A third way in employment classification

In the U.S. policy debate around the gig economy, many have called for a ‘third category’ between protected employment and unprotected self-employment. The interesting thing is that in the UK such a category already exists. An employment tribunal decision last year determined that Uber drivers were not employees or contractors, but ‘workers’, enjoying some of the benefits of employment but not all. The review recommends making use this ‘worker’ category and renaming it ‘dependent contractor’.

The review calls for greater emphasis on control over one’s work as a factor in determining whether someone is a ‘dependent contractor’ or genuinely self-employed. The question of control has featured prominently in recent research on gig economy platforms (see, for example: Rosenblat & Stark 2016, Graham et al. 2017). Uber promises freedom, but in practice uses a variety of nudges and constraints to manage workers quite closely. Platforms for digitally delivered work like graphic design don’t necessarily try to control the workers in the same way at all. So focusing on control can help distinguish between the employment status implications of different platforms, which can be quite different.

Of course, the fact that someone is genuinely self-employed doesn’t necessarily mean that they are well off. Self-employed people are often relatively poor and suffer from unpredictability of income. So it’s good that the report also calls for extending more safety nets and other support to self-employed people (p. 74-81).

The report also calls for greater clarity in law, and for alignment of the definitions between different branches of law (employment law and tax law, p. 38). This seems like such an obvious thing to do. As someone coming from a civil law system, I have always marvelled at common law’s ability to evolve through court decisions, but that spontaneous and complex evolution has a price. As the Review states, many people in Britain don’t know their rights, and even if they do, it is often prohibitively expensive to pursue them.

Fair piece rates

The Review’s section on piece rates (p. 38) is very interesting and in many ways forward-looking, but likely to cause contention.

Piece rates mean that workers are paid on the basis of the number of tasks completed (e.g. meals delivered) rather than on the basis of hours worked. This is how many gig work platforms function today. The Review suggests that platforms be required to use their data to calculate how much a worker can earn per hour from such piece rates, given what they know about the demand for the tasks and how long it usually takes to complete them. Based on this calculation, platforms would be required to set their piece rate so that on average it produces an hourly rate that clears the National Minimum Wage with a 20% margin of error.

One argument likely to be put forward in opposition is that since platforms have all the data necessary to calculate the average hourly rate, why don’t they just pay the average hourly rate instead of the piece rate? As the Review notes, piece rates are used in work where the employer cannot monitor the hours worked, such as for people who fill envelopes with information for mailshots from home. Platforms usually monitor their pieceworkers intensively, so they could just as well pay hourly rates.

I think this is a fairly strong argument, but not without its limits. Piece rates are a substitute for more direct managerial control. Employers who pay hourly rates are pickier about whom they accept into their ranks in the first place, whereas one of the strengths of these platforms is that essentially anyone can sign up and start working right away with a minimal hurdle. And workers who are paid on an hourly basis usually cannot take breaks quite as easily as pieceworkers. This low entry barrier and potential for almost minute-by-minute flexibility are genuine features of platform-based piecework, and some workers value them.

I say potential for flexibility, because actual flexibility for the worker depends on how much work there is available on the platform, as I discuss in an upcoming paper. Pieceworkers also have to put more effort into managing their own time than regular workers, though platform design can ameliorate this.

Flexibility or erosion?

The Review moreover suggests that platforms should be allowed to offer piecework at times when demand is so low as to result in hourly earnings below minimum wage, as long as the worker is fully informed of this. To quote: “If an individual knowingly chooses to work through a platform at times of low demand, then he or she should take some responsibility for this decision.” (p. 38) This is likely to be a very contentious point.

On the one hand, the report is using an old trope of laissez-faire labour policy: if the worker chooses to work for such low pay, or in such terrible conditions, who are we to stop them? Yet such choices are not independent, but shaped by and constitutive of wider structural forces. If there is nothing else on offer, of course the worker will rather accept a pittance than starve; but if every labourer accepted a pittance, soon employers would find it necessary to offer little else. The minimum wage must thus remain inviolable as a bulwark against exploitation, goes the labour movement refrain.

