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Anita Gurumurthy, IT for Change

Leveraging the Digital Transformation for Decent Work in the Global South

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Overview of presentation

The dynamics of digitalization in the Global South
Opportunities, risks and challenges for employment and decent work
Shaping inclusive and equitable digitalized marketplaces: outlining the role for policy

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The dynamics of digitalization in the Global South

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A phenomenon, not just a sector

Digital is not just a sector, but a phenomenon that has profoundly altered:

value addition and distribution across sectors
structures of choice in the economy

Global Internet traffic in 2022 will exceed all Internet traffic up to 2016
Biggest companies in the world today are tech corporations
Data-intensive businesses will account for 70 percent of the new value generated in the global economy over the next decade

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A skewed value chain

Big Tech disrupts market logic, corners disproportionate control over the digital economy
Smaller economic actors (including workers) in the ecosystem shortchanged
Data, the dominant factor of production, captured by corporations and their parent countries
A ‘data-divide’ persists between developed and developing countries resulting in inequitable development

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◦ Big Tech digital monopolies, exemplified through the likes of GAFAAM, situated mostly in the Global North have risen through a disruptive market logic and cornered disproportionate control over the gains of the digital economy, short-changing smaller economic actors in the ecosystem.

◦ A steady capture of data, the dominant factor of production in the global value chain today, has been facilitated to the advantage of these corporations and their parent countries, a trend that has brought about cascading questions for development justice and global equity.

◦ As the UNCTAD 2021 Digital Economy report notes, a ‘data-divide’ between countries of the Global South and Global North is visible in the ability to own, control and harness data resources into valuable intelligence, and translate the same into opportunities for development

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A skewed value chain

The US and China dominate the global AI economy, accounting for

94 percent of all funding of AI startups in the past five years
70 percent of the world’s top AI researchers
90 percent of market capitalization value of the world’s 70 largest digital platform companies

Digitalization a key factor in skewed global economic outlook and value distribution against labor
Profits of leading digital platforms rising since 2017. Net income of leading US digital platforms reached $192.4 billion in 2020.

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Nascent digitalization in sectors such as agriculture, financial services.
Infrastructure deficits, high costs of connectivity
Low levels of digital industrialization

Variant levels of digitalization in region
Declining formal employment in traditional jobs, platform based jobs see huge uptake
South Asia and Southeast Asia major hubs of online medium-to-high skill crowd work
Automation likely to affect critical manufacturing sectors

Stagnant growth in the economy
Variant levels of digitalization in region
Large BPO sector, platform based jobs small but growing segment

Africa

Asia-Pacific

Latin America

Digitalization of economy

Regional snapshots

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◦ Africa - The digital economy landscape in Africa is nascent, with many aspects of innovation, policy thinking, and market maturity still evolving. Key areas where emerging digital innovations are observed include financial services, small and medium scale enterprises (SMEs), and e-commerce

◦ High population growth and a large youth demographic in the region is not serviced through commensurate macro-level job growth.

◦ Decades of deindustrialization have led to national economies that largely depend on raw commodity exports.

◦ Infrastructure deficits are a major barrier in access to digital economy opportunities for African workers.

◦ Asia- . The digital economy in the Asia-Pacific outpaces Latin America and Africa by a wide margin. Several countries within the region have also seen the growth and development of domestic platform ecosystems including in Malaysia, Singapore, Indonesia, India

◦ Given extensive socio-economic differences within the expanse of the region, digitalization pathways and prospects show significant variations within and across countries in terms of rate of adoption of digital technologies, market maturity, as well as citizens’ access to opportunities

◦ Platformization is a dominant economic phenomenon in the region and is poised to add close to 327 million jobs over the next five years (2020-2025). Countries in South Asia such as India, Bangladesh, Pakistan, Sri Lanka, and in Southeast Asia such as Indonesia, Philippines and Vietnam are major hubs of online medium-to-high skill crowd work.

◦ Wide-spread automation, re-shoring and phasing out of traditional manufacturing process in the region is likely to precipitate into a regional employment crisis across key sectors such as textiles, which employ larger numbers of women workers. While routine jobs may not disappear immediately, the gradual shift in job opportunities attainable by workers with basic skills to roles that are being transformed by technology point to a growing skill deficit.

◦ LATAM- While platforms such as Mercado Libre, Ualá, dLocal and Nubank have been among the early platforms to attain regional presence, the fledgling digital economy in Latin America has struggled with low technical capacities, regulatory vacuum and significant connectivity gaps.

◦ The composition of the region’s demographics is poised to add to its economic difficulties. As a recent report points out - “an increasingly older population poses challenges to social security systems. Accordingly, the region’s old-age dependency ratio will more than double, from 15.4 to 37.7 percent by 2050. Moreover, the picture for pension savings in Latin America and the Caribbean is grim: less than half of the region’s population saves for retirement through a contributory pension system. Households do not compensate through non-pension saving instruments, either. For many countries, which also have high rates of informal employment, ensuring provision of social security and pensions is an urgent and complex issue.

