social security. This recent ILO study provides more detailed analysis on these features of platform-based work.

In a landmark judgement on Uber in October 2016, an employment tribunal in the United Kingdom dismissed the notion that the drivers run autonomous businesses merely linked by the platform. Among other things, the judge observed that it was impossible for them to grow their businesses unless “growing their business simply means spending more hours at the wheel”. The judgement also found that, through the rating system, the platform subjected drivers to “what amounts to a performance management/disciplinary procedure”, going beyond what is allowed in co-ordinating mere self-employed workers.

What’s New About the 4.0 Economy?

When we look closely at the gig economy it becomes obvious that rather than ‘new’ 4.0 digital revolution work, ‘gig economy’ work is simply twenty-first century casual work rebranded. The technology has changed, but it is still work undertaken by human beings and under the control of other human beings, in exchange for money. Indeed, gig work needs to be considered along with broader trends of casualisation of the labour market such as the spread of zero-hour contracts and bogus self-employment.

Because work in the gig economy is currently unregulated – or is only regulated by the platform – it is characterised by a lack of job security and few, if any, labour protections. Ironically, with day labourers, dockworkers, and agricultural hands – probably the types of casual work that most readily come to mind – their work is at least for the day.

In the platform economy, it is for the task at hand. This can be as short as a few kilometres drive or ten minutes spent tagging photos on the internet. The ‘Turker’, the Uber driver, or the graphic artist working on an online design platform must continuously search for work, monitoring their computer screens or smartphones for work opportunities. Indeed, in the ILO survey, it was found that workers averaged 18 minutes looking for work for every hour working.

Even when jobs span a few hours or a few days, the worker needs to be constantly searching for new work. Ninety percent of workers in the survey reported that they would like to be doing more work than they are currently doing, citing insufficient work and low pay as the reasons they were not. Despite the desire for more hours, many were already working a lot: 40% of respondents reported that they regularly worked seven days a week and 50% indicated that they had worked for more than 10 hours during at least one day in the past month. Low pay coupled with the need to work resulted in workers spending long hours online.

The lack of protections for workers, the casual nature of the work and the elements of direction and control exerted by the platforms all point to a need to regulate the gig economy. Self-regulation by the platforms, as is currently the case, cannot ensure better working conditions and can jeopardise the sustainability of well-intended platforms in what is a global race to the bottom. Moreover, unless authorities step in and recognise that workers should not be denied protection just because they work for platforms, platforms will continue to have an advantage over traditional industries, risking a deterioration of working conditions that extends beyond platform-based work.

Turning Technology to Support Regulation

But how to regulate? To begin with, the technology that has allowed parcelling and distributing work to ‘the crowd’ can also be used to regulate the work and provide protection to workers. Technology can monitor when workers are working, when they are searching for work, and when they are taking breaks. For example, Upwork, the on-line freelance marketplace, offers its clients the option of paying by the hour, as it can monitor the workers by recording their keyboard strokes and mouseclicks and taking random screen shots. Uber expects drivers to always have the app on, which can track drivers’ whereabouts including their downtime.

This same technology can thus also be used to ensure that workers earn at least the minimum wage or ideally to regulate the wage agreed collectively by the workers and the platform. If labour protections are put in place, then platforms will have the incentive to re-organise work to limit search time. Technology and better organisational design can help to minimise search time, improving efficiency for all. The technology can also be used to facilitate payment of social security contributions.

With nearly unlimited supplies of labour and an absence of liability placed on platforms, casualisation will continue. While it is easy to become enamoured by the glitz and convenience of apps and the myth that we have broken from our past, we need to remember that these platforms are merely providing another way of mediating work – driving and running errands, or doing data entry or audio transcription online are not ‘new’. Technology is great – let it help us make the world run more smoothly, not unravel the gains from the hard fought battles to improve worker’s rights.

The views expressed in this blog are their own and do not necessarily reflect those of the ILO.

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  1. skk

    that line “Indeed, in the ILO survey, it was found that workers averaged 18 minutes looking for work for every hour working.” rings true. I recently registered as “looking for work” on Upwork, looking for analytics jobs. Writing the proposals, which is essential for getting a look-in is quite a time-consuming task, while the response rate is abysmal. As regards the hourly pay rate, sheesh ! I’ve seen jobs that I’d charge $5000 for where the client suggests a fixed price of $150 – and they close the deal with someone too !

