South Africa must not choke off Uber and the gig economy - TechCentral

South Africa must not choke off Uber and the gig economy

As the National Land Transport Amendment Bill made its way through parliament several labour-related questions were raised particularly directed at e-hailing companies. In response to questions about the working conditions of drivers the department of transport voiced concerns over the costs related to monitoring the Labour Relations Act, as well as taking the view that such matters were best dealt with by the labour department.

So, while the transport department was reluctant to entertain labour questions during the passage of the bill, the tone of the public hearing process does suggest that labour policy as it pertains to digital platforms is an issue that is likely to bubble to the fore soon.

What is the problem?

Drivers for companies such as Uber are part of the growing number of people who make an income from work received on digital platforms. The Fairwork project estimates around 30 000 physical gig workers in South Africa, about half in taxi-driving and the rest mainly in delivery and domestic work. SweepSouth, a start-up that offers on-demand domestic services in South Africa, has come under scrutiny in the past for how much it pays domestic workers on its platform.

The value proposition made by platforms is that they make it possible for work to either be performed online for a client based anywhere in the world, or to connect people in the same geographic location to perform tasks in the physical world. The key point of contention is whether the people who perform the work are employees, self-employed or independent contractors. Digital platforms insist they are either self-employed or independent contractors; in many jurisdictions this means they are not covered by the protections and benefits enjoyed by employees.

What is on the cards?

In the US, the department of labour recently issued an opinion based on supreme court precedent, stating that workers that provide their services through a “virtual marketplace company” or Internet platform are independent contractors.

Earlier this year, hot on the heels of the US opinion, the European parliament approved minimum rights for workers in the gig economy. However, they included a disclaimer that “genuinely self-employed workers would not be covered by the legislation”. That one sentence goes to the heart of the matter, of course: whether workers are employees or self-employed. In an interview with Fortune, an Uber spokesman indicated that he would “not even comment on the new EU directive because the rules say genuine self-employed workers are excluded and Uber drivers are self-employed”.

The author, Gwen Ngwenya, argues that the narrative that digital platform work is more exploitative than not is already gaining currency and needs to be challenged

Until the US congress or national legislation for European countries clarifies the law, the status of workers will remain in dispute. In South Africa we already have a glimpse of the view the department, and therefore any future legislation, is likely to take.

In 2017, Uber drivers who were deactivated from the platform referred a case for unfair dismissal to the CCMA. Following a ruling in the Uber drivers’ favour, the labour department released a media statement indicating that it “acknowledges and applauds the ruling by the Commission for Conciliation, Mediation and Arbitration that Uber drivers are the employees of the company. The decision is in line with the Labour Relations Act.” That CCMA ruling was later taken on review to the labour court, where the commission’s ruling was overturned. The court held that Uber drivers were not in fact employed by Uber South Africa. It remains open, however, whether drivers are employed by Uber BV, a company incorporated in the Netherlands. Nonetheless, the reaction to the CCMA ruling reveals that the department is of the view that drivers should be considered as employees.

A formal legislative route is not the only way to proceed. A project involving researchers from the University of Cape Town and the University of the Western Cape, along with partnering UK universities, is exploring “how policy and practice around online platform work can help support workersʼ rights”. The project will be approached from two angles: legislative proposals and/or accreditation.

Legislation typically compels companies to comply with a set of rules, while with accreditation, behavioural change relies on market signals. In theory, a company’s accreditation sends a signal to consumers; who the accreditors hope will care. There certainly is evidence of increasingly conscious consumers who take a view on the business practices of the companies behind the goods and services they purchase.

Arming workers and consumers with more information in most circumstances is a good thing and affords them the opportunity to act on that information as they will. This approach, which encourages transparency and gives users sufficient information to decide whether their own welfare is enhanced by using or not using a platform, gives more weight to the agency of workers and consumers than a heavy-handed legalistic route.

Choice

The narrative that digital platform work is more exploitative than not is already gaining currency. It needs to be challenged. The key marker of exploitation is often a lack of choice. What the digital economy has done is to dramatically expand the choices available to income seekers, entrepreneurs and consumers. The gig economy thus needs to be viewed holistically.

Digital platform workers can often choose to turn down work, decide when to work and can take on other work. And why do they take on this kind of work in the first place? Research by the ILO indicates that they choose it. They choose it primarily because they use it to complement another income and because many people prefer to work from home or for themselves.

The ability to generate different income streams, to enjoy flexible hours, to gain access to thousands of clients was not created for free. The creation of many of these platforms required risk taking, an innovative product and business model, aggregating and analysing market and behavioural insights, client acquisition and retention strategies, talented developers, advertising, reputation management, and so on. The same tools and constant innovation are required to keep platforms attractive.

Platforms cover these costs by charging a fee. The fee is typically in the form of a percentage of workers’ earnings generated on the platform. If the platform charges significantly in excess of what it requires to provide the service, this creates the opportunity for a rival platform. Indeed, we see price differentiation across platforms already. Bolt (formerly Taxify), which entered the South African market in 2016 three years after Uber, charges a 15% commission, while Uber’s commission is 25% of the total trip value. It may be debatable whether or not they provide an identical service to drivers and consumers, but at the least it reflects that there is room for competitive manoeuvring.

There is anecdotal indication that drivers may have a greater sense of personal responsibility and an eye for opportunity than those who wish to protect them despite their own agency. One driver in a GroundUp report says: “If you don’t fix your bike, if you drive like an idiot, it’s on you.” Caricaturing digital platforms as exploitative dens where workers are completely helpless is unlikely to lead to the appropriate balancing of societal interests.

The future of labour policy

As business models evolve, there is a need for a holistic approach. There is nothing objectionable about research that has as its exclusive objective the protection of workers’ rights. At the legislative level there does, however, need to be an overarching approach that balances the net welfare of all stakeholders in the economy: the unemployed, business owners, consumers and workers.

It requires an awareness of not just present conditions but the future of labour on digital platforms. As transactions across platforms are carried out, a great deal of data is being collected and aggregated, recording and monitoring the interactions and transactions between workers and consumers. Combined with AI and machine learning as well as driverless vehicles and drones, it will not be long before humans are entirely unnecessary to perform this work.

South African lawmakers do not need to be hasty to regulate an area that is still evolving and which accounts for a small proportion of the labour market. This is an area where policymakers can afford to observe and to experiment with more agile policy tools such as self-regulation and third-party accreditation.

It would be prudent to focus primarily on job creation in South Africa before crushing potential growth areas with formal prescriptions. For those who have a choice between traditional modes of obtaining work and digital platforms, that choice should be respected. Those for whom the alternative is no work at all, it is not credible to conclude that unemployment would be more decent or afford more dignity than the offer of an income via digital platforms. This will be truer as transparency increases and companies jockey for market share, and in so doing increasing the incentive to improve benefits for workers and users of platforms.

  • Gwen Ngwenya is a public policy expert working on innovating the public policy process for emerging technologies and is founder and CEO of Techpol

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