In March, ride-hailing driver Charles Mayati joined hundreds of other South African drivers in a three-day strike. In Durban and Johannesburg, drivers logged off the ride-hailing apps, blocked roads, and marched to government offices to demand an end to what they said amounted to “exploitation” by the tech companies. The price of fuel was rising at the same time as their living costs were increasing, but the platforms hadn’t adjusted their fares, leaving workers struggling to make ends meet.
The drivers won a small victory. Uber agreed to hike its prices by 10%, and Bolt increased its base fares by one South African rand ($0.065) per kilometer. But within weeks, the benefits were erased by a sharp rise in the cost of fuel, which now costs 40% more than it did a year ago. “It feels like a useless protest,” Mayati, who drives for Uber and its Chinese-owned competitor Didi, told Rest of World, sitting in his car outside a mall in East Rand, a sprawling industrial hub to the east of Johannesburg.
Mayati is just one of many ride-hailing workers in South Africa who have been experiencing difficulties recently. “I won’t rule out selling off my car,” Fikile Duma, a Bolt driver in Johannesburg, told Rest of World. Duma said his earnings had plummeted to 8,000 rand (around $500) a month, from 12,000 rand ($775) a month in 2020.
South Africa is not an outlier. Faced with growing inflation, exacerbated by Russia’s February invasion of Ukraine and the resulting disruption to oil and grain supplies, gig economy workers around the world are feeling the crunch.
The United Nations Food and Agriculture Organization reports that food prices are now 75% higher than they were in mid-2020, while crude oil leapt from around $80 a barrel in January 2022 to around $120 in June. That has translated into rising prices at the pump and higher household costs around the world. This has put huge pressure on many workers in the gig economy, who typically pay their own costs, and who are often already barely scraping by in insecure jobs.
Rest of World spoke to workers across the gig economy in South Africa, India, and Argentina to understand the challenges they face. Their experiences show that they, and the companies they work for, are in an increasingly precarious position.
“Universally, the self-employed, gig model is more vulnerable to price shocks, more vulnerable to inflation, because the costs are absorbed at the individual level, rather than at the firm level,” said Matthew Cole, a post-doctoral researcher at Fairwork, a labor research organization. “The platform model … is all about outsourcing the costs to workers, and the cost-of-living crisis will bring this into real, stark focus.”
Kalamjeet Gill is kept up at night by his fear that his 14-year-old son, who has asthma, might have a medical emergency. Gill, 48, has been driving for ride-hailing companies Uber and Ola in New Delhi for the past eight years. He works between 10 and 12 hours a day but is increasingly struggling to make ends meet as rising fuel prices eat into his profits, just as the cost of living increases.
Gill said he makes around 25,000 rupees ($322) a month, 10,000 rupees of which goes to paying back a loan he took out to buy his car. Petrol and diesel prices spiked in India earlier in the year, but have moderated slightly after the government cut duty on them. However, since March, the price of compressed natural gas (CNG), which is used by Gill and most ride-hailing taxis in Delhi, has gone up by more than 20% in the past few months, while the annual food price inflation rate has passed 8%. What’s left is barely enough to cover his costs.
“Petrol and CNG prices have gone through the roof in the last six months, but the companies have not increased our pay,” he told Rest of World. “I’m not exaggerating, there have been days this year when I told my wife to make just one meal for me in a day.” An out-of-pocket expense, like a health crisis, could stretch him to the limit.
Last year, before costs started to rise, research by Rest of World and the survey company Premise found that more than 40% of Indian platform workers struggled to earn enough to feed their families. Another 17% could only just afford food. With their take-home pay falling, many workers are finding themselves drawn into this category.
Mohiddin, 21, who asked to be referred to by his first name because he feared retribution from his employer, started working as a delivery driver for Zomato in the southern Indian city of Hyderabad two years ago, hoping to raise money for his tuition fees and to provide financial support for his family. He works 10-12 hours a day while studying for an undergraduate degree in computing, making around 12,000 rupees ($154) a month, 4,000 of which goes to renting his bike.
The 8,000 rupees he has left barely covers his needs, he said, and things get more difficult in the summer: the heat means he makes fewer miles to the gallon and breaks down more often, “all of which we have to bear from our profit,” he said.
Mohiddin, who lives in a rented house with his parents, said that he felt gig economy companies lured people in with the promise of flexible hours and decent pay, but that the work was becoming unsustainable. “Prices of vegetables, cooking oil, and gas cylinders have all gone up in the last six months, and our income is falling,” he said.
