The crime of the gig economy (Deeper #30)

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Startups are founded with the hopes of creating change in their environment. But let’s be real here: it takes a lot of privilege to be able to start an endeavour that may not completely cover living costs, at least in the beginning. When I hear startup founders say of prospective employees, “If they’re focused on the money, then it’s a sign they’re not a good fit,” this is my expression:

Few people can do their best work when they’re always thinking about the different bills and responsibilities that could quite literally destroy them if left unattended. We’re all adults here, and that means school fees, electricity costs, groceries, rent and mortgages, so on and so forth. Life is an onslaught—and not everyone has the kind of financial and emotional support that allows them to “challenge themselves” and “try new things” and “fail a hundred times, succeed once”.

Unfortunately, it seems some have bought into the idea that every member of the team needs to be just as invested in the startup as the core team is. As a result, they push their employees just as hard as they push themselves. To them, it seems natural. To outsiders, it looks like exploitation.

Today, we’ll be zooming into Indonesia, SEA’s most active and diverse startup ecosystem, to see what the future of startup business-building might look like—and highlight the shoddy HR practices that keeps many of these companies afloat.

TL;DR

• Establishing a toxic culture of deep devotion
• Wage controversies in Indonesia
• Ruangguru
• Shopee
• Profit and growth at all costs
• Face it: line employees rarely have the same passion as founders—and they shouldn’t be required to
• Rampant exploitation is made possible by a lack of labor laws
• Talents are turning elsewhere to voice their frustration

Establishing a toxic culture of deep devotion

Established multi-national companies (MNC) make startups look like messy, tangled balls of yarn in comparison. Here’s what a MNC structure might look like:

Source

These structures are developed over several years or even decades—time that many startups don’t have. Some startups may not even have clear, up-to-date internal structure diagrams like the ones above. Aental image for you to describe the phenomenon: a crew laying down tracks as the train is running, trying desperately not to run aground.

A colleague of mine working in Gojek, who we’ll call L, shared that the company has gone through multiple internal restructures over the past two years—leading to instability from sudden hiring and firing periods. “It’s a Jumanji jungle out here,” she sighs. “I don’t even know what my role is anymore, because everything is done adhoc.”

We hear it all the time in startup-focused seminars and panels: most people in a startup are juggling multiple roles. This is considered impressive. For some businesses, the ability to multitask and “wear multiple hats” has even become an unspoken requirement.

Source

Wage controversies in Indonesia

To highlight the chaos of modern startup business practices, I’m highlighting two recent cases which have received coverage in Indonesian media: Ruangguru and Shopee.

Ruangguru: “no clarity into role and salary”

Ruangguru received coverage in Tech in Asia for their alleged exploitation of outsourced workers. The outsourced workers served as salespeople, responsible for marketing the company’s products to potential customers.

A former Ruangguru employee shared to Tech in Asia that she didn’t receive incentives or compensation for transportation and phone calls to potential customers. Because it cost so much out-of-pocket to try and hit the targets, she eventually gave up on reaching them entirely.

By the end of the month, she only received US$24, including monthly and lunch allowances—a far cry from the US$51 she’d been promised. PT DIKA, the outsourcing agency involved with Ruangguru, said the compensation decrease might’ve been due to absence or poor performance.

Another employee contacted by Tech in Asia claimed that his employment contract had been unilaterally terminated without prior notice.

Ruangguru has spent millions of rupiah on marketing costs and partnerships, as have fellow startups Tokopedia and Shopee. Young and dashing Thai star Bright Vachirawit is currently a brand ambassador for Ruangguru; we’ve also seen Shopee x BlackPink and Tokopedia x BTS.

Source

This has increased the fury of a growing body of startup critics, who ask, “Why are we reading articles about underpaid employees when the startup clearly has enough money to pay world-famous stars?”