On the other hand, it is probably also true that much of the work that is available on platforms during off-hours will simply not be done if the cost is higher (and indeed was not done before platforms arrived). Eaters will cook at home or pick up a meal themselves instead of paying double for delivery. Part of the value of platforms is that they make marginal, low-value transactions at least somewhat feasible by matching interested parties and bringing down transaction costs. In doing so they grow the total pie of work available. As an incremental source of income for someone with another job or studies, these edges of the pie may be very appealing.

The challenge for policymakers is to prevent what is intended to be a side gig for students from becoming the desperate sustenance of families. In 1999, Japan deregulated the use of temporary contract workers, partly with the aim of helping students and housewives gain work experience and earn additional income to supplement the salaries of the male breadwinners, who enjoyed life-long employment. Less than a decade later, almost a third of the labour force found themselves on such contracts, including millions of breadwinners (Imai 2011).

The same pros and cons also apply to the idea of the third ‘dependent contractor’ category: it could help employers accommodate more diverse life situations and business models, but it could also represent an erosion of rights if regular employees eventually find themselves in that category. Early results from our ongoing research suggest that some Fortune 500 companies that are experimenting with online gig work platforms are not doing so with the intention of replacing regular employees, but as a complement and substitute to temporary staffing agencies. But statistics will be necessary to evaluate the wider impacts of platforms on labour markets and society.

Statistics on the gig economy

When it comes to statistics, the Review points out that “official data is not likely to include the increasing number of people earning additional money in a more casual way, through the use of online platforms for example” (p. 25). This is a real problem: official labour market statistics don’t capture platform-based work, or when they do, they don’t make it possible to distinguish it from ordinary self-employment income. This makes it impossible to properly evaluate the role that platforms are taking in the modern labour market.

To help address this paucity of data, we have created the Online Labour Index, the first economic indicator that provides an online gig economy equivalent of conventional labour market statistics. It shows that the online gig economy grew by a whopping 26 percent over the past year, and that UK-based employers are among its leading users in the world. By online gig economy we refer to digitally delivered platform work like design, data entry, and virtual assistant services, rather than local services like delivery. The index is constructed by ‘scraping’ all the gigs from the six biggest platforms in real time and calculating statistics on them; a similar approach could possibly be used to create new statistics on the local gig economy, to complement inadequate official labour market statistics.

Open issues

There is much more in the 116-page Review. For instance, the issue of flexibility gets a lot of attention, and is something that colleagues and I are also doing research on. The question of “flexibility for whom – workers or employers” will no doubt continue to feature in the debates on the future of work and employment.

I hope you enjoyed my hot take, and I hope to return to these topics in a future blog post!

***

Prof. Vili Lehdonvirta is an economic sociologist who studies the design and socioeconomic implications of digital marketplaces and platforms, using conventional social research methods as well as novel data science approaches. He is the Principal Investigator of iLabour, a 5-year research project funded by the European Research Council. @ViliLe

In many sectors, automation is seen as a threat due to the potential for job losses. By contrast, automation is seen as an opportunity in healthcare, as a way to address pressures including staff shortages, increasing demand and workloads, reduced budget, skills shortages, and decreased consultation times. Automation may address these pressures in primary care, while also reconfiguring the work of staff roles and changing the patient-doctor relationship.

In the interview below, Matt Willis discusses a project, funded by The Health Foundation, which looks at opportunities and challenges to automation in NHS England general practice services. While the main goal of the project is to classify work tasks and then calculate the probability that each task will be automated, Matt is currently conducting ethnographic fieldwork in primary care sites to understand the work practices of surgery staff and clinicians.

Since the first automated pill counting machine was introduced in 1970 the role of the pharmacist has expanded to where they now perform more patient consultations, consult with primary care physicians, and require greater technical skill (including a Pharm.D degree). While this provides one clear way in which a medical profession has responded to automation, the research team is now looking at how automation will reconfigure other professions in primary care, and how it will shape its technical and digital infrastructures.

We caught up with Matt Willis to explore the implications of automation in primary care.

