July 20, 2021

The role of digital labour platforms in transforming the world of work

Uma Rani

World Employment and Social Outlook 2021 (International Labour Organization)

The digital economy is transforming the world of work. Digital technologies, the availability of cloud computing along with infrastructure and the ability to quickly and cheaply share large amounts of data and information between individuals, companies and devices have supported its rise. This has led to a proliferation of digital platforms offering a range of digital services and products. These transformations also extend to the world of work, as digital platforms have penetrated various sectors of the economy. The outbreak of the COVID‑19 pandemic in March 2020 and the increase in remote work have further amplified the growth and impact of digital economy on labour markets.

This report focuses on digital labour platforms, which are helping to redefine the means of economic exchange, bringing about a rapid exchange of labour, labour practices and the business landscape, and having a significant impact on the world of work. Digital labour platforms are able to leverage the distinct features of the digital economy, such as asset-lightness, network effects, datafication and mobility, enabling them to operate from anywhere in the world across multiple jurisdictions, regardless of where their clients, workers or consumers are located. Further, the nature and organisation of the digital economy, such as the availability of cloud infrastructure services at reduced costs, together with the availability of venture capital funding, has reduced barriers to entry and enabled the rapid growth of digital labour platforms over the past decade.[1]

These platforms can be classified into two broad categories: online web-based platforms[2] and location-based platforms.[3] The distinguishing feature of both these types of platforms is that technology or digital application is used to match workers, businesses or clients and consumers. This enables individuals or business clients to arrange a ride, order food or find a freelancer to develop a website or translate a document, among many other activities. By connecting businesses and clients to workers, they are transforming labour processes with implications for the future of work. Some of the activities on these platforms are not new, and were previously performed and continue to be performed in the traditional labour market.  

This report is a first major attempt by the ILO to capture the experiences of workers and businesses with digital labour platforms in multiple sectors and countries. It is based on surveys and interviews with 12,000 workers in 100 countries, and with 70 businesses of different types, 16 platform companies and 14 platform worker associations around the world.

A geographically uneven growth of digital labour platforms

Globally, the online web-based and location-based (taxi and delivery) platforms increased five-fold over the past decade, which are concentrated in a few countries: the United States of America (29 per cent), India (8 per cent) and the United Kingdom (5 per cent), and their growth is largely supported by the availability of venture capital investments. About 96 per cent of the global investments in digital labour platforms are concentrated in Asia (US$56 billion), North America (US$46 billion) and Europe (US$12 billion), compared to 4 per cent in Latin America, Africa and the Arab States (US$4 billion). Further, while digital labour platforms globally generated revenue of at least US$52 billion in 2019, about 70 per cent of the revenues generated were concentrated in just two countries, the United States (49 per cent) and China (23 per cent). Major gaps already persist in the availability of digital infrastructure in many developing countries that limit the rise of the digital economy, while such an uneven growth of digital labour platforms further perpetuates a digital divide and risks exacerbating inequalities, particularly between countries. Addressing this divide requires concerted policy action. 

The platform business model is transforming the world of work

The platform business model has certain distinct features that are changing the organization of work and work processes. Digital labour platforms are ICT-enabled, data driven and rely on algorithmic management practices for allocating and evaluating work based on metrics and ratings and for monitoring work using digital tools. This mode of management is a fundamental departure from traditional human resource management practices. Further, these algorithmic management practices are penetrating and increasingly being adopted in traditional work places, which has implications in the world of work.

Second, they are changing the organisation of work by shifting the responsibility of investing in capital assets and operations costs to the workers, which makes platforms asset-light. For instance, capital equipment such as computers on online web-based platforms or vehicles on location-based platforms are provided by the workers, who also bear the costs related to fuel, maintenance, purchase of licenses or internet charges. Third, they have created a dual labour market with a core workforce of workers directly employed by the platform and a large outsourced workforce, whose work is mediated through the platform. Workers in the first category have a dependent employment relationship, while those in the latter are often categorized as self-employed or independent contractors by the platforms and a vast majority of them do not have an employment relationship but often have to pay various types of fees for accessing tasks. The working conditions of these workers are regulated by terms of service agreements of the platforms, which determines workplace protections and entitlements.

Fourth, the revenue model of these platforms is based on charging different types of fees to workers or subscription plans to clients and workers. For instance, in one of the major freelance platforms, about 62 per cent of the revenue is generated by charging fees to the workers, which is contrary to the international labour standards such as the ILO Protection of Wage Convention or Private Employment Agencies Convention, which prohibits agencies, employers and intermediaries from charging fees. 

