Indonesia’s gig economy falling short on

decent work standards

Author: Trevi Putri, Gadjah Mada University and Richard Heeks, University of Manchester

3 February 2022

Indonesia’s gig economy is dominated by two mega-platforms, Grab and Gojek. The gig economy contributes at least US$7 billion to Indonesia’s economy and employs at least four million workers. The sector has been plagued with controversy, beset with worker strikes and complaints about pay and conditions. These controversies are well-founded as labour standards have consistently fallen short of decent work standards.

In December 2021, the Fairwork project released a report evaluating nine of the most prominent platforms in the country. This included car-based taxi services, motorcycle-based taxi and delivery services, and courier services. The report scored each platform against the five global principles of Fairwork — fair pay, fair conditions, fair contracts, fair management and fair representation. Indonesia’s gig economy fell short across all metrics.

The Indonesian government has previously introduced guidelines for per-kilometre fare payments to meet minimum wage standards. Yet no platform studied was able to show evidence that fair pay for its workers was being provided. Once a worker’s logged hours and work-related costs were taken into consideration, many did not take home a minimum wage. Those who did earn more than the minimum wage often worked long hours — nearly 20 per cent of workers interviewed regularly worked more than 100 hours a week.

Indonesia’s gig workers constantly face risks from accidents, scams and COVID-19-related loss of income. Only a third of the platforms studied had sought to provide fair conditions by taking measures to protect their workers through accident insurance, emergency helplines, access to health insurance and COVID-19 sick pay.

Most of the platforms have clear and accessible terms and conditions for workers that contribute toward fair contracts. But the terms and conditions typically feature an unfair distribution of risks and liabilities, given that workers are less able than platforms to bear such burdens.

Only Grab and Gojek were awarded scores for fair management. These two platforms documented channels for communication with workers and initiatives seeking to address discrimination and inequities, including those relating to gender. This is particularly important given the challenges facing female gig workers in Indonesia — those interviewed were sometimes faced with male customers refusing to travel with them or sexually harassing them.

These problems are exacerbated by a lack of fair representation of workers across all platforms. Worker associations exist in Indonesia, but they are often locality-based and informal. They are not formally recognised in law or by the platforms, giving workers no legitimised way to express their collective concerns and to negotiate with platforms. Workers also reported being wary of joining protests or strikes due to fears of penalties. Without fair representation, the grievances expressed by workers cannot be fully addressed.

The ratings for 2021 reflect an urgent need to ensure fairness in Indonesia’s gig economy. Two main actions are needed to address the substandard working conditions.

The claim that gig workers are ‘independent contractors’ needs to end. Gig workers are dependent on platforms for their livelihoods, and their work is directed and monitored by the platform’s app. The government needs to change the law to recognise that gig workers are akin to employees, and to give them associated rights and protections. As part of this, gig worker associations must be given recognition in law as labour unions, allowing them to enter into formal negotiations with the platforms on behalf of workers to reduce the current power imbalance between platforms and their workers.

Consumers in Indonesia should be provided scores on how each platform is performing in terms of decent work standards. When selecting which platforms to use, consumers can then choose a higher-scoring platform where possible. This will help to incentivise proactive steps among the platforms to meet key metrics and exceed minimum labour standards in the gig economy. Large organisations are also encouraged to sign up to the Fairwork Pledge as a way to pressure platforms to improve.

Providing platforms with incentives to show leadership in raising work standards can affect meaningful change. Worker protests, dissatisfaction and unfair treatment are detrimental for brand image and reputation at a time when platforms are seeking to engage more with corporate social responsibility in order to attract consumers and investors.

Regulatory change and consumer pressure for improvements in gig work conditions are found in a growing number of countries around the world. With some initial signs of movement in Indonesia for legislation on gig work and the willingness of consumers to boycott brands that treat workers poorly, platforms would do well to get ahead of this wave so that they can shape, rather than be driven by, the coming changes.

Trevi Putri is a lecturer in the Department of International Relations and a researcher in the Center for Digital Society at Gadjah Mada University, Indonesia.

Richard Heeks is Professor of Digital Development in the Global Development Institute at the School of Environment, Education and Development, University of Manchester.