Ed.: One finding from an analysis by Frey and Osborne is that most healthcare occupations (that involve things like social intelligence, caring etc.) show a remarkably low probability for computerisation. But what sorts of things could be automated, despite that?

Matt: While providing care is the most important work that happens in primary care, there are many tasks that support that care. Many of those tasks are highly structured and repetitive, ideal things we can automate. There is an incredible amount of what I call “letter work” that occurs in primary care. It’s tasks like responding to requests for information from secondary care, an information request from a medical supplier, processing a trusted assessment, and so on.

There is also generating the letters that are sent to other parts of the NHS — and letters are also triaged at the beginning of each day depending on the urgency of the request. Medical coding is another task that can be automated as well as medication orders and renewal. All of these tasks require someone working with paper or digital text documents and gathering information according to a set of criteria. Often surgeries are overwhelmed with paperwork, so automation is a potential way to make a dent in the way information is processed.

Ed.: I suppose that the increasing digitisation of sensors and data capture (e.g. digital thermometers) and patient records actually helps in this: i.e. automation sounds like the obvious next step in an increasingly digital environment? But is it really as simple as that?

Matt: Well, it’s never as simple as you think it’s going to be. The commonality of data originating in a digital format usually does make data easier to work with, manipulate, analyze, and make actionable. Even when information is entirely digital there can be barriers of interoperability between systems. Automation could even be automating the use of data from one system to the next. There are also social and policy barriers to the use of digital data for automation. Think back to the recent care.data debacle that was supposed to centralize much of the NHS data from disparate silos.

Ed.: So will automation of these tasks be driven by government / within the NHS, or by industry / the market? i.e. is there already a market for automating aspects of healthcare?

Matt: Oh yes, I think it will be a variety of those forces you mention. There is already partial automation in many little ways all over NHS. Automation of messages and notifications, blood pressure cuffs, and other medical devices. Automation is not entirely new to healthcare. The pharmacist is an exemplar health profession to look at if we want to see how automation has changed the tasks of a profession for decades. Many of the electronic health record providers in the UK have different workflow automation features or let clinicians develop workflow efficiency protocols that may automate things in specific ways.

Ed.: You say that one of the bottlenecks to automating healthcare is lack of detailed knowledge of the sorts of tasks that could actually be automated. Is this what you’re working on now?

Matt: Absolutely. The data from labour statistics is self-reported and many of the occupations were lumped together meaning all receptionists in different sectors are just listed under receptionist. One early finding I have that I have been thinking about is how a receptionist in the healthcare sector is different in their information work than a receptionist’s counterpart in another sector. I see this with occupations across health, that there are unique features that differentiate health occupations from similar occupations. This begs the need to tease out those details in the data.

Additionally, we need to understand the use of technologies in primary care and what tasks those technologies perform. One of the most important links I am trying to understand is that between the tasks of people and the tasks of technologies. I am working on not only understanding the opportunities and challenges of automation in primary care but also what are the precursors that exist that may support the implementation of automation.

Ed.: When I started in journals publishing I went to the post room every day to mail out hardcopy proofs to authors. Now everything I do is electronic. I’m not really aware of when the shift happened, or what I do with the time freed up (blog, I suppose..). Do you think it will be similarly difficult in healthcare to pin-point a moment when “things got automated”?

Matt: Well, often times with technology and the change of social practices it’s rarely something that happens overnight. You probably started to gradually send out less and less paper manuscripts over a period of time. It’s the frog sitting in a pot where the heat is slowly turned up. There is a theory that technological change comes in swarm patterns — meaning it’s not one technological change that upends everything, but the advent of numerous technologies that start to create big change.

For example, one of the many reasons that the application of automation technologies is increasing is the swarming of prior technologies like “big data” sets, advances in machine vision, machine learning, machine pattern recognition, mobile robotics, the proliferation of sensors, and further development of autonomous technologies. These kinds of things drive big advances forward.

Ed.: I don’t know if people in the publishing house I worked in lost their jobs when things like post rooms and tea trolleys got replaced by email and coffee machines — or were simply moved to different types of jobs. Do you think people will “lose their jobs“ as automation spreads through the health sector, or will it just drive a shift to people doing something else instead?