Protest at Uber HQ. 20 January 2017.
Photo: Phil Dokas

Digital labour platforms have in the process opened up new means of outsourcing

Diverse types of businesses, from start-ups to Fortune 500 companies, are increasingly relying on online web-based platforms to access a global pool of workers with diverse skills, to reduce costs and improve efficiency, to streamline recruitment processes, or to access knowledge and seek innovation. These platforms have also supported the growth of start-ups, especially in the field of artificial intelligence and have helped business process outsourcing companies to reorient and transform themselves to cater to customer demands with the rise of digital economy. Location-based platforms in particular have enabled businesses in restaurant and retail sectors to expand their customer base. Since the outbreak of the COVID-19 pandemic, many such businesses have also relied on these platforms to continue their operations and reduce costs. However, businesses also face some challenges and risks, particularly with regard to a loss of internal human resources capacity, high commission fees on delivery platforms, poor digital infrastructure, as well as competition issues and an uneven playing field, among others. 

Digital labour platforms have the potential to provide income-generating opportunities but are accompanied by some challenges

These platforms have the potential to provide work to workers, including women, persons with disabilities and migrant workers. ILO surveys reveal that the majority of platform workers are below the age of 35 years and highly educated, particularly in developing countries. However, gaps remain with regard to the participation of women in platform work, and gender-based occupational segregation of tasks can be observed on freelance platforms. The main motivation of workers to undertake tasks on digital labour platforms include, to complement an existing income, preference or need to work from home or job flexibility (higher among women), and lack of alternative employment opportunities (higher among taxi drivers and delivery workers). Platform work is the main source of income for a majority of workers on location-based platforms, and for about one third of the workers on online web-based platforms. Earnings of workers however, can vary considerably. On online web-based platforms, about half of the workers earn less than US$2.1 per hour. Hourly earnings in a typical week range from US$3.3 on microtask platforms to US$7.6 on freelance platforms, while workers in developing countries tend to earn 60 per cent less than workers in developed countries. Such earnings are influenced by time spent on unpaid tasks (such as looking for work or building up a profile), competition due to excess labour supply, high commission fees and other fees, and non-payment due to rejection of work.

Workers in the app-based taxi and delivery sectors in developing countries tend to earn higher than those in the traditional sectors. This is largely due to the bonuses and incentives provided to workers by the platforms, who also maintain competitive pricing, which reduces demand for workers in the traditional taxi and delivery sectors. Such a situation also leads to long working hours for traditional workers, who on average wait for about 50 minutes between rides, as they are often competed out by app-based taxi drivers, and a significant proportion of traditional drivers (48 per cent) reported that the number of rides reduced due to the introduction of app-based taxis. A majority of workers on digital labour platforms do not have social security coverage and there are large gaps with regard to health insurance and work-related injury provision, unemployment and disability insurance, and old-age pension or retirement benefits. While access to social protection is limited, workers face various occupational safety and health risks, particularly on location-based platforms. The COVID-19 pandemic has further exposed the risks to these workers. On location-based platforms for instance, workers faced reduction in demand and earnings, and a majority indicated not being able to take paid sick leave, or to receive compensation, in the event they were to test positive for the virus, thus risking the health of others in addition to their own health.

The algorithmic management practices adopted by platforms have major implications on workers access to work and their autonomy and freedom. Worker’s ratings are critical and decisive for accessing work on all types of platforms (reported by 82 per cent workers).  For instance, if the client rejects the work or gives a low rating, it will be factored into the algorithms and can affect a worker’s overall rating. Rejection of work is quite common on online web-based platform with 65 per cent of workers reporting that their work was rejected. On microtask platforms, work is rejected by the algorithms and about 85 per cent of the workers reported that none of the rejections were justifiable. This has important implications for workers to access work. Ratings also play an important role for the workers on taxi (72 per cent) and delivery (65 per cent) platforms in accessing work. Sometimes ratings on these platforms were influenced by factors beyond the worker’s control, such as delays in receiving a food order from a restaurant or traffic congestion. While higher ratings play a role in facilitating access to work, lower ratings can sometimes lead to deactivation of worker accounts or reduce their access to work.

