Uberization of work

The rise of Internet-facilitated on-demand services is changing the world of work in a radical and unpredictable way.  We are now in the era of the so-called gig economy or “sharing economy”. A “gig”, initially equated to a paid musical performance, is now “one ride gig” for a private car owner who has transformed his/her vehicle into an on-demand taxi.  Uber and Grab are turning these car owners-taxi drivers into “freelancers” or “independent contractors”.

The “uberization” of work is spreading in other industries that are using the digital platforms, such as those advertising, selling and delivering goods or services with a little help from online facilities.  Many simply use the still-to-be-regulated social media.

The gig economy benefits those with talents and business ideas that can be marketed via the Internet. For example, those who transform their homes into bed-and-breakfast mini hotels are giving big hotels stiff competition in attracting dollar-wary tourists through savvy and attractive online marketing.

People can become self-employed or small businessmen/businesswomen at the click of the mouse and transact business anywhere in the world at the time most convenient to them. Starting a business under the digital revolution seems easy. This is why the gig economy is expanding exponentially.


Work also looks easy for those who deliver service based purely on information communication technology (ICT) tools. For example, there are hundreds of Filipino English tutors teaching Japanese students (sometimes whole Japanese families) English via Skype. The Filipino English tutors usually do such tutoring from home, in their pajamas or casual clothes. Some of the tutors do tutoring on a part-time basis, meaning as a supplementary job to their regular job.

Overall, services delivered online have been multiplying. If there is Skype English, there is also Skype Mandarin being provided by freelance tutors from Singapore and Malaysia. In the United States it is reported that a growing number of the self-employed are online freelancers doing editing, translation, indexing, Web development, specialized consultations and so on.

The gig economy is a big problem for the tax people. Monitoring new businesses and various transactions done online requires an army of cyber spies. It is also problematic for labor regulators. Are Uber/Grab drivers employees? Are they covered by the Labor Code? Is there an employer-employee relation when the service terms of reference  refers to the individual service provider as a contractor, not as an employee? How about the self-employed techno-entrepreneurs?

Of course, in real life, freelancing is not necessarily a bed of roses. It involves a series of hits and misses in job contracts concluded or business deals consummated. Sometimes, there are problems in payment for services, delivered or undelivered. It is great for those with outstanding talents and have an established reputation or brand, which needs limited marketing. But for the average freelancers dependent on online signals, sustainability can be a problem. A good transaction can be followed by long periods of inactivity. On the other hand, an online assignment can be exhausting and bad to the health.

This is why some European and North American labor activist-researchers are insisting that freelancers also belong to the precariat because they lack social and economic protection. Very few buy social insurance. And since they are not considered regular employees, they do not enjoy paid holidays, leave benefits and other privileges accorded to the regulars.

This brings us back to the issue of employer-employee relations. Can the so-called independent contractors be considered employees, too? In the Philippines, there is a long-running and unresolved debate on “independent job contracting” and “prohibited labor-only contracting” involving “manpower agencies” hiring and deploying workers to do certain work or services for a principal. The big difference in the case of the Uber and Grab business setup is that the contractors are the drivers themselves. There is no intervening third-party manpower agency, whose recruitment and deployment services are being covered by the regulations outlined in the Department of Labor and Employment’s Department Order 174.

In the gig economy, the employer-employee relation issue arises when the participating freelancers or independent contractors have become dependent on the central coordination provided by the big platform providers through the magic of the ICT tools. The platform managers give directions on what to do for each job or gig and at what price to collect for such undertaking. This is clearly what is happening in the case of Uber and Grab, which have become global on-demand taxi business operations.

Not surprisingly, it did not take long before one driver filed a case against Uber, in 2015. The lady driver, Barbara Ann Berwick, claimed that she was an Uber employee, not an independent contractor, and as such, should be reimbursed for the various expenses she incurred as a driver of Uber for eight weeks. Uber argued that it is merely an “app” that connects drivers and passengers and has no control over the hours logged in by driver-contractors. The California Labor Commission sided with Berwick and asked Uber to reimburse her.

Uber appealed the case to a higher court. And in a class-action suit that followed and involved almost 400,000 drivers in California and Massachusetts, Uber entered into a compromise agreement. Uber would pay the drivers in the two states over $100 million in compensation; however, the position of Uber that the drivers shall be considered and treated as “independent contractors” was upheld.

To Uber, maintaining the independent-contractor status of the drivers is victory enough. However, there are complaints being filed in other countries where Uber operates. In October 2016 Uber drivers in the United Kingdom won a “monumental victory” (words of the British union) when a London employment tribunal ruled that the drivers are employees entitled to holiday pay, paid rest breaks and national minimum wage.

From the foregoing, it is abundantly clear that the battle for decent work conditions and appropriate labor rules in a cyber environment has just begun.


Turning Points 2018
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