    It was quite an eye-opener.

  2. Jesper

    With nearly unlimited supplies of labour and an absence of liability placed on platforms, casualisation will continue.

    but but but I thought lump of labour was a fallacy? So lump of labour is only a fallacy if wages can go down to zero? And we don’t want wages to go down to zero? Not sure what the almighty GDP might have to say about such heresy…..

    & replacing work regulating algorithms on IT-platforms (which has been produced by the all-knowing elite) with something as old-fashioned as laws written by people for people? Ungrateful Luddites, the almighty GDP will be mighty displeased. At the very least I see that the overlords will be granted additional capabilities to monitor the peons, a bit limited powers but still…

  3. JTMcPhee

    Yah, all this progressive promotion of “fixes” based on “regulation.” Regulation starts with laws that delegate power to agencies and enforcement systems. Who writes the laws? What are any laws, that purport to address what us mopes identify as as abuse and predation and destruction and looting, likely to contain? One recent “fix” is the Cuomo “Free Tuition (some strings attached, read the fine print) For College” legislative scam. And “industry,” which had a harder time of getting away with it when I worked for the US EPA in the 70s and 80s, is now invited to list the regulations they want the Rulers to get rid of because they are “inconvenient” or “stand in the way of profit.” There were a few in Congress back then who would at least tell the lobbyists “Not yet,” and do the pretext of “legislative fact gathering” and “investigation” that occasionally involved more than baring some teeth and smiling for the paroles. And a very few who still had some tiny nominal sense of “Constitutional oath” obligation, before the corruption without consequences became so “normalized.”

    So we mopes know it’s bad and going to get worse. What are the remedies? What outcomes do “we” want, indeed NEED just to even survive, from “our” political economy? The one that is “ours” only because “we” happen to have been born into it? It’s an ownership economy, all right, and “we” don’t own pretty much ANY of it.

    1. Bottom Gun

      As appealing as the concept of regulating inequities is in theory, I have to agree with you. I was an investment banker who, in a fit of patriotism, signed up as a federal regulator post-crisis. I did a tour of duty at FHFA and the open corruption left me flabbergasted. They actually made the trading desk crowd back on Wall Street look like choir boys by comparison (and sold their souls for a hell of a lot less money). Until we solve the problem of how to create a consistently transparent and accountable federal government run by talented, honest people, everything else is counting angels as they dance on the heads of pins.

      1. JTMcPhee

        BG, I hope you have landed in a safe and decent place. From what I think I know of history and human behavior, corruption and viciousness and failure (in the area of civility, comity and decency) are inevitable. Way too many people with “the talent” just seek personal pleasure and the domination and looting of others. When social groups are smaller, and the contacts are more face to face, it seems the opportunities for the parasites are at least a bit smaller. And if the predations get too oppressive, there’s always a huge assortment of implements to make that last-resort adjustment in the social order, captured in a phrase I picked up from a friend who grew up in the Piedmont — “He needed killin’.”

        Having done time, almost 13 years, as an enforcement attorney with the US EPA through the Reagan Revolution and early Pappy Bush years, and this after 3 years in the Army of which a year was in that pit of corruption called “Vietnam,” I really don’t see any way that we critters can, in large enough measure, fill out a “government” of talented, honest people. The scum drive out the decent folks, by and large. I feel for the people who still try to do the people’s work, to serve the general welfare. They can chew off some of the roughest edges, but how many will become a Manning or Snowden? The corruption I saw was all through the Justice Department, several US Attorney’s offices, several state environmental agencies and attorneys general, and of course the various legislative, executive and judicial structures.

        I have no idea, any more, of who “we” is, among us mopes, so many of whom aspire to join the looters — a house down the street has just gone on the market for 25% more than what I would consider “market,” and we had several family members over for Easter dinner and they were all excited that my house was now “worth” a lot more — starry eyes, that they might get latch onto the same bubble and float off to riches… (Where do people who sell houses for “a big profit” go to live next?) These are lucky people, who don’t have student debts, have lucked into fairly stable (for the moment) jobs. They don’t see how fragile it all is, even the ones in “IT” (who deal with code crises and DDOS and intrusions daily) and businesses subject to crapification and offshoring and all the rest. There’s the good people who try to keep things more honest, the public-servant types, but you have seen what happens to them — isolated, repressed, sold out. It’s a systemic situation — can’t even call it “failure,” because that presupposes that comity and honesty and decency and fairness are the intent and function of “the system.”

