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Are Gig Platforms Doing Enough to Promote Financial Inclusion?

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Are Gig Platforms Doing Enough to Promote Financial Inclusion?



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July 21, 2021

Comprising over 75 per cent of employment in Southeast Asia, gig workers provide the horsepower to fuel the region’s meteoric rise.

Defined by its speed and convenience, the gig economy consists of individuals providing services on temporary or short-term contracts. These can range from delivery jobs fulfilled by riders to consulting gigs provided by seasoned professionals.

The benefits of the gig economy have been well-trumpeted. For workers, there is the privilege of having flexibility and autonomy in their work. According to the UN Capital Development Fund (UNCDF) report, the greatest benefit derived by workers is the additional income opportunities these jobs provide.

Meanwhile, businesses benefit from ready access to skilled labour – eight in 10 talent managers in the Asia-Pacific region report hiring or using gig workers.

While the value provided by the gig economy is clear, let us focus on the elephant in the room instead – that gig workers are not financially included. For the average gig worker, their earnings are often their main income source. However, the unpredictable nature of these earnings makes it difficult for gig workers to furnish a consistent income history.

This handicaps them in gaining access to basic financial services such as loans. Therefore, over 80 percent of gig workers borrow from their family and friends instead.

Gig workers

Friends and family are the preferred borrowing sources for gig workers. (Image Credit: UNCDF)

Root cause

However, the lack of income history is not the primary cause of this problem. Instead, it is the limited finances and financial literacy among gig workers.

As these workers enter the gig economy primarily to meet their daily expenses needs, they can rarely afford to save. In the same report, only 13 per cent of ride-hailing and food delivery riders in Malaysia indicated they have the desired financial freedom. Meanwhile, only 18 per cent are comfortable dealing with a financial emergency of MYR 1,000 (US$250).

Acknowledging this issue, Malaysia’s GoGet, an on-demand work platform that connects businesses and consumers with verified gig workers for flexible tasks like deliveries, introduced “Pod” – a micro-savings platform developed by local fintech firm SaphX Technologies.

Pod aims to cultivate a saving habit among its users by allowing them to directly debit a fixed amount into their bank accounts weekly.

However, its uptake among GoGet workers has been less than ideal. Only 1 in 6 reported using the platform. Those with higher educational attainment, earning more than MYR 60,000 (US$14,200) annually, and relying on GoGet as the sole income source formed the majority of Pod users.

Meanwhile, 44 percent of those who do not use it stated they did not understand how the platform operated, while another 40 percent cited insufficient money.

Raising wages

These figures point to two distinct challenges of providing digital financial products for gig workers – the exclusion of technology laggards and limited finances. While the former can be solved by improving usability, the latter is harder to tackle.

For gig workers to improve their financial wellbeing, they will need to increase their earnings. This can be realised by increasing the number of gigs worked or the commission earned per gig. The latter is a more sustainable approach. However, it remains to be seen if gig economy platforms are willing to sacrifice their commissions and profits for that to occur.

Meanwhile, Grab has rolled out a slew of initiatives targeted at increasing the financial inclusivity of its workforce.

Its GrabAcademy platform offers financial literacy courses by Standard Chartered. GrabInsure, the super-app’s insurance arm, offers usage-based motor insurance for drivers and delivery riders.

This allows them to pay for daily insurance only when they are working for Grab, with premiums starting from MYR 1 (US$0.25) per day. Grab claims this pay-per-use insurance is more affordable and accessible to gig workers.

The company also partnered with NTUC Income, an insurance co-operative in Singapore to launch a similar micro-insurance plan covering critical illness for its Singapore workforce. Its drivers and delivery riders pay premiums starting from US$0.10 per trip for a fixed amount of insurance.

To tackle the difficulty in accessing credit for gig workers, Grab took things into its own hands and launched a credit facility in Indonesia.

Workers can register for loans of up to IDR 5 million (US$350) with “affordable” interest rates. Loan repayments can be made daily via direct deduction from the worker’s digital wallet. The facility is available to 1000 Grab drivers as part of a trial phase.

Will there be financial inclusion?

For many lower-to-middle class gig workers, earnings from platforms such as GoGet and Grab often represent their sole source of income. Barely able to meet their daily expenses, these workers can rarely afford to save or purchase more sophisticated financial products such as insurance or investments.

While gig economy platforms have started to tackle these issues through initiatives aimed at increasing financial literacy and access, these are band-aid solutions at best.

To tackle the root cause of the issue, gig platforms need to pay their workers better. However, such a move seems implausible, given many of these platforms are still in the red. Until then, financial inclusion for gig workers will remain a far-fetch goal.


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Workers

Uber, Lyft drivers strike to win labor rights for US gig workers, Auto News, ET Auto

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Labor organizers want to roll back a 2020 California ballot measure that cemented gig workers as independent contractors after their drive firms mounted a $200-million campaign against a state law aimed at forcing them to treat workers as employees.
Labor organizers want to roll back a 2020 California ballot measure that cemented gig workers as independent contractors after their drive firms mounted a $200-million campaign against a state law aimed at forcing them to treat workers as employees.

Los Angeles: Drivers for Uber and Lyft have staged strikes in cities across the United States, urging Congress to grant gig workers the right to band together and push for better wages and working conditions.

Wednesday’s protests – from California to Maryland – reveal an increasingly fractious dispute over how gig workers should be regarded by law and what rights they deserve at work.

