“If until 2020 labor troubles in Kazakhstan were in the mining sector, then in 2021 about 1/3 are already registered in service companies, including in the platform employment sector. Platform economy workers who do not have the social status of an employee have no other way to express their claims, except for protests and strikes” – experts Aiman Zhusupova and Aigerim Yerken write about the need to prevent labor troubles in the platform economy, specifically for CABAR.asia
Wolt couriers organized a strike in 2021, which became one of the largest non-union actions of non-resource-based sector workers in Kazakhstan over the past 10 years. Courier strikes took place in Almaty in 2021 – on May 12 (50 people), July 7 (80 people), October 21 (12 people appealed to the authorities). Drivers of the “Yandex Go” service went to protest actions – on December 6 (400 people) in Shymkent, on March 31 in Almaty (video message).
The main demands of the strikers are – review of salaries, improvement in the ordering system, solving the problem with geo-maps, legal protection, and compensation in case of various incidents, social protection, insurance, payment of medical expenses by the company and a number of other requirements. Employers blocked or suspended the most active protesters. Due to the risk of reputational losses, under pressure from the authorities, the companies were forced to make partial concessions.
This situation indicates the presence of a huge layer of problems, where the social and labor conflict is only the tip of the iceberg. In this vein, it is important to identify the main causes of social and labor conflicts among workers in the platform economy.
The dominant sources of platform employment in Kazakhstan are taxi and courier delivery aggregators. The country’s courier delivery market is divided between 4 participants, where 3 companies are from international investment projects. These are the Finnish startup Wolt (according to various estimates, 40-50% of the market), the Spanish company Glovo, the Kazakh Chocofood, the Russian Yandex.Food service. The market for aggregators of transportation services is provided by the Yandex Go group and Uber, and a small part of the market is occupied by InDriver, which is mainly focused on transportation between cities.
The pandemic has affected the rapid growth of the platform economy both around the world and in Kazakhstan. Firstly, due to restrictions on movement, many were forced to turn to courier services, and secondly, laid-off workers from different sectors of the economy came to the gig economy, since there were no other ways to earn money. Today, with restrictions lifted, society cannot imagine its daily life without couriers, taxi drivers and other workers in the platform economy. Thus, a recent failure in the system, caused by a downpour in Almaty, when Yandex Taxi was unable to temporarily accept requests, caused a collapse in the city, as many news resources wrote about.
Digital labor platforms are becoming an independent type of labor activity in Kazakhstan. According to the data of the Ministry of Labor and Social Protection of the Republic of Kazakhstan, at least 500 thousand people work in the area of employment. So, for comparison, about the same number of personnel are working in the processing companies, in the public service, in the healthcare sector. According to a survey of workers in the platform economy, one in three employed in the digital labor platform works there due to the inability to find another job.
“Platform work is non-standard work facilitated by online platforms which use digital technologies to ’intermediate’ between individual suppliers (platform workers) and buyers of labour” (Hauben et al. 2020)
However, platform employment is not formalized and is not included in the economics of labor relations.
Those employed in the gig economy are not considered workers in the traditional sense of the word. According to the Labor Code of the Republic of Kazakhstan, an employee is an individual who has an employment relationship with an employer and directly performs work under an employment contract. Aggregator companies acting as an employer avoid concluding labor contracts with employees.
Employment in the digital labor platform forms segments of “fake self-employment”, when an agreement is concluded with an individual entrepreneur or a civil legal nature agreement and “shadow employment”, when a public offer is in effect and the relationship is not legally formalized.
The lack of worker status among those employed in the platform economy has negative consequences for them. Thus, those employed in the gig economy cannot count on minimum social standards in the world of work, they do not have the right to form trade unions and there are no mechanisms for protecting collective labor rights, they also do not have the right to apply to the authorized bodies for the protection of labor rights. On the other hand, such relations relieve companies from the obligations of the employer and the payment of taxes and social contributions.
This article presents data from interviews with experts in the platform economy, a survey of digital platform workers conducted on the basis of the Eurasian Center for People Management (ECPM) as part of the Oxus Society training program on the project “Promoting knowledge-based solutions by strengthening partnerships between scientists and activists in Central Asia”. 6 interviews were conducted with representatives of workers, employers, the Association of taxi companies, the chairman of the unregistered trade union of taxi drivers. The sample of the survey was 110 people in the cities of Nur-Sultan and Almaty. Of these, 50 are drivers of aggregator companies, 53 are couriers and 7 are employees who use other online platforms to earn money. We assume that this sample cannot be extrapolated with a high degree of probability, however, the results of the survey give an understanding of the trends that are indicated in the environment under consideration. The small coverage of the respondents was due to the unwillingness or fear of employees to publicly highlight the problems of the sphere, in connection with the policy of platform economy companies.