        There were quite a few EPA employees who resisted, fairly effectively for a time, the Reagan onslaught of something far more complete than “deregulation,” a perversion of the entire process of an entity that was supposed to be “protecting human health and the environment.” Look at it now – still a few good ‘uns, but overall? Dam’ near impossible to change the momentum and direction of It All. Though some us still try, looking for those little levers that might topple some of the monuments to cupidity…

        1. JTMcPhee

          And I personally cringe, every time a “fellow American” pops out that inane “Thank you for your service,” on hearing that I’m a veteran. But sincerely, from what you posted above, may I thank you for YOUR service?

          1. wilroncanada

            The venality of so many is one of the reasons I admire the few who stand up to them, blow the whistle, put themselves in harm’s way, and even their lives on the line. I think of Erwin Gray and William Black facing Presidents, Senators, Congress-critters during the S&L scandals, in spite of the threats.

        2. Norb

          It is distressing to witness the social conditioning undertaken 24/7/365, and its effects on the citizenry. As a person becomes more aware of this, your functionality in the broader society becomes compromised and a choice must be made between participation or personal withdrawal. This is a difficult choice for social animals, which is why most people become willful participants in their own enslavement. Its just easier emotionally in the short run. As long as the chains remain invisible, the charade can continue. Dissidents are few are far between and face the wrath from both ends of the political spectrum- from both the oppressors and the oppressed. It is being an outsider.

          Human evolution needs to rise above conflict and competition. Hard to do when every surviving social institution is designed to promote these traits, and sell them as our natural state of being. It seems that once an institution is corrupted, it is next to impossible to reform. The rot runs to deep.

          A new frontier is needed. Not the fake frontier of space exploration or some extravagant IT solution in the forever near future. Somehow I believe this future will take form with simplicity and integrity at its core. The good will draw the good together. All the rest will be left behind.

      2. DH

        We have no shortage of complex regulations. What we do lack is enforcement of said regulations.

        We need fewer, simpler principle-based regulations that are then enforced thoroughly and fairly.

        Murder and robbery statutes are pretty simple, and are generally “principle-based” with few differences , even across countries. There are some specific exceptions, like self-defence and degrees like involuntary manslaughter vs. pre-meditated murder. With few exceptions, these laws are enforced broadly and fairly and people generally understand what should be prosecuted and what should not. Murder is fairly rare, as most people know it is both wrong and there is a low likelihood they would escape punishment.

        White-collar crime statutes are much vaguer and squishier so that it is almost impossible to prosecute anything less clear than a Madoff Ponzi scheme. Fraud requires “intent” which then required documentation of intent, so as long as nobody write down that they plan to steal people blind then they are in the clear, even if what they did was wrong. Jail time for white collar crimes has become almost unheard of despite the massive dollars that dwarf what household robberies entail, yet uit is the burglars who get jail time.

        Drugs are similar. The laws theoretically apply equally to the wealthy and poor, yet poor communities are torn apart by massive incarceration rates while nobody ever does a search warrant for cars in a Wall Street parking garage which would likely bring in an equivalent haul of drug felons.

        Many employment laws are similar. There are lots of tax and workplace regulatory laws but there is a massive underground economy that ignores those. This is why VATs make sense, because they are harder to avoid than income and payroll taxes in cash employment transactions.

        In he last round of cabinet Senate committee hearings, there were some Trump appointees who had hired illegal immigrants to work for them and they still got approved to their posts. Employing illegal immigrants is illegal – if employers were held to account, many fewer illegal immigrants would be employed and so there would be far fewer illegal immigrants since they would not find employment which is why many of them come in the first place. So an Administration who is focused on incarcerating and deporting illegal immigrants while employing them in their homes without any negative consequences is the epitome of what is wrong with the regulatory structure in the US.

        So our general regulatory and enforcement environment is similar to our tax system, where there is massive complexity, poor enforcement, and a relatively low effective tax rate compared to the rest of the world so that we get large societal costs while privatizing profits for a select few.