Another important aspect of algorithm management is that it prevents workers from fully benefitting from the freedom and flexibility with regard to time, place and choosing the task, ride or order, especially on taxi and delivery platforms. About half of the workers reported that that they often cannot cancel rides or orders and if they do, they faced some repercussions. In the taxi sector, these repercussions included: lower ratings (29 per cent), their account being blocked or suspended (26 per cent) and fewer rides (10 per cent). While other repercussions included penalty and fines, longer waiting time, and reduced bonuses. In the delivery sector, workers faced two major consequences, which included penalty and fines (30 per cent) and their accounts being blocked (27 per cent). The other consequences of cancellations included fewer orders, reduced bonuses, and lower ratings.

The work processes on these platforms are also monitored and tracked on a regular basis using digital tools and the Global Positioning System (GPS), which are used to monitor work progress and ratings. On freelance platforms, about 47 per cent of the workers reported that their working hours were regularly monitored by clients, 46 per cent requested to submit screenshots of the work done on a regular basis, and 43 per cent of them were regularly requested to be available during specific times by clients. These raise important questions regarding the autonomy and control that the workers exercise in performing their tasks and whether this is accurately reflected in their employment relationship.

A major concern raised by workers on taxi and delivery platforms is the deactivation of their account on the platform, which was reported by about 20 per cent of the taxi drivers and 15 per cent of delivery workers, which has a major impact on their livelihoods. As a result, workers on digital labour platforms often struggle to find sufficient well-paid work to earn a decent income, creating a situation of working poverty. A considerable number of workers also reported having experienced or witnessed discrimination or harassment, associated with exclusion from work opportunities or low pay, on the basis of nationality and gender. Moreover, the working conditions on digital labour platforms are largely regulated by terms of service agreements, which the platforms unilaterally determine, and have implications for dispute resolution and working conditions. At the same time, workers are frequently unable to engage in collective bargaining that would allow them to have issues around working conditions addressed.

War on Want and GMB protest outside Amazon HQ on Cyber Monday
Photo: War on Want

A range of regulatory responses has started to address some of the issues related to working conditions on digital labour platforms

To address the challenges raised by this new way of working, many governments have undertaken regulatory initiatives to tackle issues such as employment relationship, health and safety standards, and adequate social protection. Private, non-state actors, and employers’ and workers’ organizations have also taken some initiatives. However, variations in these regulatory responses have created further challenges. The matter is more complex because many digital labour platforms operate across multiple borders and jurisdictions. The result is regulatory uncertainty for workers, businesses and governments.

There is a need for international policy dialogue and coordination to ensure regulatory certainty and the applicability of international labour standards

The way forward would be to engage in a process of global social dialogue aimed at ensuring that the opportunities arising from digital labour platforms are leveraged, and the challenges addressed, so that digital labour platforms are best positioned to provide decent work opportunities, foster the growth of sustainable enterprises and contribute towards achievement of the Sustainable Development Goals. It is important that the ILO fundamental principles and rights at work are implemented for all platform workers, irrespective of their status. In addition, principles rooted in other ILO Conventions, such as those related to fair payment systems, fair termination and access to dispute resolution, should also be extended to platform workers.

In this regard, the report includes 15 recommendations and calls for a global social dialogue and regulatory cooperation between digital labour platforms, workers and governments, which could lead over time to a more effective and consistent approach towards a number of objectives. This requires:

  • ensuring that workers’ employment status is correctly classified and is in accordance with national classification systems;
  • ensuring adequate social security benefits for all platform workers, independently from their employment status, by extending and adapting of policy and legal frameworks where necessary;
  • ensuring fair termination processes for platform workers;
  • working towards ensuring that self-employed platform workers enjoy the right to bargain collectively, for example through greater harmonization of competition law with labour law;
  • ensuring transparency and accountability of algorithms for workers and businesses.

  • [1] Cusumano, Michael A., Annabelle Gawer, and David B. Yoffie. 2019. The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power. New York: Harper Collins.
  • [2] On online web-based platforms, workers perform tasks or work assignments online or remotely. These tasks may include translation, legal, financial and patent services, design and software development on freelance and contest-based platforms; solving complex programming or data analytics problems within a designated time on competitive programming platforms; or completing short-term tasks, such as annotating images, moderating content, or transcribing a video on microtask platforms.
  • [3] The tasks on location-based platforms are carried out in person in specified physical locations by workers, and include taxi, delivery and home services (such as a plumber or electrician), domestic work and care provision.
Uma Rani, who was the lead author of the report along with Rishabh Kumar Dhir, Marianne Furrer, Nóra Gőbel and Angeliki Moraiti of the ILO, Sean Cooney (The University of Melbourne) and Alberto Coddou Mc Manus (Universidad Austral de Chile).