Entrepreneurial challenges in the Bangladeshi gig business model
Owing to mobile technology, people can now work both offline and online for short-term engagements called 'gigs'. The phenomenon of a gig economy can be illustrated by a situation where an individual works on a temporary or part-time basis and has more independence and flexibility than traditional workers. In turn, these workers have little or no job security. Since last year, Fairwork, with its country partner DataSense, has published the annual Fairwork Bangladesh Ratings Report to understand the working conditions of platform-based gig workers in Bangladesh. These reports contain exclusive facts relevant to Bangladesh and South Asian countries that unveil some misconceptions regarding the gig economy and entrepreneurial challenges in these gig models. Some of these most notable obstacles are detailed below.
Workers going solo or 'khaep'
As Bangladeshis, many of us may be familiar with the term 'khaep', where gig workers connect to customers directly without using the platform as a medium. Basically, ride-sharing platforms face such scenarios where both riders and clients prefer not to use the platform for their own benefit. A client can get a discounted price for the ride, and they get the privilege to shop around and choose the cheapest price as workers generally gather in a particular area for taking a 'khaep'. Hence, the rider is able to avoid paying a commission that may range from 10% to 30% and can bargain freely without the app's algorithm getting in the way. For instance, an interviewed Trucklagbe driver stated how the unfavourable trip fare, the higher commission rate and the discrimination among workers had discouraged him from adapting to the 'khaep' system.
Though it is still not evident whether the overall ride-sharing industry is hugely affected because of this, it shows how important it is to work on the policy level. As such, the data shows that it is necessary to ensure that workers do not feel discouraged and oppressed, which may lead them to leave the market and choose alternatives. The existence of the gig economy is largely dependent on the customers' demand and the spontaneous participation of gig workers. The derailing of this business to become the usual transportation system offers no security to clients and riders since the secured media is cut off.
Having no app involved means that there is no verification and guarantee of the workers' identity, alongside the absence of a tracking option in case of emergencies. Under this 'khaep' model, workers are at risk of facing a financial loss since there is no standard set charge. Lack of security and credentials, an ambiguous price system and possible financial loss of both riders and clients make this aspect of the gig economy uncertain. If 'khaep' cases exist to continue, platforms may struggle to exist with a minimum profit, suggests the findings.
Intermediaries intervening between platforms and workers
Both Fairwork reports showed that one of the causes due to ride-sharing gig workers is often a net negative income, in which a large portion of their earnings goes to the intermediaries. Commonly, three kinds of intermediary engagements can be found in Bangladesh. Firstly, a worker may agree to enter the economy with a fixed contract with the vehicle owner, and secondly, if he agrees to share a portion of his profits instead of a fixed amount. The third model is where the owner pays the worker a fixed monthly salary as he does to an employee. In this case, the owner is able to get a hold of the additional earnings from these gigs. As reported by a worker, around 50% of his income is used to pay the intermediaries, which increases the worker's debt further.
These intermediaries are not formally recognised by platforms. Nonetheless, they significantly control workers' earnings when they are on contractual or profit-sharing terms with workers. Under such intermediary models, platforms remain unaccountable for workers' sufferings, while intermediaries get advantages making gig workers more vulnerable and pitiful.
Net negative income or platform debt
As per interviews with many different gig workers, most opt to join several platforms at once to have a better income source. Having an easy procedure and fewer requirements to join has made this option more alluring to the concerned workers. However, workers start emerging in a pool of debt when as soon as they join, a large share of income gets claimed by the platform, and in some cases, by intermediaries as well.
As per the 2021 report, 16 out of 103 gig workers were in a net income deficit of around Tk. 66,000. These workers were from ride-sharing platforms. Besides intermediaries, the common reasons for such negative income are high maintenance costs, monthly instalments, higher commissions and customers' refusal to pay extra for a longer route. Due to the informal model of the gig economy, platforms are not bound to give their workers financial support and security or to cover the basic expenditures to perform their gigs. Both the lack of platforms' accountability and the ubiquity of intermediaries incur to deepen the platform dept, causing net negative income for gig workers.
No clear representation of gig workers in the legal context in Bangladesh
In Bangladesh, many workers work in the gig economy full-time (40 hours per week) or even beyond this threshold. Digital platforms use different mechanisms such as ratings and point systems to decide the allocation of working hours, tasks and compensations for these workers. Such mechanisms are only functional when gig workers are contributing a good amount of time to the platform. Consequently, academics and activists have raised the argument of gig workers as regular workers/employees who should be able to claim minimum wage and basic benefits. However, it is not clear whether the 2018 amendment to the Bangladesh Labour Act or such legal frameworks explicitly recognise local gig workers. The lack of protections, poor working conditions and precarity discourage gig workers to continue work in the platform-based gig economy despite the easier procedure and fewer requirements to join.
In the modern era, the gig economy is likely to expand further, leading to an increase in unemployment in the conventional economy due to automation and the tendency to gain flexibility in jobs. However, the lack of mutual trust, the intervention of different third parties, wages being lower than the standard, possibilities of fraudulence and very high commissions create hurdles in the way of expanding gig companies in the country. The business model of these gig companies is yet to be developed to supplement such deficiencies and stimulate the strengths of this gig economy, as per the report.