◦ In a labor market characterized by informality and fragility, gig work has arisen as a small but steadily growing segment of work, operating out of key urban hubs such as Mexico City, Bogota, São Paulo and Buenos Aires. With the pandemic providing a big boost to the expansion of platform companies, platform based work is likely to become a significant source of employment in years to come, contributing to a growth in the informal sector and a further shrinking of formal sector jobs.

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Opportunities, risks and challenges for employment and decent work

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The opportunities

Digital literacy a ‘gate skill’ correlating with higher employability and mobility prospects

Women who perform (ICT)-related tasks receive higher pay — as much as 12% — than those without such skills.

Platform economy one of the biggest and fastest growing sectors of ‘jobs’ in a landscape where traditional work is declining globally
Eg. India’s 3.3 million platform workers workforce higher than the 1.254 million employees engaged by the Indian Railways, India’s largest and the world’s eighth-largest employer
Potential for e-commerce to enhance value proposition of MSMEs and improve linkages with global economy high if harnessed properly

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◦ As early as 2011, the UNESCO had recognized digital literacy as a ‘gate skill’ which improves employability prospects of workers. It also works as a catalyst because it enables the acquisition of other important life skills.

◦ The 2018 OECD report on Bridging the Digital Gender Divide shows that women who perform more information and communications technologies (ICT)-related tasks in their jobs receive higher pay — as much as 12% — than those without such skills.

◦ From From the NITI Ayog Report on Platform and Gig Economy: https://www.niti.gov.in/sites/default/files/2022-06/25th_June_Final_Report_27062022.pdf Platform economy is one of the biggest and fastest growing sectors of ‘jobs’ in a landscape where traditional work is declining globally. In 2019-20, India had around 68 lakh (6.8 million) gig workers – of whom platform workers are a subset – in 2019-20, forming 2.4% of the non- farm workforce or 1.3% of the total livelihood in the country. It is projected that in 2020-21, 77 lakh (7.7 million) workers were engaged in the gig economy. They constituted 2.6% of the non-agricultural workforce or 1.5% of the total workforce in India. Notably, this workforce of 3.3 million platform workers in the digitalised passenger mobility and hyperlocal delivery services, with the potential to grow in the years to come, is higher than the 1.254 million employees engaged by the Indian Railways, India’s largest and the world’s eighth-largest employer (Ministry of Railways, 2020), and the 500,000 headcount of the Tata Consultancy Services, India’s largest private-sector employer (ET Bureau, 2021).

◦ Potential for e-commerce to enhance value proposition of MSMEs and improve linkages with global economy high if harnessed properly. They are critical drivers of economic growth and development, especially in developing countries. Jointly, MSMEs comprise close to 90 percent of formal and informal firms globally, and on average, and contribute about 50 percent of global GDP. They are responsible for more than two thirds of all jobs worldwide and account for the majority of new job creation.Importantly, MSMEs generate critical economic value in the upstream and midstream segments of the value chain, servicing low and middle income populations and afford decent work opportunities to segments of the workforce that have lowered employment prospects such as younger and older workers, rural workers and low-skilled workers.

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The

risks

The age of the gig is the age of enhanced precarity

Platformization based restructuring has transformed work to be increasingly piece-meal, insecure and lacking in social protections.
Novel barriers-to-entry (mandatory documentation, smart-phone access and familiarity, integration into banking and financial services) to platformized work
Algorithmic regimes of monitoring, control and discipline, and performance evaluation reduce room for worker autonomy
Disruption of older informal networks of work and grey employment
Disproportionate burden of care work on women workers
Digital economy ‘jobs’ are not resulting in longer term worker well-being and economic security

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◦ Developments in AI and the rise of platformization have restructured value chains across sectors, transforming the very paradigm of work. A big push for non-standard forms of employment such as gig-work and servicification has further exacerbated labor informalization and precarity.

◦ A key characteristic of work within the digital economy is being subject to the authority of algorithms, as AI is increasingly used to manage, surveill and discipline large workforces on various platforms and within supply chains towards greater efficiency outcomes. The atomized and depersonalized nature of platform work is alienating to begin with. With algorithmic mediation the conditions of work also become increasingly extractive. The gamification of workers to work longer and harder happens through targeted incentives and punitive ratings systems. This is buttressed through constant surveillance of workers’ activities, monitoring of their output and movement, rest times and so on, creating a situation where the pressures to deliver and the expected rate of productivity are extremely high. Tweaks to the system are constantly made through this form of data surveillance.

