In just eight years, the gig economy has grown from nothing to being the primary source of income for up to 2.3 million Indonesians.
Known as the Gojek effect, so called because of the pioneering ride sharing app, the industry has seen dozens of companies pop up across the country since 2015, offering mostly rideshare and food delivery, along with other services.
But regulations governing the app-based sector have struggled to keep up. Workers have few or no rights. They have no sick leave or holidays. And they’re working longer hours for less pay.
Gig platforms have mushroomed in Indonesia in the past decade, from super apps like Gojek and Grab to more specific apps like Shopee Food, Maxim, or InDrive to local platforms like Jogja Kita. Ride-hailing and food delivery dominate.
There are anywhere from 430,000 to 2.3 million people (0.3 to 1.7 percent of the workforce) whose primary job is in the gig economy in Indonesia, the latest research shows.
This is similar to the United States, Europe, and the United Kingdom, where gig workers range between 0.5 to 5 percent of the workforce.
The difference is, in these countries, the gig economy has been regulated much more seriously, especially concerning labor rights of gig workers. In the U.K., for example, platforms can no longer categorize their workers as independent contractors. Gig workers in the U.K. are entitled to core employment protection like the national minimum wage and paid leave.
In the early days, most gig platforms emerged from the unregulated voids. Motorcycle ride-hailing platforms, for example, were about to be banned by the Ministry of Transportation in 2015 but the decision was reversed within 24 hours. President Joko Widodo asserted that the apps were essential for the Indonesian people’s needs, and “a regulation should not harm the interest of the people.”
Regulations were later put in place, with the Ministry of Transportation issuing rules in 2018 and in 2019.
Although both platforms and workers consider these a “victory” as they provide legitimacy and a regulatory framework for the ride-hailing business, both regulations are limited in substance.
First, they apply only to rideshare apps, which means Gojek and Grab are bound by these regulations, while food delivery platforms such as Shopee Food aren’t. These legal disparities impact workers. For instance, those who work for Shopee Food or other food delivery platforms earn less than those on the ride-hailing platforms.
Second, these regulations focus more on the responsibilities of the workers than the platforms’ responsibilities. Permenhub 12/2019, for example, imposes the obligation to fulfill the safety, security, comfort, affordability, and regularity of ride-hailing services on the drivers, not the platforms.
The logic is that those who provide the transportation services are the drivers, not the platforms. Indeed, platforms never referred to themselves as transportation companies but technology companies, and therefore, the Transportation Ministry regulations cannot be used to regulate these “technology companies.”
Third, the main problem with these regulations is they do not solve the central issue regarding gig workers’ welfare and working conditions. Gig workers in Indonesia are not considered workers but “partners.” This means they do not have legal protections, as the Manpower Law does not apply to them. They are instead bound in “partnership relations,” or hubungan kemitraan, relations in which legal protections are almost non-existent.
Various studies have criticized the use of partnership relations in the gig economy. The partnership relation or independent contractor model is considered a ploy so platforms can avoid their obligation to provide employment rights for gig workers, such as a minimum wage and paid leave. Court decisions in several countries have made it clear that relationships in the gig economy should not be considered partnerships but employment relationships.
But not in Indonesia.
There have been no significant regulatory developments impacting the welfare and overall working conditions of gig workers in Indonesia. One study found most gig workers in Indonesia work an average of 12 hours a day.
Other studies highlight an apparent decline in gig workers’ earnings, with many now earning less than the minimum wage. The partnership relations are also normalizing piecework, because minimum wage regulations do not apply to this so-called partnership.
The partnership relations in the gig economy are simply unfair because even though they are called “partners,” the majority (if not all) of the decisions regarding the “partnership” are decided only by one party: the platforms. In that sense, the term “partnership” itself is misleading.
In Indonesia, current gig economy regulations are limited to the services (even those that are limited toward specific transportation services), without any policies that acknowledge the root of the problems: the partnership relation in the gig economy.
The imbalance between platforms and their workers, exacerbated by legal loopholes, is making the gig workers’ welfare decline over time.
Gig workers enjoyed decent earnings during the honeymoon period, when platforms paid bonuses and gave incentives to workers and customers. But now, with the honeymoon over, it has become a race to the bottom. Research shows that poor working conditions mean many gig workers want to quit.
However, finding new jobs in the Indonesian labor market is challenging. For those who cannot leave gig work, a policy intervention to improve the quality of their welfare is desperately needed. Regulating partnerships is one logical way to move forward.
This article is part of a Special Report on the Asian Gig Economy, produced in collaboration with the Asian Research Centre – University of Indonesia.
Originally published under Creative Commons by 360info™.