The perks of “gig work” in the online food delivery sector are clear – pick up work whenever suits you, go at your own pace and never lack opportunities. Yet there is a darker side to online catering platforms, which stand accused of exploiting workers – a charge that has been amplified since the COVID-19 pandemic. As argued by Dr Pearl Lin and Mr Wilson Au of the School of Hotel and Tourism Management (SHTM) at The Hong Kong Polytechnic University and co-authors, simply raising a red flag is not enough. Hence, China’s government resolved in 2021 to protect workers through regulating the marketplace and ensuring labour welfare. Their study investigated the impacts of this all-too-recent system, and their rich insights will help online catering platforms strike a balance between cost-effectiveness and respect for gig workers and human rights in the post-pandemic era.
The pandemic dealt a devastating blow to the hospitality and tourism industry, with hotel rooms vacant and restaurants deserted. Of course, those would-be guests were instead hunkering down at home, replacing the dining experience with a take-away meal delivered direct to their door. “Deliveroo, an online catering platform in Hong Kong, reported that the company’s sales and orders doubled in the first quarter of 2020”, report the authors. Where other services in the industry fell by the wayside, online catering platforms thrived.
As one of the rare “winners” during the COVID-19 pandemic, the online catering platform sector has since experienced a steady boom in restaurant partners and demand. In 2020, the Chinese food delivery sector contributed to more than one third of global revenue. Accordingly, the number of individuals employed by online catering platforms – gig workers – has also increased exponentially. In 2020, it was reported that there was a 150% rise in gig workers in the USA, and the story is similar in China. “Myriad workers in China are engaged in on-demand work, and this proportion is rising”, say the researchers.
Hiring on-demand gig workers, such as food delivery drivers, is cheap and convenient for online catering platforms. By capitalising on work flexibility, human resource allocation can be optimised and more money made. The pandemic acted as a catalyst for this labour structure shift, with more gig workers than ever in hospitality. It is therefore no surprise that, as the authors write, “more than 32% of organisations plan to replace their full-time employees with contingent workers as a cost-saving measure”. However, cost-effectiveness should not take precedent when human resources and well-being are in the mix. Those gig workers also desperately need to be protected from exploitation.
From the employee perspective, getting a “gig” is easy in today’s world, where ordering meals online is a matter of habit. However, their working conditions are far from ideal. Gig workers have irregular schedules based on customer demand, often need to self-supply work materials such as vehicles and mobile phones, and receive salaries at a piece rate. “These workers find themselves in high-stress settings facing heavy workloads, long hours, low job security and limited socialisation”, state the researchers. Clearly, there has been a stark lack of attention to gig workers’ welfare.
Whilst online catering platforms have enjoyed a booming market share and revenue, no such advantages have been felt by the unsung gig workers themselves. To add insult to injury, unethical practices have become the norm, such as the collection of big data to calculate performance indices. This might indeed stimulate performance and increase efficiency in the short term, but it could also lead to immense feelings of powerlessness and pressure among gig workers. “These stringent standards violate the principles of humanity”, write the researchers. This is certainly not a good look for the brand value and social image of online catering platforms.
“Online catering platforms’ cost–profit nature leaves gig workers’ welfare concerns untouched until government interventions”, explain the researchers. Thus, in 2021, seven Chinese governmental departments issued a governance system named “Guides on Implementing the Responsibilities of Online Catering Platforms for Effectively Protecting the Rights and Interests of Food Delivery Personnel” (“the Guides”). The Guides’ institutional governance protects gig workers’ labour welfare and well-being in seven major areas: guaranteeing labour income, ensuring labour safety, maintaining food safety, improving social security, optimising the work environment, strengthening organisational construction and providing conflict resolution mechanisms. However, the real-life implications of the Guides have yet to be determined.
In an ambitious study, the researchers aimed to clarify how the Guides impact both online catering platforms and gig workers. To achieve truly in-depth insights, a mixed-methods qualitative design was employed. This involved two major steps: first, a series of focus groups, and second, the “Delphi technique” survey-based framework. The focus groups were crafted to foster dynamic discussions and hear various perspectives on the impact of the Guides. The participants comprised panels from five universities and five institutions related to China’s food delivery sector. All were familiar with the Guides. The Delphi technique involved three rounds of questionnaires with four scholars and four food delivery practitioners, which enabled the researchers to identify consensus on the items.
The scholars identified the direct, indirect and derived impacts of the Guides. Regarding direct effects, the Guides ensure that online catering platforms offer remuneration that meets the local minimum payment threshold. Furthermore, the Guides stipulate that the onus is on online catering platforms and third-party agents to cover gig workers’ social security insurance. “The Guides, which online catering platforms should implement, protect on-demand workers’ legal status and boost gig workers’ motivation to continue participating in the sharing economy”, say the authors.
The panellists also reached a consensus on the indirect impacts of the Guides. For instance, the Guides forbid the use of algorithmic rating indices that calculate “performance scores” based on delivery numbers, time limits, punctuality rate and 5-star reviews. Online catering platforms are also obligated to improve the order-scheduling mechanism, optimise delivery routes, and put reasonable limits on the amount of labour. “In other words”, say the researchers, “online catering platforms’ technological advantages have taken a backseat in favour of more humane labour”.
Finally, the main derived impacts of the Guides were determined. As a key point, the Guides promote online catering labour unions. Such unions seek to negotiate labour rights and interests and improve job security for gig workers, which could work to increase gig workers’ bargaining power. By cultivating more productive relationships with co-workers, supervisors and family, such labour unions are also likely to enhance gig workers’ well-being – something that has long been overlooked. Whilst this may compromise online catering platforms’ focus on profit and bring adverse short-term consequences, the “demand for food delivery remains high enough to support online catering platforms’ long-term survival”, the authors point out.
The researchers’ findings shed light on what institutional governance can offer gig workers and how online catering platforms can strike a healthy balance between cost-effectiveness and upholding workers’ rights and interests. “The future labour structure must attend to gig workers’ welfare and implement mutually beneficial measures in the sharing ecosystem”, conclude the authors. Undeniably, the Guides’ short-term impact on online catering platforms’ operating costs will probably affect the industry’s cost advantages, but long-term advantages can only be achieved by creating fair labour conditions for gig workers. In particular, it is vital to avoid turning gig workers into what the researchers describe as “extrinsically motivated machines”, lacking any inherent sense of purpose in their work.
With this in mind, there is a clear need for governance that can balance business competitiveness with gig workers’ welfare.
Lin, Pearl M.C., Peng, Kang-Lin, Au, Wai Ching Wilson, and Baum, Tom (2023). Labor Market Transformation in the Hospitality Gig Economy in a Post Pandemic Era: Impacts of Institutional Governance. International Journal of Contemporary Hospitality Management, Vol. 35, Issue 4, 1490-1510.
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