89% of survey participants are men, the remaining 11% are women. Most of the representatives of the platform economy have secondary vocational education (42%). Almost every third representative has higher education. About 30% have secondary or incomplete secondary education. 1% mentioned that they had completed a master’s degree. The average age of a courier is 27 and the average age of a driver is 35. According to the survey, it cannot be said that young people who are employed in the platform economy are just doing side work. 40% of couriers and 28% of drivers accumulate more than 50% of their income from employment in digital labor platforms.
Registration of legal status: the root of all evils
Couriers carry out labor duties under an agreement: of a civil legal nature (hereinafter referred to as CLN) for the provision of services and / or on the basis of a cooperation agreement as an individual entrepreneur (hereinafter referred to as IE). Moreover, the latter option is the most popular since it does not require the payment of taxes and other mandatory contributions from the employer. A person is considered self-employed and independently makes social payments in the amount of the minimum wage. In this case, individual income tax is not charged since an individual entrepreneur often works on a simplified declaration / patent. However, acting as an IE has its own peculiarities and difficulties that many couriers may not be aware of. In the event of a CLN agreement, taxes and social contributions are paid by the company at the expense of employees[2]. This significantly reduces the final income, that is why employees resort to the first option of cooperation. According to a representative of Glovo, about 60% of couriers work as individual entrepreneurs, the remaining 40% on the basis of a CLN agreement. Now, when accepting as a courier, a prerequisite is the presence of an IE or a willingness to open an IE. Moreover, companies are ready to assist with registration as an individual entrepreneur.
The situation of registration of labor relations with taxi drivers is even more difficult. In the Yandex Go and Uber systems, work as a driver is possible by attaching aggregators (taxi pool) to partners or if you have the status of an individual entrepreneur. By downloading the service app for drivers, the employee agrees to the public offer. There are no other legally formalized relations of the driver with both the aggregator and the taxi pool. Accordingly, drivers do not have any social guarantees when working in the Yandex Go and Uber systems.
What risk does the current "partnership" format pose for workers in the field of platform employment? Firstly, the employer can remove the employee from the activity by simply blocking the account without any explanation or on spurious grounds. In the West, this process is even called the special term "mobile despotism". This practice was used in Kazakhstan when employees announced their claims in a public field.
Secondly, workers are not provided with minimum social standards in the world of work[3]. We are talking about the lack of guarantees of earnings in the amount of the minimum wage, compliance with the regime of work and rest, a day off, the availability of paid leave, sick leave, social contributions to the State Social Insurance Fund, social health insurance, as well as working conditions. At the same time, the existing life and health insurance of an employee is rather formal in nature and is implemented in rare cases. During the interview, the couriers and drivers stated that “in fact, there are no guarantees and insurance, all this is written only on paper.” According to the results of the survey, only 23% of the platform economy workers surveyed mentioned that they feel completely socially protected, another 18% “rather agree” with this statement. While 40% found it difficult to answer, and 19% answered negatively to the question whether they feel socially protected.
Thirdly, the CLN agreement implies that the employer can unilaterally change the essential terms of the contract. For example, reduce pay or change the mode of operation. Whereas under an employment contract, an employee can apply to the Labor Dispute Commission, the trade union, the labor inspectorate in case of unilateral changes in the contract.
Fourth, according to the Association of Taxi Companies, the activities of Yandex Go and Uber employees can be considered as illegal transportation, since the rules for transporting passengers in accordance with the legislation of the Republic of Kazakhstan are not observed. In particular, we can single out the lack of a medical examination of the driver and a technical inspection of the car before the trip. Drivers and couriers do not require a certificate of clean criminal record or the absence of socially significant diseases.
Fifthly, the absence of official contractual relations between the driver and the service partner affects the risk of situations where unscrupulous partners may refuse to pay drivers for the work provided. According to the case in Russia, the aggregator company isolated itself from the situation in such a situation, indicating that the company has fulfilled its obligations and is not related to the interaction between the partner and the driver.
