Digital labour platforms are delivering social and economic benefits, but at a cost to workers

Week of 22 February 2021

Digital labour platforms are delivering social and economic benefits, but at a cost to workers

The growth of digital work platforms has been a two-sided coin for many workers and businesses. The ILO explores this complex topic, finding that platforms open up new pathways to work and generate income (especially during the COVID-19 pandemic) while simultaneously exposing workers to tenuous employment situations without the benefit of social safety nets, and wage and health and safety protections. Solutions to these challenges require a coordinated effort between policymakers, regulators and companies to ensure protections for workers, regulate wages and hours of work, tackle discrimination and harassment, and remove barriers to worker voice, collective bargaining and access to remedy. 

The ILO’s 2021 World Employment and Social Outlook—one of its flagship reports—focuses on “the role of digital labour platforms in transforming the world of work.” In the words of ILO Director-General Guy Ryder, “[t]his report is the first major attempt by the ILO to capture the experiences of workers and businesses with digital labour platforms. It is based on surveys and interviews with 12,000 workers in 100 countries, and with 70 businesses, 16 platform companies and 14 platform worker associations operating in multiple sectors and countries.”

This topic is especially timely in light of recent legal developments that have brought the rights of digital economy workers to the forefront:

    • Most recently, the UK Supreme Court ruled that Uber is required to classify its drivers as “workers” rather than as self-employed independent contractors, which grants them social benefits and protections like sick leave, a guaranteed minimum wage and the ability to more easily file complaints about the company’s labour practices. A commentary by the Editorial Board of the Financial Times points out that this “decision strikes not only at the heart of the company’s business model, but the gig economy generally.”
    • Other recent cases demonstrate that this issue is set to grow in importance, for example: a ruling by a California court requiring Uber and Lyft to reclassify drivers as employees (since nullified by a November 2020 ballot measure); and cases filed against Deliveroo in Belgium and the Netherlands to protect the rights of delivery workers.

We’ve summed up some of the key findings and takeaways from the report below. 

The digital work revolution is a two-sided coin

    • In the report’s preface, the ILO points out that “the COVID-19 pandemic has accelerated changes that were already under way, both in society and at work,” including the “expanded use of digital platforms and related technological innovations like cloud computing and the use of big data and algorithms.” This has brought new employment opportunities and flexibility to workers and businesses alike, in theory expanding access to decent work for many people globally and allowing new workers (especially women who often serve as family caregivers) to enter the workforce.
    • At the same time, the ILO acknowledges that “there are challenges”: digital work platforms play a role in linking workers with employment, without taking responsibility for their job security, wages, social protection, safety and well-being; workers can struggle to earn even a minimum wage, let alone a living wage; and they lack meaningful ways to express concerns and grievances including legal and practical barriers to labour organising and collective bargaining.

Digital labour platforms occupy a unique space in the digital economy

    • There are two main types of digital labour platforms:
      • “On online web-based platforms, tasks or work assignments are performed online or remotely by workers.”
      • “The tasks on location-based platforms are carried out in person in specified physical locations by workers, and include taxi, delivery and home services (such as a plumber or electrician), domestic work and care provision.”
    • Digital labour platforms are poised to open up new opportunities for people who struggle to access the traditional workforce, including women, people with disabilities, young people and migrant workers. “In developing countries in particular, such platforms are regarded as a promising source of work opportunities, leading many governments to invest in digital infrastructure and skills.”
    • Businesses—especially small businesses—also benefit from these platforms by reducing the time and resource costs of hiring, and increasing efficiency and productivity.

But fundamental challenges for workers remain

The ILO highlights some of the main challenges below:

    • Reinforcing geographic inequities: Most growth in digital labour platforms is “concentrated in a few countries” and requires that economies already have a relatively strong digital infrastructure and internet-savvy population—meaning that “[t]he global distributions of investment in digital labour platforms and platform revenues are geographically uneven.”
    • Wage pressures: “On online web-based platforms, labour supply exceeds demand, placing downward pressure on earnings.”
    • Risk of privileging certain workers: “Survey findings indicate that a majority of workers on digital labour platforms are highly educated and male. … While women do find work on digital labour platforms, they represent only four in ten workers on online web-based platforms and one in ten workers on location-based platforms.”
    • Job and income insecurity: “Work on digital labour platforms is the main source of income for many workers…but there are major differences between the earnings of workers on online web-based platforms in developed and developing countries.”
    • Inaccess to workplace protections and entitlements: “Working conditions on digital labour platforms are largely regulated by terms of service agreements,” which “tend to characterize the contractual relationship between the platform and the platform worker as other than employment, regardless of the actual nature of the relationship.”
    • Barriers to fundamental labour rights: “Platform workers are often unable to engage in collective bargaining” and the “majority of workers on digital labour platforms do not have social security coverage.” The ILO expands on this, pointing out that “workers in the app-based taxi and delivery sectors, particularly women, face various occupational safety and health risks. Not having social security coverage has created significant challenges for all platform workers during the COVID‑19 pandemic, especially those on location-based platforms.”
    • Exposure to exploitation, harassment and discrimination: “Discrimination on online web-based platforms is associated with exclusion from work opportunities or low pay, on the basis of nationality and gender, which was mentioned particularly by women respondents and workers residing in developing countries. Workers on location-based platforms also indicated having faced or witnessed discrimination or harassment.”

The way forward

According to the ILO, addressing these risks to people requires a coordinated approach from policymakers, regulators and the private sector to achieve changes like:

    • “clear and transparent terms of engagement and contractual arrangements for workers and businesses”
    • “ensuring that workers’ employment status is correctly classified and is in accordance with national classification systems”
    • “ensuring transparency in ratings or rankings of workers and businesses using digital platforms such as online web-based, location-based and e-commerce platforms”
    • “ensuring transparency and accountability of algorithms for workers and businesses”
    • “protecting workers’ personal and work data, as well as data relating to businesses and their activities on platforms”
    • “ensuring that self-employed platform workers enjoy the right to bargain collectively, for example through greater harmonization of competition law with labour law”
    • “reaffirming that anti-discrimination and occupational safety and health laws apply to digital labour platforms and their workers”
    • “ensuring adequate social security benefits for all workers, including platform workers, by extending and adapting policy and legal frameworks where necessary”
    • “ensuring fair termination processes for platform workers”
    • “ensuring access to independent dispute resolution mechanisms” and “ensuring that platform workers are able to access the courts of the jurisdiction in which they are located if they so choose”
    • “providing for wage protection, fair payments and working time standards”
    • “allowing platform workers to move freely between platforms, including by facilitating portability of workers’ data, for example regarding ratings”

Read the full report here: ILO, 2021 World Employment and Social Outlook: The role of digital labour platforms in transforming the world of work (February 2021)

“Technological innovation is transforming every part of our lives. The ability to quickly and cheaply exchange large amounts of data and information has laid the foundations for the rise of the digital economy and digital labour platforms. In both developed and developing countries businesses and consumers have embraced this transformation, as services and goods are delivered in ways that are cheaper and more convenient. Digital labour platforms are now part of our everyday lives. This transformation extends to the world of work. Digital labour platforms offer new markets for businesses and more income-generating opportunities for workers, including those who were previously outside the labour market. Such platforms are leading to changes not just to the organization of enterprises and work processes but in many cases to the relationship between workers and businesses as well.”