In Pakistan, the platform economy’s labour problem is as strong as ever M Haris

Do you remember waking up to your mother banging your door on a Sunday morning because she wanted you to run down to your neighbourhood store to buy eggs for breakfast? Or begging your brothers to drop you to a friend’s house because you can’t drive yet? 

Life of such dependency feels like a lifetime ago, now that you can Pandamart your groceries within an hour, book a safe ride through Careem and even have a waxing lady show up at your doorstep within minutes. 

As digital penetration continues to increase country-wide, Pakistanis, previously dependent on others, have started using online platforms and applications to perform daily tasks, such as travelling, grocery shopping, and even getting household work such as plumbing. The service industry of Pakistan has drastically changed since. 

However, despite how easy the platform service industry has made our lives, it is not that same for those who provide these services. The platform economy in Pakistan is not only a highly unregulated one, but also quite exploitative. 

Profit explores the many problems platform and gig workers in the country face. And potential lessons we can learn from other industries around the world, to make ours a more sustainable and humane one. 

The current state of Pakistan’s platform economy 

Pakistan ranks third globally in the online gig work industry, following India and Bangladesh, with about 12% of the market share according to Oxford University’s Online Labour Index. The Pakistan Freelancers Association estimates around one million IT-related freelancers in the country. Additionally, desk research suggests at least 700,000 individuals work in location-based platform services like ride-hailing, professional services, and delivery.

Despite a booming industry, the platform economy faces significant challenges. The number of digital labour platforms has decreased recently, leading to monopolistic conditions in sectors like food delivery and ride-hailing. Pakistan’s economy is under severe strain with high inflation (around 38%), a large informal economy (over 80%), and increasing youth unemployment (around 30%). This environment is pushing platform workers to either leave their jobs or accumulate debts due to negative incomes. 

An example of this is the four-day internet shutdown in May 2023, which affected over a million platform workers across the country. 

Research by the Centre for Labour Research, involving around 300 interviews with ride-hailing and delivery workers, highlights several issues that platform workers in Pakistan battle with daily. Workers are often unaware of their contractual terms, as many are registered by platform representatives without clear information. Many workers exceed legal working hours, with over 50% working more than 12 hours per day and 75 hours per week, far beyond the legal limits of eight hours per day and 48 hours per week. So, while platforms promise flexibility, the reality is often excessive working hours and a lack of traditional employment benefits leaving workers exploited in more ways than one.

The flexibility of platform work often leads to extended hours due to financial pressures. This results in significant physical and mental health issues, eroding work-life balance and leading to burnout. Despite working over 48 hours a week, many platform workers face financial hardships. Only 10% earn above the living wage, and only 20% earn more than the minimum wage. The phenomenon of negative income, where workers’ costs exceed their earnings, traps them in a cycle of debt, reflecting poorly on both the economy and worker rights, making the platform economy of Pakistan a toxic one for those who uphold it.

The most common feature of exploitation is lack of awareness. When workers are unaware of their own legal rights, it becomes much easier for them to fall prey to below minimum working standards and for platform companies to manipulate them. Although some platforms offer accidental insurance, most workers lack awareness and coverage, leaving them vulnerable. This gap in protection highlights the need for better transparency and proactive measures to ensure worker safety and rights. Platform workers appreciate the autonomy but desire access to basic workplace rights, such as regulated working hours, social protection, sick leave, and paid annual leave, however, they struggle to demand these rights. National employment legislation does not protect them, exacerbating their precarious position.

Research conducted by the Centre for Labour Research shows that Post-COVID-19, the ride-hailing sector was faced with supply-demand imbalances, reduced fare rates, and disappearing driver bonuses. The rise in fuel prices further continues to burden drivers, contributing to negative income situations and reflecting the disturbing interplay of market dynamics and worker livelihoods. Drivers report inaccurate maps causing delays and frustrations, impacting their ratings. Additionally, platforms’ automated disciplinary systems, which can block workers’ IDs based on ratings, are seen as unfair, when failing to factor in external conditions and reasons for poor ratings. While appeals processes exist, the reliance on algorithmic governance remains a widespread concern among these platform workers.

