Regulatory Developments in the Gig Economy: a Literature Review
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The Winners, 21(2), September 2020, 141-153 P-ISSN: 1412-1212 DOI: 10.21512/tw.v21i2.6758 E-ISSN: 2541-2388 Regulatory Developments in the Gig Economy: A Literature Review Victory Haris Kusuma Wardhana1*; Maria Grace Herlina2, Sugiharto Bangsawan3; Michael Aaron Tuori4 1,2,3,4Management Department, BINUS Business School Undergraduate Program, Bina Nusantara University Jl. Kebon Jeruk Raya No. 27, Kebon Jeruk, Jakarta 11530, Indonesia [email protected]; [email protected]; [email protected]; [email protected] Received: 13th November 2020/ Revised: 25th January 2021/ Accepted: 25th January 2021 How to Cite: Wardhana, V. H. K., Herlina, M. G., Bangsawan, S., & Tuori, M. A. (2020). Regulatory developments in the gig economy: A literature review. The Winners, 21(2), 141-153. https://doi.org/10.21512/tw.v21i2.6758 Abstract - The emergence of the gig economy online platforms that enable paid tasks or rented goods and its rapid growth was anticipated to play a big part to be carried out by independent contractors and are in its economy. Despite the enormous benefits, the gig called the “gig economy” (Koutsimpogiorgos et al., economy business model had also attracted numerous 2019). The gig economy also overlaps considerably issues in many countries and regions. The research with other concepts, such as the sharing economy, utilized a Systematic Literature Review (SLR) collaborative economy, and platform economy (Belk, methodology by Snyder for analyzing regulation 2014; Chalmers & Matthews, 2019; Hyman, 2018). issues in the gig economy, which was divided into The digital platform era is a catalyst for six steps, those were defining the central question, globalization that transcends national boundaries and determining databases, using search string to find fosters better cross-country flows (Lund & Tyson, relevant keywords, extracting data, filtering data, and 2018). The expanse of digital technologies is changing analyzing the findings to answer to the main question. all types of global flow, such as goods, services, money, The SLR results show licensing and misclassifications and people. More corporations have turned into global are the most dominant factors in gig economy, while supply chains in the last few years to survive cross- regulatory issues such as safety, tax, externalities, country competition (Childerhouse & Towill, 2003; wage, benefit, privacy, and discrimination area are Gereffi, 2011). Systemic and strategic coordination of other factors in it. The most popular platform types global supply chains is crucial to increase competitive that attract regulators are work on demand, asset advantage (Council of Logistic Management, 2006; rental, and crowd-work. Mentzer, 2004). As gig economies have become increasingly powerful, every company operating in Keywords: regulatory development, gig economy, a global supply chain will need to align their supply Snyder literature review chain strategy with the platform economy to help lower cost and differentiate service to its customers. While businesses in the digital era are famous I. INTRODUCTION for demand spikes and crashes, gig workers' flexibility characteristic can overcome this inherent problem Rapid technology development in the 20th with current business management. Many companies Century has been causing massive disruptions to have leveraged the gig economy as a solution for multiple industries and services, especially with temporary hiring in their supply chain. Limiting new digital platforms (Zutshi & Grilo, 2019). The hires and utilizing freelance workers will create a more emergence of digital media creates a new field in adaptive and flexible workforce in the supply chain innovative companies to develop a new market without changing the business (Foote & Folta, 2002; model. Transactions between supply and demand Tan et al., 2013). In this way, companies can maintain are mediated by peer-to-peer digital platforms their competitive advantage by lowering costs and (Koutsimpogiorgos et al., 2019) This new business focusing on core business processes. Therefore, the model consists of a two-sided market mediated by gig economy has become more relevant and crucial, *Corresponding Author 141 especially in managing global supply chains (Shukla, the word gig outside the music industry, to describe Garg, & Agarwal, 2011). a temporary job (Parigi & Ma, 2016). Jones (2011) In the upcoming years, the gig economy is generally define that a gig is a single performance by anticipated to comprise a substantial portion of the a musician or a short-term job. A more “gig economy” economy with severe economic implications. The relevant definition is stated by Bernhardt (2014) saying emergence of digital