Matt: One of the justifications in the project is that in many sectors automation is seen as a threat, however, automation is seen as an opportunity in healthcare. This is in great part due to the current state of the NHS and that the smart and appropriate application of automation technologies can be a force multiplier, particularly in primary care.

I see it as not that people will be put out of jobs, but that you’ll be less likely to have to work 12 hours when you should be working 8 and to not have a pile of documents stacking up that you are three months behind in processing. The demand for healthcare is increasing, the population is aging, and people live longer. One of the ways to keep up with this trend is to implement automation technologies that support healthcare workers and management.

I think we are a long ways away from the science fiction future where a patient lays in an entirely automated medical pod that scans them and administers whatever drug, treatment, procedure, or surgery they need. A person’s tasks and the allocation of work will shift in part due to technology. But that has been happening for decades. There is also a longstanding debate about if technology creates more jobs in the long term than it destroys. It’s likely that in healthcare we will see new occupational roles, job titles, and tasks emerge that are in part automation related. Also, that tasks like filing paperwork or writing a letter will seem barbaric when a computer can, through little time and effort, do that for you.

Matthew Willis was talking to blog editor David Sutcliffe.

The growth of online gig work — paid work allocated and delivered by way of internet platforms without a contract for long-term employment — has been welcomed by economic development experts, and the world’s largest global development network is promoting its potential to aid human development. There are hopes that online gig work, and the platforms that support it, might catalyse new, sustainable employment opportunities by addressing a mismatch in the supply and demand of labour globally.

Some of the world’s largest gig work platforms have also framed their business models as a revolution in labour markets, suggesting that they can help lift people out of poverty. Similarly, many policymakers expect that regions like Sub-Saharan Africa and Southeast Asia can capitalise on this digitally mediated work opportunity as youth-to-adult unemployment rates hit historic peaks. More broadly, it has been suggested that online gig work will have structural benefits on the global economy, such as raising labour force participation and improving productivity.

Against this background, a new report by Mark Graham, Vili Lehdonvirta, Alex Wood, Helena Barnard, Isis Hjorth, and David Peter Simon, “The Risks and Rewards of Online Gig Work At The Global Margins” [PDF] highlights the risks alongside the rewards of online gig work. It draws on interviews and surveys, together with transaction data from one of the world’s largest online gig work platforms, to reveal the complex and sometimes problematic reality of this “new world of work”.

While there are significant rewards to online gig work, there are also significant risks. Discrimination, low pay rates, overwork, and insecurity all need to be tackled head-on. The report encourages online gig work platforms to further develop their service, policymakers to revisit regulation, and labour activists to examine organising tactics if online gig work is to truly live up to its potential for human development, and become a sustainable situation for many more workers.

The final section of the report poses questions for all stakeholders regarding how to improve the conditions and livelihoods of online gig workers, particularly given how these platforms have become disembedded from the norms and laws that normally regulate labour intermediaries. Specific questions that are discussed include:

• Is it necessary to list nationality on profile pages? Will online gig workers receive formal employment contracts in the future?
• What formal channels could exist for workers to voice their issues? Where should governments regulate online gig work in the future?
• Will governments need to limit online gig work monopolies? And how will governments support alternative forms of platform organisation?
• What online forms of voice could emerge for workers, and in what ways can existing groups be leveraged to promote solidarity?
• To what extent will companies be held accountable for poor working conditions? Do platforms need a Fairwork certification program?

The report also offers suggestions alongside the questions, drawing on relevant literature and referencing historical precedents.

Read the full report: Graham, M., Lehdonvirta, V., Wood, A., Barnard, H., Hjorth, I., Simon, D. P. (2017) The Risks and Rewards of Online Gig Work At The Global Margins [PDF]. Oxford: Oxford Internet Institute.

