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Couriers and activists demand reforms in Indonesia’s gig economy

Written by Khamila Mulia Published on     7 mins read

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Nonprofit organizations and online communities have voiced their support for couriers’ demands for better treatment.

With the pandemic leading to an increase of almost 50% in e-commerce transactions this year compared to 2020, e-commerce and logistics firms are experiencing steady growth. However, rising revenues for companies have not been translated into better conditions for delivery couriers, who are the backbone of e-commerce operations.

In 2016, Ade Putra began working as a motorcycle taxi driver for multiple platforms like Uber, Gojek, and Grab. Last year, however, as ride-hailing firms saw a drastic decline in passenger orders due to city lockdowns that affected large parts of Indonesia, Putra decided to change gigs and become a courier. He joined two logistics firms—Gojek’s GoKilat and Lalamove.

Putra thought that the two gig jobs would give him a decent income, and that was the case until June when both companies adjusted their incentive schemes, which reduced delivery riders’ per-km commission for each order.

“Previously, Lalamove’s tariff rate was IDR 4,000 [USD 0.28], but it was cut in half in January 2021. GoKilat also changed the incentive schemes recently, so we filed a complaint,” Putra told KrASIA. Putra is also a spokesperson for a Lalamove partners group that went on strike in June, collectively deactivating their accounts for three days.

Putra and other couriers working for Hong Kong-based Lalamove have also complained about the platform’s suspension policies. “Sometimes, things happen that are out of our control, such as a wrong delivery address, or our motorbikes unexpectedly break down. However, platforms don’t care about these reasons, and we can get suspended if we cancel an order or if a customer gives a low rating,” Putra explained.

In early June, Gojek’s GoKilat couriers refused to take orders in protest of the new compensation package. Photo by Shutterstock.

Inequality in the “partnership model” between platforms and couriers

The gig economy is a relatively new concept in Indonesia, popularized by ride-hailing companies like Uber, Grab, and Gojek, which revolutionized informal motorbike taxis, known as ojek, since 2014. Grab—which acquired Uber Southeast Asia’s operations in 2018—and Gojek have expanded their services beyond ride-hailing to offer other offerings, including last-mile delivery and food delivery.

Following the success of ride-hailing firms, an array of logistics companies such as Lalamove, Lazada Logistics, J&T Express, and SiCepat have also started operations in Indonesia to provide quick logistics solutions and deliveries, supporting the growth of e-commerce in the country. Some of these companies have adopted a “partnership model” with their couriers, claiming to offer greater freedom and flexibility in terms of hours and work arrangements. However, these companies don’t classify couriers as formal employees. Instead, they are defined as temporary contractors. By not establishing a formal labor relationship, companies can deny benefits that couriers would otherwise be granted under Indonesia’s law.

“The current sharing economy platforms offer a pseudo-partnership system that leads to exploitation of workers,” Bhima Yudhistira Adhinegara, director at think-tank institution Center of Economic and Law Studies (Celios), told KrASIA. “In an ideal partnership, both parties must agree on every policy, so companies would not be allowed to make unilateral decisions, especially when it comes to wages and workloads.”

“Companies offer an ‘illusion of choice,’ as if couriers have the choice to work anytime. But with a low incentive system, they need to work anytime if they want to bring decent money home,” said Margianta Surahman, executive director of Emancipate Indonesia, a youth organization focusing on labor issues.

What’s more, under the current manpower law, gig workers are not allowed to create a formal labor union, and their organizations are only seen as informal communities, making it difficult to voice their demands.

Lazada Logistics’ operations in Indonesia are supported by more than 15,000 employees and courier partners. Photo courtesy of Lazada Indonesia.

Call for reforms

The average net income of GoKilat couriers in May 2021 was about IDR 1.6 million (USD 112), which is less than half the minimum wage in Jakarta of IDR 4.4 million (USD 309), according to a report by the University of Gajah Mada. The report also highlights that the average working hours of GoKilat couriers are 11.2 hours per day, 25.2 days per month. Moreover, 60% of couriers don’t have health insurance, and 97% don’t have vehicle insurance. KrASIA was unable to locate any recent public data or reports from other companies.

In the first half of 2021, there were at least four no-work strikes carried out by couriers to express their dissatisfaction with the low incentive schemes. Gig workers protested against Shopee Express in April, followed by a protest against Gojek’s GoKilat, also known as GoSend Same Day, in June. The wave of organized actions for better remuneration and benefits continued with other protests against GrabExpress and Lalamove that same month.

