The partnership trap in the Indonesian gig economy

In the last three months, there have been three strikes by gig workers in Indonesia. Problems related to harsh working conditions, injustice, and the decline in the welfare of gig workers became the main issues in the three strikes. The biggest strike was carried out by GoKilat couriers (delivery service from the Gojek platform company) for 3 days on 8-10 June 2021 involving nearly 1,500 couriers or almost 80% of active couriers on GoKilat. A day later, couriers from Lala Move went on strike spontaneously for three days by mass deactivating accounts on their platform application.

Prior to the two strikes above, on April 6, 2021, a strike was carried out by Shopee Express couriers for 1 day in Bandung, Indonesia, involving around 1,000 couriers. The Shopee Express courier strike was motivated by a cut in the payment they received. The new rules reduce courier revenue from 2,500 rupiah (US$0.17)/package to only 1,500 rupiah (US$0.10)/package and that is the only income earned by the couriers. In other words, they did not earn basic income equal to the minimum wage in the province where they work. Moreover, they did not have health insurance, decent working hours, overtime pay, leave /holiday rights, and severance pay. The working conditions were worse due to the fact that the vehicles (motorcycle) used are theirs and they had to pay fuel cost.

With such a wage system, to be able to earn the minimum wage in Bandung City in 2021 of 3,742,267 rupiah (US$263.16) per month for instance, couriers have to deliver 2,495 packages monthly—not including fuel and maintenance costs they have to pay. It means that they would have to deliver about 104 packages per day to the customers. If, on average, a package is delivered in 10 minutes, they need 17 hours per day, far above the decent 8 hours work day. This oppressive work system for gig workers is possible and there is no prohibition from the Indonesian government, due to the courier’s status as an independent contractor ormitra” (partner) for the platform company, instead of labor.

The precarious and uncertain working conditions stem from the misclassification of their employment status. Companies classifies them as “partners”, so that they could avoid the obligation to provide the minimum wage, health insurance, overtime pay, severance pay, 8 working hours per day, and holiday rights if they were labor, although the working relationships between the companies and their couriers represents the employer-employee relationships as there are shift work for the couriers, work control by the companies, requirements in recruitment such as contracts of employment, and the companies unilateral rules established by the companies.

The rise of the partnership model in Indonesia

The partnership model is now ubiquitous in many startup companies in Indonesia. After its implementation in the ride-hailing industry (such as Gojek, Grab, and Uber), it has begun to be implemented by delivery companies, some of which are Shopee Express, JNE Express, ID Express, Wahana, Mr Speedy, Lel Express, Lala Move, etc.

Not so different from Shopee Express, the other companies also paid their “partners” low wages. At JNE Express, for example, the couriers were only paid 1,350 rupiah/package. Nonetheless, JNE Express provided them fuel cost of 15,000 rupiah per shift/day. It did not provide vehicles, so the couriers have to drive their own. Satrio (22), a partner of JNE Express, told me that, on average, he delivered about 35 packages per day, earning 62,250 rupiah (US$4.37) per day (1,350 rupiah x 35 packages [+ 15.000 rupiah]).

In practice, the partnership model contradicts the principles of partnership. According to Law Number 20 of 2008 on Micro, Small, and Medium Enterprises, partnership shall be cooperation in business relations with an equal position and based on mutual need, trust, consolidation, and benefit principles. However, the principles of partnership have not materialized as the companies have dominated all work processes and forced the “partners” or couriers to comply with all their decisions. I refer to it as bogus partnership, a political action taken by platform companies to place the couriers as “partners” without the principles of partnership.

The root of the prevalence of the bogus partnerships

The concept of the bogus partnership has mushroomed among the platform companies. By means of the bogus partnership in the gig economy, they can economize, cut production costs, and avoid business risks. On the other side, the “partners” (drivers/couriers) have been thrown into the partnership trap, making the working condition that became precarious, uncertain, and unprotected.

There are three causes that enable this bogus partnership to be applied by the platform companies. Firstly, the abundance of the reserve army of labor in Indonesia, which is estimated to comprise 71,2 millions out of 121,8 millions  of the labor force in 2014. They are faced with the contradictions (something that is common in the Global South) that wages in formal jobs are still low, which they also encounter in the gig economy. They hoped to get decent work, but they are forced to keep working in the gig economy or formal job with low wages, long working hours, and heavy work due to no other option. The absence of workers’ bargaining position paves the way for the cheap labor market in Indonesia.

Secondly, the weakness of the labor movement in Indonesia. The abundance above constitutes a structural condition, exacerbating the working conditions. To regulate the working relationships is a political process, the abundance of the reserve army of labor has depoliticized the workers, but they are likely to have better wages and decent working conditions when the working class is organized. We can look back, the abundance of the reserve army of labor in the beginning of the Indonesian independence, who could encourage some protection and better working conditions owing to the strength of the labor movement, including the Law on Basic Agrarian Principles, severance pay policy, labor representatives in Dewan Perusahaan (Work Council), and nationalization of foreign companies driven by the working class.

Nonetheless, in the current context, the working class movement in Indonesia is still so weak. It cannot be separated from the destruction of the working class in 1965 and floating mass politics during the era of the Soeharto’s regime. As a consequence, the working class movement that had existed since the beginning of the 20th century was broken off. However, the working class in this era is now building up its strength.

The gig workers in Indonesia went on strikes to resist. The couriers of Shopee Express in Bandung on 6 April 2021 struck as their income per package was cut from 2,500/package to 1,500/package. The strike only lasted a day as they decided to work again subsequent to the agreement they reached with their employers. Previously, the drivers of Grab in Yogyakarta in the end of December 2020 went on strike by deactivating their applications simultaneously for a day due to a cut in tariff and bonus from Grab.

The gig workers keep going on strike and resisting in response to the worse working relationships with low income. To some extent, gig workers’ strikes had several small victories, inspiring other resistance. However, the resistance still has been spontaneous and unorganized nationwide.

Thirdly, the prevalence of the bogus partnership in Indonesia is enabled by the poor law enforcement of the misclassification or partnership. Instead of attempting to create just working conditions for the “partners” of the gig economy, the governments committed themselves  to easing the platform companies’ business. The measure was taken because this gig economy and partnership are claimed to be the future jobs. A founder of Gojek, Nadiem Makarim, was even appointed as the Minister of Education by Jokowi as he was considered a successful businessman. Even though the couriers were deemed heroes during the COVID-19 pandemic for their delivery during the social restrictions, their working conditions are getting worse.

On the pretext of flexibility, sharing economy, and gig workers’ freedom, the platform companies have not protected and given them rights. Amidst the problem of structural conditions of the labor and weak working class in Indonesia, the platform companies are trapping them into the bogus partnership resulting in indecent and uncertain work, instead of occupational welfare and safety, for the gig workers.

Arif Novianto is a Junior Researcher at the Institute of Governance and Public Affairs (IGPA), Gadjah Mada University, Indonesia. He tweets at @arifnovianto_id.

Read the article in Indonesian here. Photo by Afif Kusuma on Unsplash.

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