Read the article: Graham, M., Hjorth, I. and Lehdonvirta, V. (2017) Digital Labour and Development: Impacts of Global Digital Labour Platforms and the Gig Economy on Worker Livelihoods. Transfer. DOI: 10.1177/1024258916687250

The report is an output of the project “Microwork and Virtual Production Networks in Sub-Saharan Africa and Southeast Asia”, funded by the International Development Research Centre (IDRC), grant number: 107384-001.

As David Harvey famously noted, workers are unavoidably place-based because “labor-power has to go home every night.” But the widespread use of the Internet has changed much of that. The confluence of rapidly spreading digital connectivity, skilled but under-employed workers, the existence of international markets for labour, and the ongoing search for new outsourcing destinations, has resulted in organisational, technological, and spatial fixes for virtual production networks of services and money. Clients, bosses, workers, and users of the end-products of work can all now be located in different corners of the planet.

A new article by Mark Graham, Isis Hjorth and Vili Lehdonvirta, “Digital labour and development: impacts of global digital labour platforms and the gig economy on worker livelihoods”, published in Transfer, discusses the implications of the spatial unfixing of work for workers in some of the world’s economic margins, and reflects on some of the key benefits and costs associated with these new digital regimes of work. Drawing on a multi-year study with digital workers in Sub-Saharan Africa and South-east Asia, it highlights four key concerns for workers: bargaining power, economic inclusion, intermediated value chains, and upgrading.

As ever more policy-makers, governments and organisations turn to the gig economy and digital labour as an economic development strategy to bring jobs to places that need them, it is important to understand how this might influence the livelihoods of workers. The authors show that although there are important and tangible benefits for a range of workers, there are also a range of risks and costs that could negatively affect the livelihoods of digital workers. They conclude with a discussion of four broad strategies – certification schemes, organising digital workers, regulatory strategies and democratic control of online labour platforms — that could improve conditions and livelihoods for digital workers.

We caught up with the authors to explore the implications of the study:

Ed.: Shouldn’t increased digitisation of work also increase transparency (i.e. tracking, auditing etc.) around this work — i.e. shouldn’t digitisation largely be a good thing?

Mark: It depends. One of the goals of our research is to ask who actually wins and loses from the digitalisation of work. A good thing for one group (e.g. employers in the Global North) isn’t necessarily automatically a good thing for another group (e.g. workers in the Global South).

Ed.: You mention market-based strategies as one possible way to improve transparency around working conditions along value chains: do you mean something like a “Fairtrade” certification for digital work, i.e. creating a market for “fair work”?

Mark: Exactly. At the moment, we can make sure that the coffee we drink or the chocolate we eat is made ethically. But we have no idea if the digital services we use are. A ‘fair work’ certification system could change that.

Ed.: And what sorts of work are these people doing? Is it the sort of stuff that could be very easily replaced by advances in automation (natural language processing, pattern recognition etc.)? i.e. is it doubly precarious, not just in terms of labour conditions, but also in terms of the very existence of the work itself?

Mark: Yes, some of it is. Ironically, some of the paid work that is done is training algorithms to do work that used to be done by humans.

Ed.: You say that “digital workers have been unable to build any large-scale or effective digital labour movements” — is that because (unlike e.g. farm work which is spatially constrained), employers can very easily find someone else anywhere in the world who is willing to do it? Can you envisage the creation of any effective online labour movement?

Mark: A key part of the problem for workers here is the economic geography of this work. A worker in Kenya knows that they can be easily replaced by workers on the other side of the planet. The potential pool of workers willing to take any job is massive. For digital workers to have any sort of effective movement in this context means looking to what I call geographic bottlenecks in the system. Places in which work isn’t solely in a global digital cloud. This can mean looking to things like organising and picketing the headquarters of firms, clusters of workers in particular places, or digital locations (the web-presence of firms). I’m currently working on a new publication that deals with these issues in a bit more detail.

Ed.: Are there any parallels between the online gig work you have studied and ongoing issues with “gig work” services like Uber and Deliveroo (e.g. undercutting of traditional jobs, lack of contracts, precarity)?

Mark: A commonality in all of those cases is that platforms become intermediaries in between clients and workers. This means that rather than being employees, workers tend to be self-employed: a situation that offers workers freedom and flexibility, but also comes with significant risks to the worker (e.g. no wages if they fall ill).

