Social Protection for Indonesia’s Gig Economy Workers

The modernization and development of information technology have given rise to the gig economy. Many workers now rely on the gig economy as their primary source of livelihood. However, gig economy workers are a vulnerable group who often do not receive their rights as workers. Therefore, regulations related to social protection for gig workers are needed to ensure their rights and protect them from exploitative practices.

Understanding the Gig Economy

The gig economy is a labor market that heavily relies on temporary and part-time positions. It is filled with independent and freelance workers. The gig economy is also known by several other terms such as sharing economy, collaborative economy, crowdworking, access economy, on-demand economy, freelance economy, and platform economy. 

The term “gig economy” originates from the music world, where performers engage in single or short-term gigs (shows) at various venues. Some examples of gig economy workers include digital platform partners (such as delivery couriers and ride-hailing drivers), freelancers, contract workers, pieceworkers, subcontractors, freelancers, and outsourced workers.

The gig economy is becoming increasingly popular, and the number of workers is expected to grow continuously. In 2019, there were approximately 2.2 million workers in Indonesia who could be categorized as gig economy workers. They are part of the informal labor force, which constitutes the majority of workers in Indonesia.

Challenges of the Gig Economy 

The emergence of gig economy workers can indeed have positive impacts on the national economy. However, the relationship between workers and employers is often heavily skewed to favor one party, the employers.

According to research conducted by the SMERU Institute, several impacts of the gig economy’s presence need collective attention, particularly concerning the workers’ side. Some of these include:

• Weak in social protection and welfare. Among the obstacles in providing protection for gig economy workers is the ambiguity surrounding their characteristics, making it difficult to include them in government-provided social assistance programs. Clarifying the definition of the relationship between workers and their employers, which currently falls outside the category of employment relationships according to regulations, is crucial in efforts to provide protection for them.

• Vulnerable towards uncertainty and economic shock. The absence of employment contracts and evaluations based on skills and company needs makes gig workers vulnerable to unilateral termination of employment. They are also susceptible to unstable economic conditions such as during crises and periods of high inflation.

• • Vulnerable to stress and excessively long working hours. For some workers, the flexibility of gig work can actually disrupt work-life balance, sleep patterns, and daily activities. Flexibility in the gig economy often means that workers must be available at all times, regardless of any circumstances, including health barriers and others.
• Vulnerable to skill traps. The gig economy trend can complicate the career development of gig workers. For instance, there are concerns that young drivers in the online transportation sector may experience deskilling. Deskilling can lead to job degradation and wage reduction for employees within the capitalist production relations in the digital era.

“All types of workers need to consistently enhance their skills to remain relevant in the job market. However, skill improvement requires both cost and time. Besides serving as a safety net during crises, social protection programs can also support the enhancement of workers’ skills by providing alternative sources of income when they allocate time for training or education,” said World Bank researcher Putu Sanjiwacika Wibisana.

The Importance of Social Protection

Based on SMERU’s rapid research, two principles can serve as references in providing protection for gig economy workers: streamlining and collective action.

Streamlining refers to efforts to ensure that social protection schemes, including available social security, are well-publicized and easily accessible. Technological innovations, especially digital ones, play a significant role in supporting streamlining. Some potential roles of technology in streamlining include:

• Daily Billing, such as daily payment of BPJS (Social Security Administration Agency) for health insurance contributions.
• One for All, such as depositing BPJS for health and BPJS for employment contributions into one account.
• Crowdfunding, such as how in the ride-hailing service sector, passengers contribute to BPJS for health and BPJS for employment contributions.
• Matching Grant, such as how the government/local government matches the paid BPJS for health and BPJS for Employment contributions.
• In-App Integration, such as having the JKN (National Health Insurance) and JMO (Employment Social Security) mobile applications integrated into the Gojek application.
• Multiple Employers, such as the payment of BPJS for health and BPJS for employment contributions from multiple accounts across multiple employers.

Collective action refers to ensuring that stakeholders provide protection schemes and assistance to help alleviate the vulnerabilities faced by gig economy workers. An example of collective action is the Gojek Swadaya Program initiated by Gojek Indonesia. This program facilitates its ride-hailer drivers to pay daily premiums for personal health insurance and register to BPJS for employment.

Furthermore, in achieving social protection for gig economy workers, the government, companies, and labor organizations must collaborate to develop a framework that takes into account their needs. This is crucial in realizing decent work for all to support sustainable development goals. Gig economy workers are entitled to their basic rights related to working conditions and wages, and employers must respect the physical and mental integrity of workers in performing their duties.

Translator: Dinda Rahmania

The original version of this article is published in Indonesian at Green Network Asia – Indonesia.

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