No rules in the Grey Zone : Platform workers at high risk during Covid-19 Pandemic

Most non-standard workers are hit heavy by lock-down and social distancing measures during the ongoing Covid-19 pandemic. Many platform workers belong to this group. They remain “on-demand” as they fulfill locally based, physical tasks via online platforms. Way before the Covid-19 outbreak most risks concerning their health, safety and income were borne by each of them individually. The pandemic just made matters worse.

The majority of workers, who deliver, drive, clean or repair, is not able to claim predictable and set pay levels and are treated as self-employed — despite evidence that they are not quite that. They are dependent on work supply via intermediary platforms, who set the parameters on prices and access to consumers (users). This results in a gap between the contractual link (self-employed) and the economic reality of the relationship between them. This has been debated at length and labelled as “grey zones” (among other by the OECD). Workers in these zones lack clarity on their rights and status. Some of them are suffering from a mis-classification of their employment relationship.

As such, California’s proposition 22 ballot going through is a major set-back to labour protections. Behind the ride-sharing platforms’ win are a whopping $203 million spent on their campaign. With this, workers remain independent contractors without health insurance. They will receive stipends towards insurance. The voters’ decision will legally supersede the A.B. 5 law that would have given employee protections to gig workers.

Elsewhere, now more than ever revisiting the rules governing this grey zone is key. It can happen through the application of new or existing regulation (think proof of the employment relationship). It also can happen if major on-demand platforms themselves change their approach. Some platforms do offer good protection for workers, when they recognize them as employees (not as self-employed) or when they have a pay policy that observes established minimum wage levels, or in the very least, when they provide paid (sick) leave.

During the crisis …

The crisis impacted platform businesses very differently. Transaction volumes increased on online shopping, delivery and logistics platforms, decreased for ride-hailing platforms and dropped significantly for personal services. Some platforms are reportedly down scaling their workforce to cope with the drop in revenue. In that case what happens to workers who do not benefit from social and employment protection? When a ‘regular’ business closes or proceeds with layoffs, workers receive compensation. “Self-employed” workers on platforms don’t. The Fairwork Foundation estimates that 50 million platform workers globally have been affected by COVID-19 in spring, with half of them having lost their jobs and those still in work having lost two thirds of their income on average.

Massive hirings occurred in those segments where demand increased. These are due to low barriers to entry and the overall crisis situation — yet this increased demand will not be sustainable over time. We’ve seen this now with Instacart — a grocery delivery platform in the US. A record number of 300.000 new workers joined the platform in late April — presumably laid off from other sectors. Reports suggest that with falling demand, and the absence of minimum floors, workers are now starting to compete against one another for gigs on lower wages.

Globally speaking, platform workers have done what can be considered essential services during and beyond lock downs. And yet, most did not receive any hazard pay while doing so. Vulnerable workers “with very low income continued their platform work in spite of the inherent health risk”. For that health risk to come by, the employer — in this case the ‘platform’ has to provide regular, adequate, free provision of Personal protective equipment (PPE) and ensure contact free supply chains and physical protection barriers. In spring, many platforms only took actions after health risks became glaringly apparent and workers started to voice their legitimate frustration. Media outlets picked up their concerns. The issue became a business risk. Hence, those that introduced measures do not need to be applauded for taking up their civic duty to protect the health of workers and consumers during a pandemic. Since, some workers have reported that they have not received promised PPE supplies or have not been reimbursed for purchases made on their own account.

In some cases, governments had to step in trying to fill in gaps in unemployment benefits and wage losses (see Denmark,UK or Italy). Local governments have covered paid sick leave elsewhere (Philadelphia, US). Occupational, Health and Safety authorities also took action (New South Wales, Australia). In Brazil, it took a court case to force a platform to provide PPE to workers.

An OECD policy brief released last month is displaying a range of measures taken by platforms during the pandemic (including the provision of protective equipment and of paid sick leave). The platform survey that the brief is based on was complemented by a workers’ survey showing quite mixed results:

‒ Only 35% of respondents said that their platform(s) had taken measures to assist them during the pandemic and just under half of those 35% said that they were satisfied with the measures taken.

‒ Asked about the resources provided, more respondents said that it was easy/relatively easy (38%) to access these resources than those who said it was hard/relatively hard (30%).

Most platforms seem to have refrained from providing income loss compensation and none had allowed for worker representation. According to the Fairwork Foundation: “Platforms have largely, with the exception of some which are providing some level of sick pay, left this to governments. Instead, platforms have focused mainly on preventive measures which are predominantly aimed at protecting and reassuring customers”. This has been rightly labelled an incremental approach: “Except, perhaps, for the introduction of sick pay, they have been incremental rather than radical in their responses. We see this incremental approach across the board, in the choices being made by some platforms: offering loans rather than grants to workers with financial difficulties; deferring rather than waiving loan repayments; simply telling workers to disinfect rather than monitoring that they do so; […] paying minimum sick pay rather than maintaining past earnings during illness.”

This fits the previous assumption that there is a business case to pursue some of the quintessential measures to keep demand up. And, that there is a business case not to change the business model as well. Meaning that providing PPE and possibly sick pay during a global pandemic does not equal re-assessing the employment relationship or reviewing working conditions. Many platforms would likely drive themselves out of the market if they were to pay labour costs. It’s just not in their interest.

… and beyond

It all points back to the elephant in the room: on-demand workers are mostly dependent workers and not at all self-employed. To be sure, some workers indeed seek self-employment and short-time gigs and want to retain all flexibility coming with that. But many others who work full- or part-time would surely qualify for the employee status. They should be entitled to get out of the “grey zone” but are not given that possibility.

Unrecognized employment relationships are a structural problem for platform workers. And, they are a structural benefit that allow platforms to save money. A survey of the Spanish trade union UGT has shown that platforms are saving ca. 5000 euros in social contributions per worker. Platform delivery riders in the UK earn at best around two-thirds of what a worker would earn even at the national minimum wage.

Trade unions have tried to address some of these issues. In doing so, they are faced with some barriers, including on the competition front. One of the first collective agreements in Denmark between a domestic workers’ platform and the 3F union allowed for flexibility and compromise. Workers could decide themselves if they wanted to obtain the employment status, while others could remain freelances — yet benefit from minimum fees. Unfortunately, the latter component is now being challenged by domestic antitrust legislation. At the European level, there is hope that the new public consultation on allowing self-employed platform workers to bargain. If it does, agreements like this could become more prominent.

If nothing changes, most platforms would keep the same business model as before, one that puts risks on workers, but with minor adjustments at the margin, and ones that they can quickly reverse once the situation comes back to “normal” and pressure on them subsides.

What we need to see more of is:

‒ Help with reducing costs by for example lowering intermediary fees or by increasing per-gig payments during the crisis;

‒ Pay that is in line with living or minimum wage standards, and income compensation in case of drops in demand or for health reasons including by introducing a general health insurance cover and sick pay;

‒ Unrestricted worker representation and engagement, and openness to consider employing full- and part-time workers based on their working hours.

There are firms that have a genuine ambition to do the right thing. There are platforms who stopped claiming commissions during the crisis. There are those operating on an employee model (Foodora in Norway, Alto in the US). And, there are few collective agreements out there that set the right protections for workers including a minimum wage level.

The on-demand platform economy still has a long way to go. It is one that hopefully is more responsible using the crisis to reconsider some of the practices that made the industry grow initially.