Do gig workers deserve better deal?

Do gig workers deserve better deal?

As more people join the gig economy, the state is having to address issues of insurance, benefits and status. Arnun Chonmahatrakool
As more people join the gig economy, the state is having to address issues of insurance, benefits and status. Arnun Chonmahatrakool

It is common to see uniformed riders delivering food around Bangkok. People have also become accustomed to using ride-hailing apps instead of traditional taxis. Following the coronavirus outbreak, the demand for ride-hailing plunged during the lockdowns, before rising again as social restrictions were eased. On the other hand, demand for food delivery services continued to surge as more people dined at home. Queues outside restaurants, that were once crammed with customers, have been replaced by large groups of colourful platform delivery couriers.

Worker participation in the gig economy, especially food delivery and private ride-hailing services, may continue to grow. Revenue for the Thai online food delivery business is projected to grow at 11.3% between 2021-2024, increasing its market value from $329 million (about 10 billion baht) in 2020 to $455 million in 2024. The market value of Thailand's ride-hailing sector in 2020 was $1.1 billion and is expected to grow further. In addition to the growing demand for these services during the pandemic, many whose jobs were affected also joined the gig economy.

Prior to the pandemic, many Thai workers turned to gig jobs as a "side hustle" to top up their incomes. The two main reasons why gig platforms are so popular among the Thai workforce are: 1) the relatively good compensation, and 2) these workers enjoy greater flexibility in terms of hours worked. However, due to the recession caused by Covid-19, many workers have begun to rely on gig jobs as their primary source of income. As a result, there was a surge in the supply of gig workers which led to greater competition, impacting their compensation.

Many gig workers in Thailand, as well as civil society, have called on governments and platform companies to provide improved social welfare and change the legal status of gig workers from "independent contractors" to "employees". For instance, a group of delivery riders gathered in front of Grab Thailand's headquarters and Government House in Dec last year to demand better service rates, insurance, employee benefits and employee status -- the lack of recognition of gig workers in the Thai labour law means they are not eligible for social welfare or legal protection. This situation has fuelled debate about whether these provisions should be extended to the gig economy.

Gig workers can rely on the Thai social security fund in case of illness, disability, death and for their pension, but only 55% of the 38.3 million people in the fund are informal workers, with the rest being formal workers. Consequently, many informal workers are still not protected under the security fund.

This call for better welfare is not unique to Thailand. On Dec 7, 2020, hundreds of GrabBike riders gathered in front of the company's office in Hanoi to protest over its increased commission rate. In the same month, Garda Nasional, an Indonesian motorbike driver union, threatened to organise a nationwide protest if the merger between Grab and Gojek continued without their consent, fearing it could lead to massive job losses. In January 2021, a food delivery driver in China who worked for, a company owned by Alibaba group, set himself on fire to protest unpaid wages. These incidents have placed the gig economy in the global spotlight.

The problem that Thailand and many other countries face is outdated labour laws that do not adequately embrace (or protect) gig economy workers. In Thailand, labour law only classifies workers into two types: formal workers and informal workers. According to the Social Security Act of 1990, gig workers are not covered by the formal social protection scheme, receiving only partial protection instead as voluntarily insured persons.

There is an argument that gig workers do not fit into either of the categories. Although they are classified as independent contractors in practice, some observers argue that the relationship between gig workers and platforms are more akin to employee-employer relationships. For example, some platform companies can determine the jobs that gig workers receive, including the destination they must travel to, and there may be penalties for refusing jobs or failing to complete their tasks.

But changing the status of gig workers from independent contractors to employees is not straightforward. Gig workers are people who value freedom and flexibility over the demands of their jobs. On the other hand, the ability to rely on gig workers has also allowed businesses to scale rapidly. Emerging platform companies may find themselves in a more difficult situation if they are expected to rely strictly on employee-employer relationships. A study showed that reclassifying drivers as employees in the US would increase Uber's business expenses by 20-40%, which would require the American ride-hailing firm to increase their service charges between 25% and 110% to cover the cost. Incremental costs like this may affect the stability of emerging companies and negatively impact the Thai digital ecosystem. Moreover, when faced with greater costs, companies could pass those onto consumers.

Governments around the world are attempting to address these issues, but not all will take a similar approach. In the US, as a result of strong lobbying by ride-hailing companies, the State of California passed ballot measure Proposition 22 after 58% of the ballots voted in favour of continuing to classify gig workers as independent contractors. The South Korean government has been planning to introduce a law to protect gig workers working through online platforms. The proposal would ensure that platforms provide health insurance and unemployment insurance for gig workers. In Vietnam, the Minister of Labour, Invalids and Social Affairs (Molisa) is considering several options to regulate gig workers. One of the proposed policies is the applicability of the Employment Act 1955 to protect these workers.

On the issue of the Thai social security fund and concerns over the low participation rate, merely changing the employment status of gig workers would not resolve this issue. Instead, the government could focus on improving financial literacy or developing the skills of workers who rely on gig jobs, enabling them to transition into a higher value role.

A more holistic approach

Policymakers and regulators should begin to look at gig workers' social security issues from a holistic point of view and collaborate with the private sector, academics, gig workers and think tanks to identify solutions that are applicable to Thailand's situation.

Another way to improve social welfare is to encourage consistent upskilling or personal development. Workers can be given incentives to take on new courses or do on-the-job training, allowing them to take up new roles in industries where there is demand.

It may be tempting to make quick changes to the regulation in order to address the challenges faced by workers on the ground, but the solution has to be sustainable for the long term. While discussion on gig workers will continue, any strategy to solve this problem must be balanced against Thailand's longer-term objectives, such as creating sustainable jobs and ensuring workers can adapt to the changing economic environment.

Jaratphong Srirattanan is Policy Analyst and Seha Yatim is Policy Manager of Access Partnership.

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