◦ Further, the opacity of algorithms has the potential to mask deeply manipulative and unfair practices, as union representatives in particular pointed out. For instance, provisional attempts by trade unions to document how algorithms determined pay rates seem to point to clear cases of wage-theft, with a number of inconsistencies present in the way particular rules were being implemented.

◦ Low-skill, informal workers and workers from marginalized groups face new barriers to finding work opportunities that once were organized off-line and now are increasingly mediated through digital interfaces. Lack of access, literacies and/or the added burdens of investments in technology and digital literacy have even pushed many out of work.

◦ The intersections between the care and digital economy have become very clear during the pandemic as more and more women workers have been disproportionately affected by additional care work burdens that invariably fall upon them. Precarization as well has pronounced gendered patterns that need to be paid attention to, with women workers facing higher degrees of job insecurity or worse, being forced to exit the workforce. For instance, middle class women workers in Latin America have been seeing a gradual erosion in job security and heightened precarity over the years, an impact, as one informant pointed out, is not only economic in nature but has deep psychosocial ripple effects.

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The

challenges

Infrastructure deficits a major barrier in access

African region has the lowest internet penetration rate at less than 30 percent across most countries
Affordability of the cheapest Internet-enabled feature phone/smartphone among different regions is anywhere from 9 percent (LATAM) to 30 percent (Sub-Saharan Africa) of monthly GDP per capita in low income countries
Smartphone adoption rates, rose in all regions between 2016–2019. But many users in developing world unable to transcend social uses of technology (passive content consumption or communication) to utilize economic opportunities
Starker divides in digital literacy/ access to digital technologies and resources for marginalized groups for workers

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◦ Infrastructure deficits a major barrier in access

◦ Smartphones are a key tool for accessing the Internet and for transferring data. This is especially the case in most developing countries, where fixed broadband connection and computer use are less widespread. Smartphone adoption rates, as measured by the proportion of smartphones in all mobile connections, rose in all regions in 2016–2019 (figure I.4). However, gaps between regions remained in 2019. North America and Europe led in the smartphone adoption rate, followed by China. The smartphone adoption rate was lowest in sub-Saharan Africa, which, however, is forecast to experience the greatest growth in smartphone adoption by 2025. The growing trend in smartphone adoption is parallel to improvements in affordability of smartphones and data plan subscriptions.

◦ The cost of owning a smartphone is a barrier to connectivity and to fully benefitting from the data-driven digital economy in developing countries. GSMA (2020b) measured the affordability of the cheapest Internet-enabled feature phone or smartphone among different regions. In 2019, the cost of such a device represented on average 4 per cent of monthly gross domestic product (GDP) per capita in high-income countries. In countries with lower income per capita, this proportion was more than double in Latin America and the Caribbean (9 per cent), and as high as 30 per cent in sub-Saharan Africa. Purchasing an Internet-enabled phone or a smartphone does not, however, automatically lead to Internet access, which also requires a mobile data plan subscription.

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The

challenges

A persisting gender digital divide

Gender gap in the traditional labor market extends to the rest of the economy and to the digital
ITU (2020) estimated that, globally, the level of the male and female population using the Internet in 2019 was 55 and 48 per cent
Lower levels of digital literacy levels and STEM among women
Prevalence of gender stereotyping in labor work allocation

Had the gender gap in labor force participation been narrowed over the past decade, the GDP growth rate in MENA could have doubled or increased by about US$1 trillion in cumulative output.

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◦ ITU (2020) estimated that, globally, the level of the male and female population using the Internet in 2019 was 55 and 48 per cent, respectively. This translates into a gender parity score of 0.87 (figure I.8), where total parity at a level of 1 is the target. The gender parity score is calculated as the proportion of women who use the Internet divided by the proportion of men.11 At the global level, the score decreased slightly between 2013 and 2019. It increased in Asia and the Pacific, CIS, Europe and the Americas. However, it decreased in the Arab States, and especially in Africa (from 0.79 to 0.54). Similarly, while it increased in developed countries, it decreased marginally in developing countries, and significantly in LDCs (from 0.70 to 0.53).

◦ There is a persisting gender divide when it comes to digital technologies, with women workers possessing lower levels of digital literacy levels and STEM (science, technology, engineering and mathematics) education, as well as a prevalence of gender stereotyping in labor work allocation (WEF, 2020

◦ From ILO report – Digital Platforms and Future of Work 2021- Gender differences in the propensity to do crowdwork, with women representing only one out of every three workers. In developing countries, the gender balance was particularly skewed, with only one out of five workers being a woman.

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The

challenges

Governments struggling to address the issues of large scale employment generation
Pandemic measures, down-scaling of economic activities, has left informal workers worse off

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Shaping inclusive and equitable digitalized marketplaces: outlining the role for policy

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National level policies towards meaningful work futures
Upskilling and workforce preparedness
Solidarity economy models and sustainable local economies

Comprehensive economic regulation and curbing big tech excess
Innovation towards public interest and equity
National and international data and AI governance frameworks

New work futures

Equitable platformization

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◦ To leverage the digital moment for worker well-being and mobility A local-to-global agenda for short and long term actions, spanning a mosaic of spaces and spheres, encompassing approaches that not only target the digitalization of work arrangements, but also address larger economic, social and political antecedents is necessary.