Read the full article: Graham, M., Hjorth, I. and Lehdonvirta, V. (2017) Digital Labour and Development: Impacts of Global Digital Labour Platforms and the Gig Economy on Worker Livelihoods. Transfer. DOI: 10.1177/1024258916687250

Read the full report: Graham, M., Lehdonvirta, V., Wood, A., Barnard, H., Hjorth, I., Simon, D. P. (2017) The Risks and Rewards of Online Gig Work At The Global Margins [PDF]. Oxford: Oxford Internet Institute.

The article draws on findings from the research project “Microwork and Virtual Production Networks in Sub-Saharan Africa and South-east Asia”, funded by the International Development Research Centre (IDRC), grant number: 107384-001.

Mark Graham was talking to blog editor David Sutcliffe.

Mark: We are studying online freelancing. In other words this is digital or digitised work for which professional certification or formal training is usually not required. The work is monetised or monetisable, and can be mediated through an online marketplace.

Freelancing is a very old format of work. What is new is the fact that we have almost three billion people connected to a global network: many of those people are potential workers in virtual production networks. This mass connectivity has been one crucial ingredient for some significant changes in how work is organised, divided, outsourced, and rewarded. What we plan to do in this project is better map the contours of some of those changes and understand who wins and who doesn’t in this new world of work.

Ed: Are you able to define what comprises an individual contribution to a ‘virtual production network’ — or to find data on it? How do you define and measure value within these global flows and exchanges?

Mark: It is very far from easy. Much of what we are studying is immaterial and digitally-mediated work. We can find workers and we can find clients, but the links between them are often opaque and black-boxed. Some of the workers that we have spoken to operate under non-disclosure agreements, and many actually haven’t been told what their work is being used for.

But that is precisely why we felt the need to embark on this project. With a combination of quantitative transaction data from key platforms and qualitative interviews in which we attempt to piece together parts of the network, we want to understand who is (and isn’t) able to capture and create value within these networks.

Ed: You note that “within virtual production networks, are we seeing a shift in the boundaries of firms” — to what extend to you think we seeing the emergence of new forms of organisation?

Mark: There has always been a certain spatial stickiness to some activities carried out by firms (or within firms). Some activities required the complex exchanges of knowledge that were difficult to digitally mediate. But digitisation and better connectivity in low-wage countries has now allowed many formerly ‘in-house’ business processes to be outsourced to third-parties. In an age of cloud computing, cheap connectivity, and easily accessible collaboration tools, geography has become less sticky. One task that we are engaged in is looking at the ways that some kinds of tacit knowledge that are difficult to transmit digitally offer some people and firms (in different places) competitive advantages and disadvantages.

This proliferation of digitally mediated work could also be seen as a new form of organisation. The organisations that control key work marketplaces (like oDesk) make decisions that shape both who buyers and sellers are able to connect with, and the ways in which they are able to transact.

Ed: Does ‘virtual work’ add social or economic value to individuals in low-income countries? ie are we really dealing with a disintermediated, level surface on a global playing field, or just a different form of old exploitation (ie a virtual rather than physical extraction industry)?

Mark: That is what we aim to find out. Many have pointed to the potentials of online freelancing to create jobs and bring income to workers in low-income countries. But many others have argued that such practices are creating ‘digital sweatshops’ and facilitating a race to the bottom.

We undoubtedly are not seeing a purely disintermediated market, or a global playing field. But what we want to understand is who exactly benefits from these new networks of work, and how.

Ed: Will you be doing any network analysis of the data you collect, ie of actual value-flows? And will they be geolocated networks?

Mark: Yes! I am actually preparing a post that contains a geographic network of all work conducted over the course of a month via oDesk (see the website of the OII’s Connectivity, Inclusion, and Inequality Group for more..).

Mark Graham was talking to blog editor David Sutcliffe.

Mark Graham is a Senior Research Fellow at the OII. His research focuses on Internet and information geographies, and the overlaps between ICTs and economic development.