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Impact of COVID-19 on the gig economy: The Standard

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Flourish, a mission-oriented global venture capital firm with portfolio investments throughout Africa, has unveiled a survey in its global research series —The Digital Hustle: Gig Worker Financial Lives Under Pressure.
The report tracks the experiences of gig workers, those who use digital platforms such as e-hailing or delivery apps, to learn more about how they are faring during the COVID-19 pandemic.
Kenya’s gig economy has been growing steadily over the years with entrance of local and international players offering ride hailing and online delivery services. However, the Covid 19 pandemic affected operations in the sector making most players to effect a raft of measures in order to remain afloat in business.

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Key findings from the report indicate that approximately 4 out of 5 workers in South Arica now earn less than USD240 (Sh25,867) per month, compared to 16 per cent before the COVID-19 lockdown.
91 per cent of workers are concerned about COVID-19, specifically, how gig workers believe it will affect their ability to earn an income (46 per cent) and the risk to their family’s health (26 per cent).
Some gig workers are impacted more than others. E-hailing drivers were twice as likely as delivery workers to report a significant decline in quality of life, with 83 per cent suffering a large decrease in income.
Coping strategies among gig workers vary. Some have a financial cushion, but a majority live on the edge. If they lost their main source of income, 58 per cent of respondents reported they could not cover household expenses for a month without borrowing. Most have made sacrifices to cope with the pandemic and accompanying economic dislocation. Over half of gig workers have already reduced their household expenses, almost half borrowed money, and nearly 3 out of 4 had to rely on savings. Yet, only 1 in 5 are seeking additional income, a low figure possibly driven by the strictly enforced COVID-19 lockdown.

Ameya Upadhyay, Venture Partner at Flourish Ventures.

Following the report, The Standard had an interview with Ameya Upadhyay, Venture Partner at Flourish Ventures to give more insight into the survey:

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Your report The Digital Hustle: Gig Worker Financial Lives Under Pressure showcases the disruption brought about by Covid 19, how do you think the gig sector can reinvent itself to live up to its potential so that it manages to wade through the crisis brought about by the pandemic?
The pandemic has affected virtually every sector of the economy across the world. It’s incumbent upon players in the sector to come up with measures that will effectively steer the industry to help the financially vulnerable while continuing to grow and be profitable.
In Kenya we have seen a number of players enact policies that have guided their operations since the onset of Covid 19.
Glovo introduced contactless and signatureless deliveries in order to limit physical interactions with customers. Bolt also introduced a plastic film barrier in its cars in order to assure customers of their safety. At the same time, several boda-hailing companies are increasing focus on food and e-commerce deliveries in the face of restrictions on movement. The launch of Uber Direct and Uber Connect in Kenya highlights this trend.
We believe that every strategy being used now should be geared towards affirming consumers of their safety and building trust as companies look towards creating long-term solutions.

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What’s the future of the gig economy in Kenya in the wake of this Covid 19 pandemic?
Kenya’s gig economy will continue to prove beneficial for the country’s economy even with the effects of Covid 19.
As the world learns to live with the virus, more consumers will shift to e-commerce and we are likely to witness a rapid growth in delivery and logistics to support this trend. We believe this trend will benefit everyone involved: small retailers and restaurants will find a means to stay afloat through online sales, gig workers will be able to augment their income through deliveries and consumers will be able to access goods in a safe manner. 
We are already seeing this trend play out in Kenya, as mentioned above and elsewhere in Africa. Further, as gig platforms introduce rigorous safety measures, we expect the core transport business to pick up pace gradually.
We also see a significant opportunity for gig platforms to address the financial health of gig-workers by embedding services like credit and insurance. This will not only increase worker-loyalty, but also provide an additional revenue streams for the platforms.

Going forward what new challenges is the gig economy likely to contend with especially the ride hailing sector so as to stay afloat in business?
Consumers are going to be very skeptical about almost everything. Operators especially in the ride hailing sector should consider constantly communicating their safety protocols so as to enhance consumer trust and affirm that they are using a safe platform.
We are also likely to see authorities across the African continent impose additional regulations geared towards ensuring customer safety such as those imposed in Kampala recently. Ride hailing platforms will need to proactively engage with regulators and demonstrate how they can continue to provide their essential services while putting customer safety first.  
The report reveals effects brought about by the Covid 19 pandemic in South Africa, could this be a reflection of other markets in the African continent especially in Kenya?
First, we need to emphasize that Kenya and South Africa are very different markets in many respects.
As the same time, we expect the disruption caused by COVID in the gig economy to be similar across many countries in Africa, and for that matter across emerging markets.
This is because people face similar risks to their safety and have responded in comparable ways. It is interesting to note that we discovered similar disruption caused by COVID when we conducted a study similar to the one in South Africa in Brazil.
What strategies do you think can work best to cushion the sector from further damage even as the effects of the pandemic continue to persist?
As a first priority, players in the sector should re-assure customers of their safety by implementing safety protocols and communicating these to customers constantly.
Second, they should implement strategies to support the workers on their platforms who are experiencing a significant income shock.
One way to do this is to re-focus on the growing delivery and logistics segments. The platforms should can also address financial health of workers by providing services such as credit and insurance.
Third, they should proactively engage with regulators and other policymakers to ensure their actions align with broader policy imperatives. Fourth, they should re-double efforts to
Do you think the gig economy will employ a majority of Africa’s workforce in the future? How will this play out?
While growing fast, the gig economy is still in its nascence in Africa. We believe gig platforms have the potential to bring millions of informal African workers online, helping formalize their livelihoods, improving their earning opportunities, and connecting them to digital financial products like payments and credit.
This belief is underpinned by the fact that gig platforms bring several efficiencies to informal and fragmented marketplaces benefitting all stakeholders; workers can earn more reliably and customers can access quality services at the click of a button.
What did you aim to achieve with this report?
We are a global fintech investor committed to helping people achieve financial wellbeing. In pursuit of that goal, we want to better understand the financial impact of the pandemic on gig workers and how their livelihoods are changing, as well as how fintechs can better serve the population.