Gaps in Pakistan’s platform economy and related regulations

To date, platform economy workers in Pakistan have largely been overlooked by regulatory frameworks, despite significant growth in both traditional and digital platform-based work. 

The legal landscape has struggled to keep pace with this expansion. Although attempts by the governments of Punjab and Sindh in 2017 to restrict ride-hailing platforms focused primarily on competition and corporate law issues, these efforts did not address worker rights directly and were quickly resolved through private negotiations. 

It is important to involve those directly affected by the issues that plague this industry, in order to come up with solutions that will actually work. However, unfortunately most gig workers in Pakistan are deliberately or due to regulators’ oversight, are left out of these conversations. 

The Khyber Pakhtunkhwa Assembly’s introduction of the Khyber Pakhtunkhwa Transportation by Online Ride Hailing Company Bill, 2022 marked Pakistan’s initial legislative effort targeting platform work. This bill seeks to regulate online ride-hailing services, emphasising safety guidelines and general rights for drivers, albeit classifying them as service providers rather than employees.

Pakistan’s Constitution guarantees fundamental rights such as freedom from slavery and fair working conditions, though these provisions lean towards civil and political rights rather than socio-economic protections. As such, supplementary federal statutes cover employment contracts, termination procedures, working hours, paid leave, and wage payment, but are insufficiently applied to platform workers.

Most platform companies in Pakistan classify workers as independent contractors rather than employees, which restricts their access to essential benefits like minimum wage, decent working hours, social security, and collective bargaining rights. Despite legal battles elsewhere, companies like Uber continue to classify drivers similarly in Pakistan, exacerbating the vulnerability of workers in an increasingly dominant market position post-acquisition of Careem.

The concept of “decent work,” as endorsed by international bodies like the ILO and enshrined in the Sustainable Development Goals, applies universally but is unevenly implemented in Pakistan’s digital labour platforms. Existing labour laws, such as the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, and the Punjab Minimum Wages Act, 2019, theoretically encompass platform workers due to their broad definitions of workers and wage regulations.

Efforts to utilise consumer protection laws as a workaround to enforce worker rights have seen limited success, given the primary focus on consumer rights rather than labour protections. However, provincial consumer protection acts could potentially hold platforms accountable for fair wage practices and service disclosures affecting workers.

Legal ambiguity persists despite existing laws that could potentially safeguard platform workers, including Acts regulating minimum wages, occupational safety, and protection against harassment. The lack of specific judicial interpretations or cases involving platform workers further complicates the application of these laws.

Looking forward, the approval of the Islamabad Protection of Home-Based Workers Bill suggests a growing recognition of online platform workers and a willingness to extend social security benefits. However, clear and enforceable regulations tailored to the unique dynamics of platform work are urgently needed to protect the rights and welfare of Pakistan’s burgeoning digital workforce.

Examples from around the world: What are others doing to regulate platform work?

The regulation of platform economies is a complex, evolving challenge faced by national legislatures and courts worldwide. However, there are examples of some diverse policies and legal approaches that offer valuable insights when taken from a comparative perspective.

Even though these initiatives are not ideal, having several loopholes, they are a step towards achieving a better future for platform workers. 

In the UK, courts have played a crucial role in safeguarding platform workers’ employment rights. The judiciary has expanded the interpretation of existing employment laws to include many platform workers under social security protections. Notably, Section 230(3)(b) of the Employment Rights Act defines a ‘worker’ broadly, encompassing those under any work contract that isn’t explicitly an employment contract. Significant cases, like Pimlico Plumbers and the 2021 Supreme Court ruling on Uber, have underscored that the practical realities of the worker-platform relationship warrant protection under employment legislation. These legal decisions grant platform workers essential rights such as minimum wage, rest breaks, and protection against unlawful deductions.

