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The impact of the gig economy on e-commerce and its sustainability

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The growth of the gig economy, where short-term contracts or freelance work prevail as opposed to permanent jobs, has enabled people to increase their income and run multiple ‘side-hustles.’

In the gig economy, participants enjoy the flexibility of choosing what to do and when to work, and the convenience of being matched up with potential clients through mobile apps.

In Kenya, ride-hailing apps and online professional workers comprise the lion’s share of the gig economy both in value and number of workers.

Research from Mercy Corps suggests that the offline Kenyan gig economy will reach USD28.95 billion in 2023 from USD19.6 billion in 2019 and will employ a total of 5.7 million workers.

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The growth of gig economy is fueled in part by mobile, internet and smartphone penetration and the proliferation of mobile money in Kenya. Mobile money platforms such as M-Pesa have become the second most-used payment channel in Kenya after cash.

Ecommerce has skyrocketed in Kenya with the number of customers and businesses running their transactions online rising. 

Glovo is an on-demand technology platform that connects customers with riders to get products delivered through a mobile app.

Priscilla Muhiu (pictured above), Glovo’s general manager for Kenya shares on the gig economy, e-commerce and COVID-19.

The impact of the gig economy on e-commerce and its sustainability – The gig economy has given Kenyans the freedom to work and live more efficiently and effectively. It has also opened up an innovative new revenue stream for the continent — allowing millions to take up flexible work on their own terms.

Gig work is becoming increasingly important as a potential pathway to socio-economic development and employment creation, given Africa’s unique status as the continent with the youngest population in the world amongst the highest youth unemployment rate.

Impact of Covid-19 to the business and how the company survived- As part of the protocols put in place by the government to stem the tide of the pandemic, consumers created and reinforced new online buying behaviors and habits.

Consumers were more motivated than ever to shop online and have deliveries made at their doorstep and the ripple effect of this was a 30 per cent increase in grocery orders in Kenya as reported by Glovo in 2020.

The evolution of online delivery space and the overall outlook of the on-demand delivery market- As the online retail space continues to expand, consumers are choosing click retail over traditional brick and mortar stores.

Online retail presents a unique opportunity to have a positive impact on the Kenyan economy including job creation for riders and a business lifeline for restaurant owners.

This shift in consumer behavior, coupled with the advent of Covid-19 and increase in internet penetration, has seen the rapid growth of on-demand delivery start-ups.

What strategy plans does Glovo have for Kenya in 2021? – We are looking at offering more competitive delivery fees. We will continue to expand into new towns in Kenya and getting into various partnerships that will benefit the consumers.

Pricilla’s key lessons in life – You are not defined by what is in your head, you are what you do, you don’t have to feel like today is your day, you just have to act like it is. Actions may not bring happiness but there’s no happiness without action and also one of my favorite lessons is, life is not a shop for your pauses and your procrastinations.

 

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Gig economy can serve 90 mn jobs, add 1.2% to GDP over ‘long term’

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The gig economy can serve up to 90 million jobs in the non-farm sectors in India with a potential to add 1.25 per cent to the GDP over the “long term”, a report said on Tuesday.

The gig economy, where workers get hired typically for short durations, can lead to transactions of over USD 250 billion over the long term, the report by the consultancy firm BCG said.

The firm said gig economy is not a new concept but has seen greater adoption following the advent of technology.

A few years ago, when concerns were being raised about a ‘jobless’ growth, the government had pointed to the growth in gig economy jobs.

In the short-to-medium term, nearly 24 million jobs in skilled, semi-skilled and shared services roles could be delivered via gig economy, including nearly 3 million shared services roles and around 8.5 million roles meeting household demand, it said.

A majority 70 million ‘gigable jobs’ are in the construction, manufacturing, transportation and logistics, and personal services sectors, it said adding that these will be primarily driven by small business and household demand.

The consultancy said its estimates are based on a detailed mapping of job-types across industry sectors to identify opportunity areas and barriers to unlocking demand for gig-based services.

The potential of the gig economy was determined using interviews with corporations, including large corporations and medium, small and micro enterprises (MSMEs), a survey of over 600 urban households, and inputs from industry experts.

Over the long term, there will be around 35 million skilled and semi-skilled jobs across sectors, it added.

The report added that five million jobs can get delivered via shared services roles like facility management, transportation, and accounting, and 12 million can arise from household demand for services, while 37 million unskilled jobs can come from across various sectors of the economy.

The gig economy could create about one million net new jobs over the next two-three years by aligning near-term incentives of employers and workers, it said.

It said gig workers are typically younger, work fewer hours a day, are relatively less educated, and more often serve as secondary contributors to household income.

Also Read: Indian economy on recovery path; GDP likely to return to positive territory: IMF



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Gig economy platforms warned about safety compliance

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The gig economy sector has been put on notice after a compliance blitz carried out by SafeWork NSW highlighted widespread breaches of the state’s mirror work health and safety laws.

Six food delivery platform operators were served with improvement notices during the campaign for failing to inform and instruct their riders around safe work practices and appropriate safety equipment.

All but one of the riders observed in the Sydney metropolitan area were found be engaging in unsafe practices, according to Better Regulation Minister Kevin Anderson.

Over 90% of the riders had inadequate personal protective equipment. Approximately 60% of the riders were unable to demonstrate or refer to safety protocols that had been provided to them.

“What we’ve seen is disgraceful – riders out in the dark without high-vis, wearing thongs, cutting in front of trams, using mobile phones and giving passengers a lift while on the job,” Mr Anderson stated.

“The message to operators is clear – safety must always come first, and we won’t hesitate to prosecute anyone who puts workers lives at risk. Lift your game, improve your systems and make sure riders are aware of how to stay safe on the roads or you will be caught, you will be fined and you will be called out.”

Explore further on Pinpoint — [¶37-005] Do online platforms have a WHS duty?

Source: SafeWork NSW, Gig economy warned to prioritise driver safety, 29 March 2021, accessed 31 March 2021.

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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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