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A roadblock to the gig economy? UK Supreme Court classifies Uber drivers as “workers”

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In a landmark ruling, the UK Supreme Court has unanimously held that private hire vehicles drivers who provide their services through the Uber app were “workers” for the purposes of UK employment legislation: Uber BV and others (Appellants) v Aslam and others (Respondents) [2021] UKSC 5.  Earl Deng and Allison Wong discuss the decision and its implications for the gig economy in Hong Kong.

Hong Kong is known for being an employer-friendly jurisdiction, so it may come as a surprise to many that as long as 14 years ago, the Hong Kong Court of Final Appeal held in Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951 that the status of an “employee” working under a contract of service under section 5(1) of the Employees’ Compensation Ordinance, Cap. 282 did not depend on the mere existence of a contract or necessitating dominant control over the worker in question, but must instead be ascertained as a matter of overall impression and to be determined on a case-by-case basis.

Since Poon, the rise of the gig economy through app or web portals has further muddied the waters with innovative business models and service agreements where the service provider no longer directly engages the worker to provide a service for its customers, but instead purports to act as a matching agent between a service providing worker and the ultimate paying customer and taking a portion of the fees.

The Arguments

In Uber, the appellants argued that pursuant to its service agreements which both the driver and the customer accepted and separately entered into, Uber’s role was simply as a booking agent for independent contractors who provide transportation services (“Driver”) and that the contract for transportation services was between the Driver and the end user (“Rider”).

The Supreme Court unanimously rejected Uber’s arguments on two grounds.

On agency, the Supreme Court rejected that any agency relationship arose on the facts, whether on the wording of the service agreements or any evidence of overt acts by the principal (i.e. Driver) to confer the necessary authority to Uber to act on its behalf.

On contract, the Supreme Court upheld its previous decision in Autoclenz v Belcher [2011] UKSC 41; [2011] ICR 1157 and clarified the theoretical justification for it.  Like PoonAutoclenz held that whether a contract gives rise to a relationship of employment is not to be determined by the ordinary principles of contract, but to adopt a test that “focuses on the reality of the situation where written documentation may not reflect the reality of the relationship”.  However, instead of focusing on the exceptional nature of employment contracts, the Supreme Court held that the rights asserted by workers under employment legislation are not contractual rights but rights under legislation, and therefore the Court is to determine whether for the purpose of that specific legislation, the claimant was an employee.

The Court went on to hold that the purpose of the employment legislation in the UK is to protect vulnerable workers from exploitation by providing minimum standards and conditions of work and therefore it would be inconsistent against this legislative background to use the contract as a starting point to determine whether an individual falls within the definition of a worker.

On the facts, the Court emphasised certain aspects of the relationship between Uber and the Drivers which tend to show that there was a relationship of employment, including:

(i) the fixed nature of Drivers’ remuneration with no bargaining power on the part of Drivers;

(ii) the fact that Uber dictated the terms of services;

(iii) Uber’s control over Drivers on their performance via inter alia cancellation penalties and performance metrics;

(iv) restrictions on Drivers from establishing any relationship with Riders.

Significance to Hong Kong

At first blush, this decision together with the CFA’s judgment in Poon suggest that the gig, literally, is up.

However, and like all “overall impression” cases, Uber BV case was confined to its facts and the evidence before the Court.  Uber BV’s position remains that the case is confined to a group of drivers in 2016 under those terms of service agreement.

In Australia, the Full Bench of the Fair Work Commission held in Amita Gupta v Portier Pacific & Uber Australia Pty Ltd [2020] FWCFB 1698 that workers delivering through the Uber Eats platform were not employees due to:

(i) lack of control over working hours;

(ii) no exclusivity to platform;

(iii) no requirement to wear a uniform, bear logos, or represent herself as a representative of Uber.

Deputy President Colman also noted that the factual matrix did not require the Court to consider whether there was an employment relationship as Uber was simply a commercial intermediary between restaurants, customers and deliverers. That judgment is now on appeal.

Also of note is the decision of the Supreme Court not to express any concluded view on arguments put forward by Uber that they were simply a payment agent (but which failed to establish on the facts and evidence), providing some support to Deputy President Colman’s views.