Sixth, it is worth highlighting separately the psychological factors associated with activities in the field, which in the future may affect the deterioration of the socio-psychological well-being of workers in the platform economy. The point is that employment in the gig economy, in the form in which it exists, has an impact on the growth of sentiments of isolation, alienation of workers from the employer, the state and society due to the fact that they cannot count on assistance or social guarantees.
Seventhly, these circumstances have deferred social problems, since most of the couriers and drivers do not have access to medical care, there are no savings in the pension fund accounts. In the future, this may create a social burden due to chronic diseases, a burden on the social security and health care budget. According to interviews, taxi drivers have a big claim to the issue of fair distribution of benefits, to the work of the state apparatus.
Labor conflicts in the platform economy in Kazakhstan
So, according to the survey, today every second employee of the digital labor platform admits the possibility of participating in protests to express their dissatisfaction.
Table 1. Would you participate in protest actions (strikes, rallies, etc.) to express dissatisfaction with working conditions?
In addition, 40% of platform economy workers support the view that working in their field involves the frequent occurrence of stressful situations.
At the same time, contrary to the widespread beliefs of employers that their employees are engaged in side work in addition to their main income, only 41% of respondents consider the digital platform as a temporary type of employment. 43% of respondents found it difficult to answer this question. One in six perceive their current job in the gig economy as permanent and essential.
In addition, as part of in-depth interviews that were conducted on an anonymous basis, employees also indicated that, in particular, the company's management implements a policy aimed at ensuring that taxi drivers do not interact with each other, do not unite, or create any kind of community. In a number of taxi companies, correspondence in the general chat of instant messengers is prohibited.
If we talk about the statistics of labor conflicts, then in 2021 the number of social and labor conflicts increased 10 times from 13 to 100[4]. If until 2020 labor conflicts were in the mining sector, then in 2021 the sectoral structure of conflicts has changed. 1/3 of labor conflicts are registered in service companies, including those in the platform employment sector. Despite the relatively short period of development of the platform economy in the country, today there have already been several significant social and labor conflicts in the sphere.
In fact, platform economy workers who do not have the social status of an employee, social protection, access to the employer, measures of collective protection of labor rights, access to the trade union, to labor inspections have no other way to express their claims other than protests and strikes.
Income of companies in the gig economy in Kazakhstan and their contribution to the country's economy
From the cost of one service, platform economy workers pay a commission to the aggregator company, the amount of which, according to various sources, ranges from 17 to 30%, including 4.5-10% charged by the service partner - the taxi pool.
Companies-partners of global aggregates in the field of transportation are not legally carriers and do not comply with the requirements of the law.
The work “Platform Economy of Kazakhstan”, implemented by the Kazakhstan International Bureau for Human Rights and Rule of Law (KIBHRRL)[5], indicates that today, due to the uncertainty of the status of the digital platforms themselves and their partner companies in Kazakhstan, huge financial flows that are inexplicably withdrawn, involved in the turnover remain unaccounted for. In fact, these are organizations that make profit, and they must pay the appropriate taxes to the country's budget. Nevertheless, as the director of the Karaganda branch of the KIBHRRL Yuri Gusakov emphasizes, this profit is also extracted somehow, without the due part of the contributions to the social sphere established by law for legal entities, to the budget in the form of taxes, goes either to offshore zones or into the pockets of those who are far beyond our borders.
Today, due to the uncertainty of the status, it is impossible to check the activities of these companies, so lawyers insist that the state should take a decisive role in this matter and put an end to the existing "incomprehensible chaotic process."
The validity of this statement is confirmed by the fact that today many countries on the issue of regulating the labor status of platform workers are inclined to believe that it must be treated in the same way as with the traditional economy in order to protect workers in the first place in a situation where companies in the gig economy, declaring , which are not an employer, but only a partner, do not assume any obligations towards their employees.
One example is illustrative in this regard. In 2021, the Supreme Court of England recognized that the cooperation of taxi drivers with the Uber aggregator platform is subject to UK labor law, and the nature of the relationship of the platform with taxi drivers in content corresponds to the interaction of workers and employers, which provides for the provision of a set of basic guarantees. As a result of the court decision, the company assumed the following obligations:
• Accident insurance and sick pay, if necessary;
• Paid holidays;
• Salary not lower than the minimum wage;
• Contributions to the pension fund.
