The Cheat Sheet

When the gig economy’s wage bubble bursts

Jinoy Jose P | Updated on September 26, 2018 Published on September 26, 2018

But I see happy Uber drivers all around me!

You’re not watching closely, I guess.

What am I missing?

A lot, in fact. For one, studies have found that the earnings of gig economy workers, including the freelance-drivers attached to taxi aggregators such as Uber or Ola, have been falling at an alarming pace, proving critics right on the existence of a wage bubble in the gig economy. This trend is noted across the globe, and especially in the US. A recent study from a research institute backed by investment banker JP Morgan Chase shows between 2013 and 2017, the average monthly income of transportation workers in the gig economy fell by 53 per cent in the US alone.

Oh, that’s a plunge!

Indeed. Transport sector seems to be bleeding arm (from workers’ perspective) of the $1.5-trillion gig economy. According to the report, ‘The Online Platform Economy in 2018: Drivers, Workers, Sellers, and Lessors’, there has been a considerable increase in the number of ‘driver partners’ (with Uber, etc.), but the money each of these worker earned every month on an average feel from $1,469 in 2013 to $783 in 2017. The report, however, shows gig-workers in the hospitality industry (Airbnb, etc.) saw their incomes grow 69 per cent during the period, but experts say that the leasing sector is yet to enter the correction phase like the other popular segments of the gig economy.

A supply glut is the villain here?

Yes and no. The JP Morgan Chase Institute study does say the the rapid growth in the number of drivers has come a steady decline in average monthly earnings in the transport sector. That said, activists and labour rights experts accuse gig economy companies of unleashing predatory and exploitative work practices, namely introducing lax and complex clauses in their agreements with workers so that they can escape legal scrutiny when it comes to social security, labour protection issues.

Such as?

Earlier this year, the UK’s DPD courier, a 1977-founded company that recently went the ‘gig’ way, was dragged into a controversy when Don Lane, a delivery worker with 19 years of service at the firm died on the job allegedly under stress from work owing to the draconian policies of the logistics player.


One report has termed the working conditions in the UK and other geographies purely “Dickensian” and has called for stringent policy measures to rein in the gig rogues. Even though gig economy companies say, rightly in many cases, that they have introduced innovative systems and methods to the labour market, offering workers flexibility and the freedom to choose how and when they work, it is a fact that such chaotic and amoebic environments have helped create an environment of exploitation where workers get minimal protection and low wages. A government study in the UK recently established that a quarter of the people working in the country’s gig economy are being paid below the national minimum wage. Similar situations exist in India as well, as anecdotal evidences and legal complaints suggest.

That’s terrible

Equally important is the vague ways in which some gig companies describe themselves. For instance, for long, Uber argued it was a digital company. But in December 2017, the European Court of Justice ruled that it was taxi company and not a digital service provider. This and many similar rulings are now forcing Uber and many of its ilk to introduce better wage packages and offer social security cover to their workers.

So, what’s the fix?

While acknowledging the technological prowess of the gig economy, the companies should be brought under strict regulations and they should be forced to respect labour rights.

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Published on September 26, 2018
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