Economy Kushay's Matter Bank

[AK] Criticisms Against Sharing Economy – Exploitation of Their Workers

This note will discuss how sharing economy, if left unregulated, is horrible in ensuring its worker’s rights. Source:

This note will use Thailand as a case study.

Platform economies, or more commonly known as sharing economies, are characterized by a lack of regulations that defines the relationship between an employee and employers (ex: health benefits, place of employment, etc.). Instead, platform economy companies such as Uber or Airbnb treats labors as “freelancers” or “contractors” instead.

One thing to note is that the income platform economies worker gets is pretty little. Only 17% of Airbnb hosts uses it as their main source of income, and most of this 17% are already established in real estate, they have a lot of properties that are close in tourist sites. But the growing trend is that a lot of people are quitting their previous jobs in the traditional sector in favor of working full-time in this platform economies. Why are some confident in moving?

It’s because informational asymmetry. Operations of platform companies are initially heavily subsidized by the companies themselves in order to attract consumers. The problem with this is that obviously, subsidies can’t last forever. By the time the subsidies are cut, and the workers have are burdened with the operating costs (ex: fuels for Uber, electricity and water for Airbnb) themselves, that’s when the workers are going to live in an extremely low wage.

This information asymmetry is almost inherent because the people who look for jobs in platform economies mostly have no high formal work qualifications. They are people such as migrant labors, uneducated people, and seniors.

The harm also goes to traditional platforms. A lot of hotels in Thailand that are negatively affected by Airbnb sacks many permanent employees and hire freelancers (who are not subject to labor protection laws) to reduce operating cost.
The point from all this is that platform economies promote a heavily under-regulated, and possibly exploitative methods of employing people. If a government wants to use platform economies as their main driving force (ex: Thailand 4.0 envisions government sponsoring platform economies) they must be fully aware of the possible negative consequences.

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