        I think we should have massive simplification across the board of regulations and tax codes and then enforce them to the hilt. However, there are too many entrenched parasitical groups who make money off of the contradictions and inefficiencies to allow that to happen.

  4. Jfree

    The worst option imo is to ‘regulate the gig economy’. All that does is delude oneself into ignoring the more serious issue here (or even making it worse) – why is casual work the only real work option for so many?

    Far better imo to focus on stuff like:
    1. Get rid of all the subsidies/distortions re financial asset bubble-blowing – which is killing people at the bottom who rent.
    2. Solve the health cost (emphasis however on the UNPOPULAR stuff of reducing costs) issue one way or the other so that it becomes easier to restore full-time real jobs for people.
    3. Get rid of educational credentialism and of subsidizing (via debt) WAY too much study of nonsense while still having shortages of skills that can produce income (yes STEM).
    4. Correct the imbalances between the large/established v the entrepreneurial/growing. The ‘gig’ economy is only seen as entrepreneurial because we’ve killed off the entrepreneurial-that-matters.

    1. RepubAnon

      The “gig” economy is already regulated to some extent by the independent contractor / employee tests. If the apps work as essentially an advertising / marketing platform for folks running their own businesses, it’s little different than a pseudo-temp agency. If the “gig software” company takes a cut of the fee charged, treat them as a temp agency who employs the workers. If they charge a fixed fee, treat them as an ad agency.

      Plus, make the folks “gigging” workers to report them – if they meet the test of worker vs independent contractor, force them to pay the employer’s share of their employment tax.

      On a side note – isn’t “gigging” something they do to frogs?

  5. redleg

    I’m a STEM professional licensed in multiple states, and I’ve been forced to do the gig thing since 2011 when the genetic managers took over the company at which I was employed and eliminated my position (they actually captured our group’s revenue stream).
    I’ve been in a perpetual search for work ever since then and it’s killing me.
    The gig economy isn’t just for unskilled, non credentialed workers. Even highly specialized skills are expendable/disposable.

    1. TedHunter

      I’m sorry to hear that and wish you good luck.

      As a Europe-based headhunter I can confirm that the idea of a shortage of MINT, STEM or executives is just a myth. The only thing I can do to avoid howling with the wolves is charging my clients fixed fees based on the actual difficulty of finding someone, not variable fees based on the contract volume (usually 30% of the anual gross).

      Unfortunately, the only rule which is really promoting careers is the Mathew effect. Or joining an employee owned company, but for some reason people are more interested in talking about the problem than about validated solutions.

    2. Marley's dad

      On the job boards that I look at regularly, there are frequently local jobs posted for Physicians and Dentists, part-time.

  6. Watt4Bob

    The whole notion of a ‘Gig Economy’ has been built on ignoring existing regulation, so what sense does this make?

    Uber marches into town and brazenly ignores local regulations all over the country and gets away with it?

    If I, as an individual was caught providing taxi services without a license I’d be fined or jailed, but for the big guys regulations are there to be ignored?

    When did we assent to becoming a culture of sheep, free to be herded, and robbed by the highest bidder?

    Nothing is unlawful or immoral if you have $billions in capital behind you.

    Alas, our leaders have no sense of decency, and no sense of shame.

  7. Wisdom Seeker

    I stand with those who argue that further regulation is pointless because the regulators, legislators and many judges are, demonstrably, no longer working to form a more perfect union, establish justice, promote the general welfare, or secure the blessings of liberty for all. Unless “all” refers to corporate “persons” rather than the corporeal persons of which the Constitution spoke. Whether the government folks are working appropriately for the one other item mentioned in the Constitution, “provide for the common defense”, is debatable too.

    1. redleg

      Government is supposed to protect people from corporate malfeasance. You are arguing that because government is not performing that regulatory/legal function, corporations should not be subject to any limits at all.
      What could go wrong?

      1. Wisdom Seeker

        I wasn’t arguing that at all.

        I was pointing out that until the people solve the issue of government NON-feasance, government will not protect people from corporate (or individual) MALfeasance.

        Trying to use the current government to apply limits to corporations is like asking a dog to bite the hand that feeds it. The corporations control the government and won’t act against their own interests.

        Only a government that is actually accountable to the people will regulate in favor of the people. Take back popular control of the government and the regulations will follow.

