Trending Gig Economy in Indonesia, Brings Blessing or Calamity?

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Ilustration by safety Health Magazine
Ilustration by safety Health Magazine

Have we ever calculated how many times we use service provider apps such as online transportation service or online shopping? The frequency may exceed our total fingers. The platforms do not only help us as consumers but also help freelancers who become partners of the service providers. This economic cycle is often referred to as gig economy.

A Brinkley study related to the gig economy defines gig economy as an economic sector consisting of professional workers who work independently (freelancers/gig employment), where they receive jobs from single short-term projects, from institutions and individuals.

In Indonesia, the economy has grown rapidly in recent years. According to Bloomberg data, one-third of Indonesia’s 127 million people work in the freelance category with working hours under 35 hours per week. This fantastic number is inseparable from digitalization and automation in the industrial era 4.0, where work can be done anywhere and anytime.

Furthermore, workers have the power over their time and place of work so they can be more flexible. The income they will earn is directly proportional to how much work they can accomplish in the same duration as other workers. On the other hand, companies can choose how many workers they need to work on a particular project. Companies can also select which skills are required more and able to provide benefits for the projects they run. With the right placement of workers, the company’s target will be achieved in a precise manner, in terms of time and purpose. Gig economy implementation will reduce the costs incurred by the company for recruitment or from the benefits given workers such as bonuses, end-of-year allowances, as well as a pension.

However, like a coin with two sides, the gig economy does not only offer benefits. There are several risks in its implementation, especially felt by gig employment. Before becoming part of gig employment, prospective workers must go through a rigorous selection process competing against thousands of other applicants. The selection often found not transparent. Work is not always available or in line with the competition held by prospective workers.

Legally, these freelancers still do not have a regulatory umbrella that protects them. They cannot be classified as ‘small’ employees or entrepreneurs. Therefore, gig companies tend to be one-sided in making policy decisions. Some of their policies often bring an adverse effect to the gig employment.

For example, research by Research Institute of Social Economic Development (RISED) showed an increase in tariffs for one of the online transportation platforms that reached 20%. This increase, according to RISED, does not guarantee the welfare of the partners – in this case, the drivers. A higher rate is inversely proportional to consumer interest in using the services, and it certainly gives a negative impact on drivers who face the consumers. Consumers say it is better to use private vehicles than having to spend more to use online transportation services.

With a great concern to the prospect of a future economy in Indonesia, the government must immediately make a policy that mediates between the two parties. Some recommendations on the level of urgency are clear legislation in protecting gig employment from workplace safety issues, regulations regarding dismissal, suspension, and policy decision making, rules for the protection of wage rights to be received by prospective workers from each project taken and the last, adequate training for workers, regarding the employment contract he will make with the company.

Only improvements and solutions to the problems from government policies can determine whether the gig economy brings blessings to Indonesian society, or brings calamity?

This post is also available in: Indonesian

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Tsania Ysnaini Mawardi

Tsania Ysnaini Mawardi

Kepala Departemen Ekonomi Kreativ KM PSDKU UNAIR Banyuwangi 2019 Mahasiswa Akuntansi PSDKU Universitas Airlangga Banyuwangi

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