Shopee: “constantly changing fees”

Shopee experienced a meteoric rise in popularity in Indonesia throughout 2019 and 2020 thanks to its constant free shipping promotions, and it has invested heavily into its own delivery fleet. But In April 2021, a number of Shopee Express couriers from the Bandung Raya Driver’s Collective hosted a strike in response to changes in Shopee’s compensation scheme:

Rian, a driver interviewed by Kompas, said that it takes about 10 minutes to deliver a packet. That means about 48 packages would get delivered in a given working day. But Tech in Asia reports that Handhika Jahja, Shopee Indonesia’s executive director, claimed that an average Shopee Express courier in Jakarta could deliver 80 parcels a day.

From these calculations, we can guess that Shopee drivers are likely working serious overtime. This is backed by Kompas, which reports that some couriers have to deliver 125 packages a day during promotional periods, working up to 14 hours a day.

In his interview, Rian also stated that he now earns Rp100.000 to Rp130.000 per day —a 30% decrease from last year, when he once earned Rp150.000 to Rp180.000 per day. Shopee also doesn’t cover expenses related to gas, mobile credits, and parking fees, which means that couriers are suffering from reduced income, yet a higher workload.

Profit and growth at all costs

From the two cases I shared above, we can extrapolate one main challenge that’s wreaking havoc: instability caused by the burn-cash-for-market-share approach to business-building.

Startups are shoving wads of cash to consumers and brand ambassadors, but behind the scenes, they’re also wringing out every last drop they can get out of their employees. “They do pay us very well,” L says ruefully. “You know why? So we can afford to get therapy.”

In a statement to kompas, Executive Director Shopee Indonesia Handhika Jahja used corporate-speak to imply only full-time employees can host a strike, and that because couriers are just gig workers, no strike is going on at Shopee. He also argued that Shopee couriers aren’t paid as poorly as those at other companies.

Source

This kind of approach shrugs off responsibility and, once again, rewards the most hungry and desperate. Ideally, companies that are aware of how “affordable” labor is in Southeast Asia should promote fairer compensation, not use the status quo to justify their own exploitation.

The question that’s on most founders’ minds’ seems to be, “How can I reach profitability as soon as possible?” rather than, “How can I build a business that’s sustainable and strong into the long-term?”

Like many have already said, this is a race to the bottom—and it needs to be much more regulated.

Rampant exploitation is made possible by a lack of labor laws

I’ve heard it said that employees should 1) put up with anything and everything and 2) work themselves to the bone for the startup that employs them, because “that’s what it takes” to build a company. But aside from the founder and core team, should we really be demanding that employees give their life and limb for the startup? (especially when they aren’t doing the same in return).

Startups like Ruangguru, Shopee, and even Gojek are skirting around labor laws by engaging with workers as gig, freelance, and contract employees. There are little protections in place for these types of workers in Indonesia. Even Singapore, considered a leading example of a country with strong employee and labor laws, struggles to determine how gig workers can best be protected.

As evidenced from the Ruangguru case, businesses employing gig workers could unilaterally decide not to pay them even after work is already done. This is possible because there are no fines or sanctions for sudden terminations, unfair policies, and unsafe work practices—and becau. This system allows entire nations and cities to be exploited in the name of growth.

Sorry We Missed You: Dokumenter ttg ‘gig economy’ (seperti ojol) dgn ciri fleksibilitas jam kerja & kontrak kerja.

“They have to exploit themselves because they are trapped in this idea they are self-employed…I think it is simply extreme exploitation.”https://t.co/CErxvaoJxO

— Margianta S. J. D. (@margianta) October 22, 2019

We’ve spoken about the gig economy before for Deeper, pointing out how many workers in Southeast Asia have little to no protections in place to ensure they earn a living wage. In Deeper #2, we also wrote, “There’s the question of whether tech companies are really helping the underserved or whether they’re the oil tycoons and plantation lords of our century—taking advantage of cheap human labor and swapping them out whenever they’re broken (due to injury or exhaustion).”