◦ Course correcting for extractive platform structures requires concerted efforts on many fronts. These include comprehensive economic regulation that is aimed at curbing big tech excess, innovation towards public interest and equity, and developing national and international data and AI governance frameworks

◦ Charting enabling pathways to alternative economic futures that put worker rights at the centre, giving them control and agency over digital resources in sustainable, locally responsive ways is an important priority. Areas which become important to target as part of this include, national level policies towards meaningful work future, upskilling and workforce preparedness, solidarity economy models and sustainable local economies

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Equitable platformization

Capacity-building to participate in decision-making spaces and influence norm development on digitalization and the platform economy

Policy frameworks to rgeulate

- activities of Big Tech companies

- corporate compliance with labor regulations

- linked investors/investments and capital flows

Economic regulation and curbing big tech excess

National & international data and AI governance frameworks

Innovation for public interest and equity

Sustained policy engagement in global debates on frontier technologies, 4IR, access to knowledge

Global civil society networking to influence international rule of law on the data and AI economy

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Sustained action to promote rights-based policy frameworks on social security adequate to platformized work, including through mandatory employer obligations and portable benefit mechanisms

New work futures

National level policies towards meaningful work futures

Solidarity economy models & sustainable local economies

Upskilling and workforce preparedness

Access to broadband/data connectivity, smart devices, etc., especially for women workers

Cooperative models of care services through mutual aid societies, women’s self-help groups

Policy, research and program initiatives in a feminist vision of the platform economy, with an emphasis on care infrastructure, and community-based services and support

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Examples of policy in action

EU Directive on improving working conditions in platform work, includes measures to determine employment status of gig workers, and have accountable algorithmic management systems
India’s Labour Code on Social Security 2020 recognizes gig workers and platform workers as separate categories of workers and outlines social security provisions

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◦ EU Directive on improving working conditions in platform work, includes measures to determine employment status of gig workers, and have accountable algorithmic management systems

◦ India’s Labour Code on Social Security 2020 recognizes gig workers and platform workers as separate categories of workers and outlines social security provisions. Another important development has been the creation and populating of the e-shram database, an ambition exercise by the government to register all informal workers (including gig and platform workers), with a somewhat vague promise of provision of social security.

◦ In Brazil, Act No. 13467/2017 introduced a new form of work, the “intermittent [employment] contract”. This type of contract allows employers to engage workers to provide their services on a non-continuous basis, as an employee. The reform would help employers retain a flexible workforce ready to perform services when necessary. Workers’ salary cannot be lower than the minimum hourly wage of other company employees who work in the same position under an intermittent or regular employment contract. They are also entitled to a full range of benefits, such as severance payments, social security payments and bonuses.

◦ India’s Motor Vehicle Aggregator Guidelines 2020 are also being seen as a progressive document for regulation of the app-based transport services sector. It has several provisions to place accountability on the platform companies – the implementation is slow, with state-wise rules being formed in a few states such as West bengal, and high court orders expediting the process in states such as Maharashtra.

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Examples of policy in action

Open Network for Digital Commerce (ONDC)
Aims to democratize digital commerce in India.
Uses open-source protocols to establish a decentralized, interoperable network for digital commerce.
Positioned as a public good alternative to monolithic platform models

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◦ The Open Network for Digital Commerce (ONDC) is being launched with the promise of democratizing digital commerce in India. A joint initiative of the Indian Commerce Ministry’s Department for Promotion of Industry and Internal Trade (DPIIT), a handful of state corporations, and private commercial banks like Axis and Kotak Mahindra, ONDC is imagined as a network of platforms or marketplaces comprising consumer-end apps, business user-end apps, and gateways at its core. It will also provide horizontal network services like registries, network policies, data policies, reputation ledgers, and payment services.

◦ ONDC comes in the wake of a rising political consciousness – in India and abroad – about the highly centralized and consolidated shape of the internet today. DPGs like ONDC are an attempt to counter such monopolistic forces by employing techno-legal solutions where the law alone fails to play catch-up with technological advancements. ONDC, with its decentralized network of interconnected ecosystem participants, positions itself as an alternative to the intermediary-driven, monolithic platform-centric model. While it does not still address many of the issues that affect workers, such a model may go some way towards dismantling the mainstream platform model.

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Question for group work

Gender justice is an integral and inalienable part/goal of labor justice and development. What national policies should be adopted to close the gender digital divide and ensure that marginalized women can have access to the socio-economic gain of the information society?

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