Shane Heywood

Musings on market-oriented approaches to International Development

The “1099” / “Sharing” economy and Social Impact: When ‘good’ jobs go ‘bad’?

“For many people in emerging markets, a reliable job is the most effective means of escaping poverty.  Steady jobs change lives” [EY Growth Services]

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Sharing is not always caring

Deliveroo, Handy and Uber have a problem. The Independent Contractors (not Employees) hired by these firms are unhappy. In a string of protests, complaints run the gamut of unfair terms, low pay and a draconian enforcement of key performance indicators.

On the other hand, these firms – which represent the “1099” or “sharing” economy –  are seen as part of a vanguard of innovation, with investors expressing robust content. For example, in August 2016, Deliveroo raised £212m to fund expansion.

The tension that remains difficult to solve is how can innovation and a company’s growth be fostered, while balancing the rights and conditions of workers – a tension present in developed and developing markets.

In fact, in developing markets, there is an additional factor that makes achieving a balance between growth, job creation and worker’s rights even more challenging.

130506072010-01-bangladesh-building-collapse-0506-horizontal-large-galleryGrowth, Rights and Social Impact

In 2013, 1,021 bodies were recovered from the Rana Plaza Factory in Bangladesh. This tragedy brought to life the dynamics around responsibility toward contractors vs. employees, in addition to the existence and enforcement of work and safety rules – which can tend to be sub-par and weakly enforced in developing markets.

Herein lies the additional challenge for driving social impact in developing markets: on top of balancing growth and the rights and workers, there is a need to be particularly disciplined in ensuring the enforcement of workers’ rights along the entire value chain, in markets where rules and regulations may not be particularly robust.

Given the importance placed on job creation as a key tool for improving livelihoods, this tension between creating fair employment opportunities while driving innovation / growth matters hold particular resonance for any seeking to drive Social Impact.

 

Good, Better, Best – never let it rest?

At the Acumen Debates at EY in 2016, Geetha Tharmaratnam of the Abraaj Group mentioned an investment made by the firm that led to change in conditions not only for the investee, but along the firm’s entire value chain.

For firms looking to drive Social Impact, then, the challenges facing Deliveroo and also present in the Raza Plaza tagedy suggests an onus to implement mechanisms to implement and enforce robust working conditions broadly, while fostering corporate growth and innovation.

A challenge, to be sure, but a most worthy outcome deserving of employees  / contractors seeking to improve their lives, one job at a time.

 

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