The question is under debate in Congress as lawmakers wrangle over whether the self-employed can bargain collectively as part of a wider Protect the Right to Organize Act (PRO Act).

“We want a seat at the table,” said driver Alvaro Bolainez, part of a 50-strong protest at Los Angeles airport.

Bolainez urged his fellow drivers to turn off their apps and lay down their keys, saying his pay was consistently and unilaterally cut by the rich ride-sharing companies he serves.

“It’s like a rollercoaster – one week I can make $1,000, the next I’ll make $400 working the same number of hours,” he said.

A spokesperson for Lyft said in an emailed statement that the company is “fighting to expand benefits and protections for drivers in a way that allows them to keep their independence. This is the type of forward-looking approach our drivers want.”

Uber referred questions to the Protect App-Based Drivers and Services Coalition, a pro-industry group, which said most driver earnings were on the rise in California.

It also sent remarks from drivers who oppose the strike.

“I treat it like it’s a business and I drive smart,” said 65-year-old Jim Pyatt, a part-time driver in California. “I never make less than $35 an hour and I love the flexibility.”

But at the L.A. rally, drivers told a very different story – recalling days when earnings lagged the minimum wage, of idling roadside for hours or paying out of pocket for vehicle repairs.

Labor organizers want to roll back a 2020 California ballot measure that cemented gig workers as independent contractors after their drive firms mounted a $200-million campaign against a state law aimed at forcing them to treat workers as employees.

A Reuters calculation found the 2020 measure had saved Uber and Lyft $392 million each in costs such as payroll taxes and worker compensation.

“It created a second-class status for all app-based workers in California,” said Nicole Moore, a rally organizer who urged the Senate to pass the PRO act when it votes on a multi-trillion dollar spending package under negotiation.

The law would, among other measures, reclassify many independent contractors as employees for the purpose of collective bargaining, though not for wage laws and benefits.

Veena Dubal, an employment law professor and critic of gig company practice, said with debate fomenting over worker rights, the West Coast was a microcosm of a far bigger problem.

“Although the action is centered in California, it’s really workers over the country participating because they know California is the epicenter of the business model, but the companies are trying to export it elsewhere,” she said.

In recent months, gig firms have courted unions and state officials in an effort to cement their workers’ status as independent contractors in all U.S. states so as to cut costs.

Read more:

Under the proposal outlined in a regulatory filing with the California Public Utilities Commission (CPUC), the penalty would be reduced to $150,000, but Uber would pay $9 million to support a state victims’ fund and help create industry-wide safety and reporting standards.



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Gig workers rally in Fresno in support of Right to Organize Act

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FRESNO, Calif. (KFSN) — Rallies were held across California earlier this week in support of the Right to Organize Act that is currently stalled in the State Legislature.

One of the demonstrations was held in downtown Fresno at city hall Wednesday afternoon.

A nationwide strike is underway among rideshare, and delivery drivers, including DoorDash and Uber Eats.

Organizers said they’re pushing for the right to organize and form a union to gain more benefits.

Proposition 22 was passed in November of last year, which made rideshare drivers and other gig-workers independent contractors.

However, rally participants said that’s not exactly how it works.

“Independent contractors don’t get treated like second-class workers. They’re not independent contractors if they don’t have the right to negotiate the terms of their contract,” said volunteer organizer Hashid Kasama.

A spokesperson for the Protect App-based Drivers and Services Coalition said that since Prop 22 passed Uber Driver’s earnings are up in California’s two largest markets.

Copyright © 2021 KFSN-TV. All Rights Reserved.



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Micromax Next Product, In 2B Will Be Aimed at Gig Workers

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Micromax IN 2B

It seems that Micromax is gearing up to launch a new handset in India, as is evident by a teaser released by the company on Twitter, that reveals the launch date of July 30 for the same.

Going by the teaser released by Micromax, the upcoming handset will offer smooth performance, long battery life with the focus group being Gig workers. The teaser does not reveal the name of the handset, but we can expect it to be released as the Micromax IN 2B in India, as the device was spotted on Geekbench in June.

What do We Know About the Micromax In 2B,2C?

At that time, the benchmark listing had revealed the main specifications of the device ahead of the launch. This device will be succeeding the Micromax In 1B smartphone.

According to a report by The Mobile Indian earlier this week, Micromax seems to be planning to launch the Micromax In 2B in India by the end of July.

Now, the teaser of the arrival of the new handset on July 30th has further provided us with solidified proof of a new offering from the company. As mentioned earlier, the Micromax 1N 2B visited Geekbench last month. Benchmark details wise, the Micromax In 2B will come with a Unisoc T610 octa-core SoC. The device is also expected to opt for 4GB of RAM. Software-wise it should run Android 11 out of the box.

The Geekbench test revealed that the Micromax In 2B managed to score 350 points in the single-core test and 1204 points in the multicore test. To recall, the Micromax 1N 1B was launched by Micromax earlier in 2020 in November. The device opted for a 6.52-inch IPS LCD display with HD+ resolution and a 20:9 aspect ratio.

Performance-wise the handset was powered by the octa-core Helio G35 SoC. Optics wise the 1N 1B used a dual-camera setup with a 13MP primary sensor and a 2MP secondary camera. The phone used a massive 5000mAh battery with 10W charging.

The report also mentions that the company could release the Micromax In 2C in India next month, with a Geekbench listing confirming the same. The listing revealed that the In 2C could ship with an Unisoc T610 processor with 4GB of RAM. The phone could run Android 11 out of the box.



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