The intensifying dissatisfaction expressed by delivery workers has encouraged a number of independent researchers, nonprofit organizations, and online communities to team up to shape a formal petition that will be delivered to Indonesia’s minister of manpower, Ida Fauziah. The petition, which has a title that can be translated as “Please protect e-commerce couriers, as they are not safe and prosperous,” has collected over 8,549 signatures since September 2. The organizers expect to collect 10,000 signatures.

The writers of the petition hope the ministry can set new regulations to ensure decent income schemes, humane workloads, labor rights, and legal assistance when needed for couriers. They also urge e-commerce platforms to provide better public education about the cash-on-delivery system due to a series of abuses against couriers by unsatisfied customers.

Read more: As courier abuses go viral in Indonesia, should e-commerce platforms eliminate cash on delivery?

Complaints about gig workers’ mistreatment is a global phenomenon. In late July, China issued new policies to protect food delivery riders and ordered online platforms to guarantee a base income and social welfare for their riders. In Singapore, Prime Minister Lee Hsien Loong expressed concerns for delivery workers and said that his government would address the struggles of low-wage earners in general.

With over 33 million gig workers in Indonesia, critics say the government should take similar actions soon. Celios’ Adhinegara drew a comparison with the UK, where Uber’s drivers are classified as workers instead of self-employed independent contractors. Analysts believe that Indonesia’s tech sector, whose valuation continues to grow, has a responsibility to improve the welfare of its driver and courier partners.

“All the requirements to formalize an employment relationship between tech platforms and driver-partners have been met. There is an employer, an employee, a clear job description, and work targets. If we continue to encourage the gig system for blue-collar workers, we’ll enlarge an informal sector where workers do not have job protection and security,” said Adhinegara.

When reached by KrASIA, Gojek’s head of logistics, Steven Halim, said that GoKilat driver-partners are a key part of the company’s business. Drivers have the freedom to determine their own working hours and the flexibility to decide how many packages they wish to deliver within the day, he highlighted. “At the same time, we recognize the importance of ensuring they have sustainable earnings,” said Halim.

“We have a competitive base income scheme for GoKilat drivers, and an incentive scheme that provides greater opportunities for them to earn additional income.”

Halim didn’t provide details about the mentioned base income and incentive schemes, but he told local media in June that courier partners get a bonus of IDR 1,000 (USD 0.07) per package for one to nine deliveries, going up to a maximum of IDR 2,500 (USD 0.18) per package for the delivery of 15 packages and above.

Lazada also shared a similar response. “The safety, health, and welfare of every Lazada Logistics’ partner, including our couriers, have always been and will always be our top priority. Every Lazada courier partner in Indonesia is entitled to life insurance and accident insurance,” said Philippe Auberger, chief logistics officer at Lazada Indonesia.

Meanwhile, the current average incentive rate for Shopee Express delivery partners in Greater Jakarta is IDR 2,213 [USD 0.16] per package based on 80 packages per day. “Our incentive programs are always compliant with local regulations, and highly competitive within the logistics services industry. We support our courier partners through a range of other initiatives including offering training and insurance coverage to ensure a safer work environment,” Shopee’s spokesperson told KrASIA.

Promoters of the reforms, however, remarked that the partnership model between online couriers and tech platforms is not even recognized by Indonesia’s framework. “The Indonesian labor law does not recognize this kind of partnership, so regulators must immediately review [the law for this system],” Adhinegara said. While law no 20 of 2008 concerning micro, small, and medium businesses (MSMEs) regulates a partnership system involving MSMEs, gig workers should be regulated under the labor law, he added.

Meanwhile, Emancipate’s Surahman said that if changing the status of couriers from “partners” to employees is “too difficult at the moment,” tech companies should update the current model to at least provide a guaranteed minimum income and insurance.

Surahman, along with other activists and representatives of online courier communities, had an online meeting with staff from the Ministry of Manpower in August. Following the meeting, manpower minister Ida Fauziah said she would evaluate the partnership system to eventually make changes to favor an equal bargaining position between couriers and tech companies.

“After the petition reaches 10,000 signatures, we’ll follow up with the ministry to give more public pressure. Hopefully, the government will provide a win-win solution immediately,” Surahman said.

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