platforms mediating flexible that gig is a unique subset of contingent work, which labor fits in a long-term trend towards labor market has grown since the most recent recession. However, flexibility and contingent work (Estlund, 2018; absolute numbers are still small and difficult to track. Hyman, 2018; Stanford, 2017). A report by The Referring gig to contingent work was first used by PricewaterhouseCoopers (PwC) emphasizes the journalist Tina Brown (McKinsey & Company, 2016). potential of five key gig economy sectors (automotive, Characteristics of contingent work reflect gig workers hospitality, finance, staffing, and media streaming) nowadays, such as temporary, contract based, and by forecasting earned sales revenue of US$335 providing little or no benefits. billion in 2025 compared with only US$15 billion in After reviewing characteristics from the word 2015 (PwC, 2015). Of one the leading examples of “gig”, people can understand more about the gig a company in the gig economy are Uber, that offers economy's dynamics from the word “economy”. ride-sharing services with over 3 million active drivers Samuelson (1997) defines economy (originally from worldwide, completing more than 15 million trips each Greek ‘oikonomos’ – ‘household management’) as a day (Bhuiyan, 2018). Another example is Airbnb that study of how societies use scarce resources to produce disrupted the hospitality industry by lowering prices commodities and distribute them among people per night by US$100 compared to its traditional hotel (Samuelson, 1997). More straightforwardly, Marshall competitors in major cities such as London, Paris, and (2013) defines economy as a study of humankind New York City (Yaraghi & Ravi, 2017). in the ordinary business of life. It examines the part In contrast to the enormous growth potential of of individual and social action that is closely linked the gig economy, the current regulation is considered with the use of the material requisites of well-being. to be unsuitable for the gig economy and its workers James (2014) adds a more general term of economy (Kennedy, 2016; Nurvala, 2015; Ljungholm, 2018). as a scope of production, distribution, and trade and The crucial regulation issue is whether gig workers the consumption of goods and services by different are more appropriately classified as independent agents. In broader sense, economy is defined as a social contractors or as employees (Cunningham-Parmeter, domain that emphasizes the practices, discourses, and 2016; Munkøe, 2017). Various lawsuits have alleged material expression associated with the production, that gig economy platforms have misclassified use, and management of resources. their workers into independent contractors to evade However, all these definitions do not cope well employment laws (Cherry, 2016; Oei & Ring, 2019; with the advancement of technology that develops new Schor, 2018). It is considered one of the main issues in market models that establish entirely new concepts. the gig economy since worker classification eventually Especially since the world is entering the Industry 4.0 will affect many factors such as worker benefits, worker era with the emergence of digital platforms (Zutshi taxation, firm profitability, and other legal aspects as & Grilo, 2019), the power of knowledge and its well (Munkøe, 2017; Oei & Ring, 2019; Snider, 2018). influence in the economy become more apparent than Rogers (2015) states that in reality, while gig workers ever, mainly in the case of the gig economy. A more do not fit into either the employee or independent relevant definition of the economy for the 21st Century contractor categories, they should be treated as is the study of how humans use knowledge to identify employees to counter the ‘unequal bargaining power’ resources and use these scarce resources to create, between them and the platform company. Litigations using expertise and commodities, and distribute them and widespread confusion of how gig workers should among people (Khumalo, 2012). In the case of the gig be classified has also created new points of view on economy, implementation of this definition is how how a new hybrid category should be created, situated platform companies use information through their between the categories of employee and independent apps to bridge demand and supply between individuals contractor (Cherry & Aloisi, 2016; Kennedy, 2016). to create new platform-based business models. These issues about employment relationship are also Given the novelty of the gig economy, there is closely linked with the well-being of gig workers, as no specific and shared definition of the gig economy research has shown that the average Uber driver only for now (Schor, 2014). However in recent years, earns approximately minimum wage, and potentially many scholars have created