The recent development of business models in the world has put forth the use of technology to create a direct link between supply and demand. The most surprising fact is that we are no longer required to have a large company to operate a lucrative business.
For example, Airbnb is the biggest accommodation provider in the world, but does not own any properties. Alibaba is the leader in goods marketplace in China, yet does not maintain an inventory. While Facebook, the world’s largest media company, has zero media content.
This is the new model in which the “broker” of services utilizes mobile apps for customers to meet the prospective service providers. This business model is massive these days in Indonesia, as you can see with Go-Jek, Grab and Uber as great examples. All of them own zero assets but are arguably giant companies.
The broker business model is commonly called a sharing economy and has been proven to boost economic growth. For example, data from the Central Statistics Agency (BPS) states the unemployment rate in August decreased to 5.61 percent. According to the BPS, 500,000 new jobs were created in the transportation sector, thanks to the new ride-sharing apps like Go-Jek, Grab, Uber, etc.
The basic recipe of success is maximizing the demand and supply side to make the transaction. Consequently, the software company as a broker creates job opportunities in a relatively short amount of time.
Despite this glamourous achievement, there are side effects that are often left behind in the discussion; regarding workers’ rights and what kind of economic benefit is gained for both service providers and consumers.
The term “partner” coined by the app company is not an equal position for the service provider. In business terms, partners have some shares in the company, therefore it grants the partner certain rights, for example they can decide the vision of the company or how the company works.
In contrast, the term “partner” in relation to Go-Jek, Uber and Grab have little correlation to the entitlements of the service provider. As a simple example, the motorcycle driver cannot negotiate pricing for the services. The ramifications are arguably huge coupled with market demand for low prices.
The app company as a broker must compete on fulfilling the services based on the demand from the market and this is when things get tricky. The market always wants the best services with “reasonable” prices. In this situation, the reasonable definition means as cheap as you can get the services. Consequently, drivers in the sharing-economy model must accept the fact that they need to follow the prices set by the companies.
This is exactly what happened with the case of the sharing economy in Jakarta. The demand from consumers manages to drive prices down, while the so-called “partners,” do not have any right to object to pricing.
The further ramifications include the inequality observed in Jakarta. The zero assets and partner term mandates the service provider, namely motorcycle driver or car driver, to be responsible for any risks involved in the workplace, and this includes their well-being.
The discussion of welfare and the rights of workers has been diminished under the term “partner,” simply because they are understood as a partner rather than a worker. This unrest can be observed in newspaper headlines.
In October 2016, Go-Jek revised an agreement between itself and its drivers without any negotiations, sparking a rally among the drivers.
Grab drivers did the same thing in January 2017, protesting the transparency of driver incomes and adjustment of new rates. This leads to weaker demand for tangible changes for their welfare. Therefore, the question remains: Who should be responsible for the welfare of the actors in the sharing economic model? Or furthermore, can their demand for welfare be achieved through this business model?
There are two main arguments for why the broker companies should take more responsibility for the welfare of their drivers or “partners.” First, the company can shape supply and demand, exemplified by their authority to set the price and other bonus programs without any further negotiations with the parties affected by their decision.
The outcomes of their policy will most likely be in line with their business interests.
Second, since their power is unlimited (arguably the limit of their power is constricted within the interests of investors), then the companies are truly a game changer in the model.
They can select the best system to serve their business, thus making the “partner” weaker in practice because there is no mechanism for defending the interests of “partners.”
In that sense, the companies are more than a “software provider” because to me, they seem like traditional companies that employ staff to serve their benefits. Consequently, the companies must bear the same responsibilities in regard to staff welfare. Unless, the company decides to utilize the real meaning of “partners” in their business model.
However, the sharing economy model is not entirely wrong, it’s just that we must tackle the argument over protection of workers/ partners in this sector. Thus, this article calls for discussion to refine the current business model.