At the same time, the lack of transparency in the sphere affects the fact that representatives of companies in the gig economy make various, in fact, contradictory statements, in particular, both about the absence of a profitable part, and about the fact that companies' incomes are very high in Kazakhstan .
What is the position of authorities?
Awareness of this problem exists in Kazakhstan as well. Thus, in 2021, Tokayev dwelled separately on the problem of protecting the rights of workers in the gig economy in his Message to the people of Kazakhstan pointing out that "this area needs the assistance of the state in terms of social and medical insurance, pensions, taxation."
In 2021, the Federation of Trade Unions of Kazakhstan and the ILO conducted a joint study on the topic: “Defining a strategy for the actions of trade unions in Kazakhstan in sectors dominated by non-standard labor relations, self-employment, platform and informal employment.” Platform employment was classified as non-standard forms of employment, the distinguishing feature of which is the low level of protection of labor rights of workers and the vulnerability of their social and economic situation. The study pointed out that in Kazakhstan, non-standard forms of employment are not singled out or prioritized. In particular, the Labor Code regulates only certain types of non-standard employment, despite the fact that many issues of labor relations are transferred to the sphere of collective agreement regulation. The study emphasized the importance of bringing national legislation in line with the needs of new forms of employment, adapting legislation to new aspects of labor relations.
In 2022, the Ministry of Labor and Social Protection of the Population announced the importance of recognizing and legalizing platform employment. From July 1, 2022, a pilot project of schemes for covering citizens with a social security system is being launched together with the main operators of online platforms. It is expected that the results of the pilot will be provided before the end of the year.
In our opinion, this solution is half-hearted and does not address other problems faced by workers in the field. First of all, it is necessary to start with the legal regulation of the labor status of platform economy workers, their recognition as workers in the traditional sense, and the signing of collective labor agreements.
Conclusion
Social and labor conflicts among platform economy workers are caused by a number of factors. The main reasons are the lack of conditions for the realization of labor rights, social guarantees for work, the possibility of expressing dissatisfaction in other ways, the ability to apply to the authorized bodies for the protection of labor rights, and others.
The world uses different approaches to resolving the situations of digital platform workers: from recognition of the status of employees (for example, in Denmark), and the introduction of the category of “dependent self-employed” (Germany and Spain). The challenge is to find an optimal compromise way to regulate the activities of platforms within the framework of traditional legislation, which is still adapted to the challenges of the gig economy. Court cases that arise as a result of contradictions between employees and companies in the gig economy are not uncommon in world practice. In most cases, decisions are made in favor of employees who are recognized as employees in order to ensure their basic rights.
Thus, taking into account the prevalence of platform employment in the country, it is necessary to expand the concept of an employee in the Labor Code and consider the possibility of recognizing those employed in the gig economy as employees.
The legal formalization of the labor status of platform workers as employees will not only affect the automatic distribution of basic social and labor guarantees to platform workers, but will also create a legal basis for the possibility of organizing workers into trade unions to represent and protect their rights in relations with employers. Moreover, it will provide an opportunity to apply to the authorized bodies of the country for the protection of labor rights. It is worth noting that the need to ensure platform workers have access to relevant labor rights and social protection rights through the correct determination of employment status is also emphasized in the reports of the European Commission. Other important recommendations include ensuring fairness, transparency and accountability in terms of algorithmic governance used on digital work platforms.
It is also important to ensure the transparency of the activities of digital economy companies in the country, to conduct audits of their activities, including from the point of view of ensuring the payment of all taxes laid down by the legislation of Kazakhstan and mandatory contributions to the country's budget. Currently, there are practically no effective legislative levers of influence on aggregator companies, which, in fact, have created an unregulated oligopoly in the country.
Authors: Scientific researchers at the Eurasian Center for People Management - Aiman Zhusupova and Aigerim Yerken
[1] Statistics on social and labor conflicts is maintained by the Eurasian Center for People Management
[2] In accordance with the legislation of the Republic of Kazakhstan, all due taxes, and deductions (PIT, MSHIC, MPC, etc.) are paid without fail, approximately 22% of wages
[3] Law of the Republic of Kazakhstan dated May 19, 2015, No. 314-V ZRK "On minimum social standards and their guarantees"
[4] Statistics on social and labor conflicts is maintained by the Eurasian Center for People Management