Workers’ groups said they have petitioned the national and state governments to support struggling gig workers, but little has been done. “[The government] calls us for meetings, but at the end of the day, they side with these big companies. Even our basic demands — like increase in pay, when petrol and CNG prices have gone up — have been neglected,” Shaik Salauddin, general secretary of the Indian Federation of App-Based Transport Workers, told Rest of World. “Today, gig workers are a big part of everyone’s life. We deliver your groceries and your food. We drop you at your offices and pick you up. But no one cares about us.”
The impact of inflation could mean that “gig workers leave the economy altogether,” said Oliver Large, a senior policy analyst at the Tony Blair Institute for Global Change, who studies platform labor. Those that stay could refuse to offer less lucrative services, such as shorter journeys. Services that rely on shorter journeys, such as “quick commerce” platforms, which typically promise deliveries within 10 or 15 minutes, could become even more unattractive for gig workers. “And that will have a knock-on effect for the platforms, in terms of the availability of these particular services,” Large said.
It isn’t just delivery riders and taxi drivers who are struggling to make ends meet in the platform economy. Restaurants, which food delivery platforms rely on, are facing the dual challenge of rising prices and falling demand. Restaurants have often complained that high fees and the need to pay for promotions make it hard to turn a profit on delivery platforms such as UberEats, Rappi, or GrabFood. Inflation is making that even harder.
In Argentina, many restaurants went online during the pandemic via delivery apps, such as PedidosYa and Rappi. The online food delivery business grew 400% during the country’s lockdowns in 2020, according to the consultancy Focus Market.
Argentina has experienced high inflation for more than a decade, but the problem has worsened this year. With the annual rate of inflation now pushing past 70%, the industry is struggling to adapt. Flour, which cost 1,350 pesos ($11.14) for a 25-kilogram bag in 2019, now costs 2,000 pesos ($16.32).
Juan Navarro manages Churros El Topo, a churrería (churros shop) with five outlets across the Buenos Aires area, which sells around 35% of its orders through PedidosYa and Rappi. He said that, despite growing costs, his company has made the decision not to raise its prices. “If we transfer the rise in our costs directly to our [consumers], we’d be selling a luxury product,” he said. The company maintains the same prices for counter sales and sales through the apps, which means that the commission taken from the platforms eats into its margins.
Restaurant owners told Rest of World that platforms’ commissions during the pandemic were as high as 30% for some restaurants. Juan Manuel Ottaviano, a labor lawyer and researcher at the National University of General San Martín’s Center for Training and Studies on Work and Development, said that the companies change their rates to manage supply. For example, if the platforms feel they need more ice cream parlors in an area, they might offer a reduced rate to parlors to encourage more supply, or pressure them to change their pricing. “There is an asymmetry between the platform companies and the small outlets — which are the majority — when setting rates and determining prices,” Ottaviano told Rest of World.
This has meant that many smaller restaurants have simply had to “absorb part of raw-materials inflation,” Ottaviano said, because they need to meet the platforms’ expectations. If they don’t meet the platforms’ needs, they fear being delisted or excluded from promotions.
Some restaurants have had to push their rising costs onto the consumer in order to stay afloat. Juan Corbella, a manager at restaurant company Rato, which operates two outlets in the Argentinian city of Rosario, depends on PedidosYa and Rappi for 80% of his business. “Our cost obviously includes raw materials, and in Argentina there is no other option but to transfer costs to prices,” Corbella said.
The apps’ commission means that he has to increase prices even more. “We must add 10% to [the added costs from inflation], because the apps take 25% of each sale,” he said, referring to the rate his restaurant pays.
Rappi, PedidosYa, Uber, and Bolt did not respond to requests for comment.
Experts told Rest of World that, even as their workers and suppliers struggle, gig economy companies have few options. “I think [the problem] is very profound,” Howard Yu, the LEGO professor of management and innovation at the Institute for Management Development (IMD) business school in Switzerland, told Rest of World. “Unless their core product is actually very profitable, they are in a very, very precarious and vulnerable position.”
Few of the platform businesses make significant profits; most have funded their expansion by spending venture capital money, growing enormously but not solving the basic economics of their businesses. In the recent past, the companies might have dealt with waning demand and discontent in the workforce by burning cash on customer promotions and subsidies for drivers and riders. However, investors’ appetite for supporting unprofitable companies has waned — accelerated by a slump in tech stocks that has wiped billions of dollars off the value of major VCs’ portfolios. A rise in interest rates in the U.S. is also likely to lead to capital flowing out of emerging markets, further reducing the amount of money available to tech companies like PedidosYa or Rappi.
Yu, echoing other experts, said that the gig economy industry may be facing a moment of reckoning, where unprofitable companies and “unicorns that are one-trick ponies” without diversified businesses may end up having to merge with others or close. “Because underneath there is no viable economic model,” Yu said. “For the longest time, people kind of turned a blind eye to it. And it has never been a sustainable business model.”