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NSW gig economy guide ‘penned by Uber’

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New guidelines from the NSW government aimed at improving safety in the gig economy may as well have been penned by Uber and ignore the compounding pressures leading to dangerous conditions for delivery riders, the Transport Workers Union says.

The NSW government established a taskforce to improve the safety of gig economy workers following the deaths of five delivery riders in the space of two months late last year. The Joint Taskforce on food delivery rider safety is led by SafeWork NSW and Transport for NSW, and is expected to unveil its final guidelines this week.

The guidelines were discussed and given the green light at the taskforce’s final roundtable, held in Sydney on Thursday.

But no delivery riders were present at this roundtable after the Transport Workers Union after its members quit the taskforce last week, labelling it “farcical” and criticising it for not taking stronger action.

At a press conference held below the roundtable meeting, TWU national secretary Michael Kaine said the taskforce’s final recommendations will do nothing to address the dangerous issues for delivery riders, including low rates of pay and scheduling pressure created by algorithms.

“This is not an action plan, it is an inaction plan. This guidelines process has failed to deal with the deadly pressures that are killing riders on our roads. It has left those deadly pressures untouched, unacknowledged and unregulated,” Mr Kaine said.

“It looks as though these guidelines have been penned by Uber or Deliveroo themselves. This government has caved into the pressure from these massive companies and accepted hook, line and sinker their version of how they want the world to look.”

NSW taskforce guidelines miss the point: Transport Workers Union national secretary Michael Kaine

Steve, a Deliveroo delivery rider, had taken part in the taskforce’s roundtable, but said he had also chosen to withdraw from it.

“I just feel it’s pointless to stay on with how it’s going about it at the moment,” Steve told the media.

“Reasonable pay is all we’re asking for, so it doesn’t compel us to rush from one place to the other. There is a clear link from our income stream to our health and safety. The problem with this taskforce is they’re ignoring it because they just want to talk about health and safety.

“But you have to link it with the core issues of why it’s happening. We need state government interventions, we need some kind of regulation in this economy otherwise there’ll be more deaths.”

Esteban, who is also a delivery rider, was recently injured after falling off his bike on light rail tracks in the rain while rushing to complete a job.

“I just don’t want this happening anymore,” he said. “Safety in this occupation is very critical and it’s something that’s not being taken into account properly. Fellow riders have died, most of them immigrants.

“I put myself in their shoes, and I imagine what will happen with me and my family if I come to this country with a lot of dreams and suddenly I just died because of a lack of safety in my job. It’s very disappointing.”

The launch of the taskforce came with renewed hope that action would be taken to protect delivery riders, but this has now been “extinguished”, Mr Kaine said.

“That’s what the NSW government is going to announce in the coming days, that it is extinguishing hope that things will get better for riders in the gig economy,” he said.

“We were told absolutely that the government would take no regulatory steps to improve conditions for riders, it would take no steps to ensure that responsibility was placed on these behemoths and would not listen and not take into account or acknowledge the key pressures that exist that are creating these problems.”

Do you know more? Contact James Riley via Email or Signal.

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Deliveroo share price rise shows investors aren’t bothered about gig economy workers | Comment & Opinion

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Deliveroo rider Subway

It’s understandable some Deliveroo riders opted to go on strike this week. While CEO Will Shu and early investors have made hundreds of millions (despite the IPO flop), a damning report last month found many are paid less than the minimum wage; only a handful qualified for the maximum £10,000 bonus; and none got employee share options either as, despite their blue Roo uniforms, and in some cases years of service, it’s just a gig. 

Trouble is, the striking riders not only have no worker rights: they have no power. Courier work promises some pay instead of none, and it seems there are many more ‘scabs’ willing to keep gigging among the 50,000 riders than the few hundreds reportedly on strike. With a low barrier to entry – a pedal bike – there’s also an easy pipeline among the 693,000 fewer Brits on a payroll since February 2020 as its recruitment of 25,000 extra riders last year proved. And some riders like the gig, and fear changes would mean less flexibility to work when they want.

True, concerns about the fate of Deliveroo’s gig economy workers led City fund managers, including Legal & General and Aviva, not to invest (albeit more likely concerned due to the potential impact on their investment than on ethical grounds).

But this week, as retail shares in Deliveroo started trading, the share price went up, despite the strikes – albeit fractionally – indicating everyday investors aren’t bothered.

Perhaps real change will come when Deliveroo’s supermarket and fast food chain partners start getting tarred with the exploitation brush. A few big names pulling out of the platform would surely bring some change.

Or perhaps some of Deliveroo’s rivals can make more of the rights they afford their riders. Just Eat CEO Peter Duffy said recently that the gig model had led to the worst working conditions “in a hundred years”.

But the most likely agent of change is the courts. We’ve seen Uber lose its legal fight. If a rider strike won’t harm Deliveroo, losing its gig workers would be much more damaging to its business model. And you never know, Chancellor Rishi Sunak may also impose a digital delivery tax. That would nuke it.

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