        1. JTMcPhee

          …and recognize that any “taking back” is an enormous uphill undertaking, given where the power currently lies, and how many of us are desperate and apathetic and clinically depressed, with neither the time, wealth or energy or civic skills to organize effectively around an organizing principle and flag. The Tea Party had help from the oligarchs themselves, and had the Gadsden flag (which is likely now dead as an acceptable ensign for the vast majority) to form up behind.

      2. Henry

        The constitution is written in a way which protects the minority, the ruling class corporations, from the majority, the working class. Our federal and state governments are doing exactly as they are designed to operate.

  8. Arizona Slim

    I’ve been a freelancer since 1994. There was a time when I thought freelancing was just great, and I was more than willing to do it for the rest of my life.

    Then came The Gig Economy. Complete with bidding sites and apps. I’ve never used them, but they are affecting my business in a negative way. It’s a lot harder to earn a good income these days.

    I think that freelancers definitely need unions, but this one isn’t what I have in mind:

    BTW, I was so critical of the Freelancers Union that they banned me from their Facebook page.

  9. Wisdom Seeker

    Actually, the gig economy approach could be a good thing, if it were applied in areas (such as health care) where the current system is hopelessly bureaucratic and thus needlessly expensive.

    Imagine being able to simply phone up a primary care doctor, go in for a quick visit, and be charged just for the doctor’s time and a reasonable overhead for the office expenses? (i.e. how it used to work back in the old days…)

    A 20 minute visit should not cost more than $100; that would provide a fully-scheduled doctor, billing 40 hours/week, with $300K/year in personal income (not bad!), plus another $300K/year to pay for office expenses and other overheads. NO “insurance” required.

    Let consumers debit that from their O-Care deductibles by providing a basic invoice (as is done to obtain tax benefits on healthcare reimbursement accounts). Cut out all the middlemen and watch “gig economy” doctors crush costs…

    1. Jim

      Wisdom Seeker, you spoke earlier of a govt that no loner worked for us. In the realm of medical care it sure would be nice if AG Sessions (or even a State AG !) went back to 15 USC Chapter 1 and informed medical PROVIDERS (the insurance companies don’t even enter into this) that they had to post prices, and offer that price to ANYONE who walks in the door. That part of the law has been on the books for a long time now.

      Whatever State AG did this first would turn their state into a medical destination.

      Health Care is consuming 37% of the Federal Budget

      Oklahoma City Surgical Center Price List

      1. redleg

        That’s nice, but posting prices is meaningless if you need to go to an emergency room.
        “Oh no driver- not this one. The price for anaphylaxis is better on the other side of town”

        1. Wisdom Seeker

          Not at all. If prices are posted and antitrust laws are enforced, price competition in non-emergency services would set price expectations everywhere including ER services. Otherwise, the hospitals would have to be able to justify in court why the same service in an ER costs so much more than in a regular hospital room, and good luck with that!

          Consider other “emergency” services: if your plumbing backs up and you call a plumber in the middle of the night, or you ask for a rush service call to fix a broken heater or AC unit, you know you’ll pay a bit more for a rush job than for a regular service call, but you also know you won’t be robbed blind. Why should medicine be different?

          1. redleg

            False analogue alert.
            A sewer backup is in no way shape or form the equivalent of emergency medical care.
            Try again.

  10. Tomonthebeach

    I completely agree that the government, as usual, has not kept up with the changing labor landscape, and that some protective regulations are overdue.

    However, the lament about gig workers having to “continuously look for work” strikes me as irrelevant. Ask any consultant, and they will tell you that success hinges on knowing where the fish are biting. Anybody, gig or full-time, private or public sector, who is not continuously looking for value-added things to do is risking unemployment tomorrow or a passover for promotion in the near future.

    1. witters

      “Anybody, gig or full-time, private or public sector, who is not continuously looking for value-added things to do is risking unemployment tomorrow or a passover for promotion in the near future.”

      Enjoing the beach, Tom?

    2. athena

      However, the lament about gig workers having to “continuously look for work” strikes me as irrelevant.

      That’s probably because you’ve never worked on one of these platforms. It’s unlike any other labor market in history.

  11. Osirisopto

    As a life-long self employed person I recognize the “gig” economy as the twenty-twenty first century share cropping it realty is.

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