Talents are turning elsewhere to voice their frustration

Over the past few years, talents in Indonesia have come to see these startups as the ideal place to work—competition is intense, and tens to hundreds of employees might compete to fill a single open position. But the lid is being lifted to reveal what’s really going on behind the scenes. As a consumer, I’m grateful for these accounts. Without them, we wouldn’t know about these serious issues.

We hear all the time from founders and managers that concerns can be raised in front of everyone in town halls and surveys, because they “deeply value open communication”. But as a result of company cultures that punish, rather than thank, employees for criticism, The Ken reports that many have turned to online meme accounts to voice their anger and concerns.

“Spill accounts”—dedicated solely to sharing the latest gossip and “spilling” the tea—have become popular over the past years in Indonesia, and nowadays, there are spill pages just for startups.

The quick growth of these accounts shows that much of the honesty and fairness that startups claim to provide may not exist in practice. Ideally, employees wouldn’t have to share their grievances to an anonymous, public social media account—because they’d be able to quickly communicate their thoughts to internal management.

Perhaps there are no formal structures in place that provide definitive help and support for employees, much less allow them to be honest about their opinions. Or perhaps the ones that currently exist simply aren’t effective.

No startup is immune to social media spillage, and we consider this a positive trend. Social media is offering employees the transparency and space that they aren’t finding within the company—both Ruangguru and Shopee’s exploitative practices were first raised and amplified through social media. Gojek was also highlighted:

Caption: @Ridehaluing created a series of stories with different reactions to Gojek’s town hall incident (Source)

The stronger employees’ voices become, the more likely startups will take notice—if only to prevent further reputational damage—and change their workplace practices. The increased attention from the public also puts pressure on governments to quickly develop regulations that prevent startups from going out of control.

Face it: line employees rarely have the same passion as founders—and they shouldn’t be required to

In a lot of ways, modern working relationships between startups and their employees are toxic. Employees are rarely allowed to have serious disagreements or concerns about the way the company is run. If they express feelings of exhaustion, sadness, or disappointment, they’re considered disloyal and ungrateful for the opportunity they’ve been given.

Not everyone can accept low compensation in return for great experience: an otherwise-qualified candidate may not have a strong support system, or they may have financial dependents (parents, family members, siblings, children) to consider. Other barriers to entry include high living costs, poor health, and lengthy commutes.

It’s unreasonable to expect line employees to pour in the same blood, sweat, and tears as the founders or core team. Line employees don’t go to work every day thinking, “I’m going to make a difference by spreading access to education across the archipelago,” or, “I’m going to transform logistics for SEA.”

They wake up hoping that the money they earn can be used to support their parents and siblings, pay for nice food once in a while, and reduce their burden on their family. For many, it’s simply a job that pays the bills—especially when they get such a limited voice at their company and don’t feel that they have a stake in the business.

If a job comes along that helps them pay the bills more effectively, then many will be tempted to move—because they don’t have the luxury to prioritize anything other than cash. That doesn’t make them unfaithful or fickle—it makes them human. Why prioritize a business that doesn’t prioritize them?

Though we’re not in the business of consulting on business practices, as employees ourselves, we urge you to consider the value in giving talents a living wage that empowers them to focus on their career.

What’s next for startups?

The spill accounts are an integral new class of players in startup ecosystems in Indonesia. If startups don’t want to listen to their employees, then they’ll certainly listen to the mainstream news outlets and outraged customers who’ve picked up on the “tea” from these social media accounts.

Consumers and talents are being more outspoken in Indonesia, and it’s a good lesson that could be applied to the rest of Southeast Asia one day. It’s better for a startup to change these business practices now rather than risk permanent damage to the brand and reputation they’ve worked so hard to build.

At With Content, we’ve done a lot of writing for startups and businesses active in Southeast Asia We’ve read reports, analyzed data, and conducted interviews with some really great business leaders. We’re not going to pretend to be great business builders, but we’d like to think we have some familiarity with this sensitive topic.

Perhaps this year, we can take a longer look at the businesses we’re building and reject the idea that we have to work harder to survive. Maybe this time, we can choose kindness and sustainability in our work practices instead.

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