However, litigation alone is insufficient for industry-wide reform. It often benefits individual litigants without compelling companies to alter contracts for all workers. Additionally, focusing on contractual documents can lead to legal loopholes, prompting calls for statutory presumptions of worker status to reduce the need for frequent litigation. Effective enforcement and proactive regulation are essential to extend protections broadly and address disparities for self-employed individuals not covered by current laws.

In the US, platform worker status remains contentious, with no unified federal standard. Employee classification, which offers significant protections, varies widely across states and is subject to tests like the Control Test and the Economic Realities Test. These tests focus on factors such as the right to direct tasks and the economic dependencies of workers, but their application is inconsistent and often inconclusive for platform workers.

California’s Assembly Bill 5 (AB5) introduced the “ABC” test to address worker misclassification, aiming to reclassify many independent contractors as employees. However, Proposition 22, a ballot measure passed in 2020, allowed companies like Uber and Lyft to exempt their drivers from AB5, though it faced legal challenges and partial invalidation. The Biden administration’s proposed rules seek to define an “employee” based on economic dependency, but the outcome of these regulations remains to be seen.

The EU has taken steps to regulate platform work through directives like the 2019 Directive on Transparent and Predictable Working Conditions, which enhances transparency and predictability for workers in open-ended forms of employment. It includes measures to address ‘bogus self-employment’ and ensures protections for on-demand platform workers. However, it leaves a loophole for purely freelancing or self-employed individuals.

Spain’s “Rider Law,” passed in 2021, presumes employment for delivery workers under digital platforms and mandates transparency in algorithmic management. The European Commission’s proposed Directive on Platform Work, expected to influence member states, aims to clarify employment status and enhance protections for platform workers, including transparency and human oversight in algorithmic decision-making.

The International Labour Organization (ILO) has acknowledged the need for an international labour standard for platform work. During the 347th Session of the ILO Governing Body in March 2023, it was decided to discuss this issue at the 113th Session of the International Labour Conference in June 2025. This initiative aims to establish decent working conditions for platform workers globally by 2026, addressing the unique challenges of the platform economy and setting a benchmark for national regulations.

How can Pakistan learn from other platform economies?

No country has been able to create a platform economy that is completely fair, however, efforts to reduce exploitation and increase labour protection have been made to move towards a fair system. Regulation of the platform economy is a burgeoning area worldwide, offering valuable examples that could inspire reforms in Pakistan.

In China, the Ministry of Human Resource and Social Security issued guidelines in 2021, introducing a concept of “less-than-complete employment relationships” to extend minimum wage rights to platform workers. Indonesia’s BPJS allows self-registration for work injury benefits, accessible to platform workers. India’s Social Security Code, pending implementation, mandates platform contributions to provide various benefits. Rajasthan’s 2023 bill establishes a welfare board for gig workers, mirroring South Korea’s 2020 amendments granting insurance benefits to platform workers.

Chile and Colombia are making strides with legislation requiring employment contracts and social security for platform workers, while South Africa extends anti-discrimination laws. The Philippines’ POWERR Act seeks to classify gig workers as regular employees. Brazil mandates COVID protections and accident insurance, Uruguay allows digital social security contributions, and Spain enacted the Rider Law for delivery worker protections. New York set minimum pay standards for food delivery riders, and the EU proposed a directive enhancing algorithmic transparency and employment presumptions.

In the UK, Uber drivers gained worker status in 2021, entitling them to minimum wage and benefits. Italy and France have enforced sectoral agreements and social responsibility for platform workers, respectively, while Greece established trade union rights and contract transparency. These global initiatives showcase diverse approaches to regulating platform work, offering a spectrum of strategies Pakistan could adapt to protect its growing gig economy workforce.

How can regulatory bodies help platform workers in Pakistan? 

In order to empower platform workers in Pakistan, it is necessary to make their digital ratings portable, allowing them to demonstrate career progression and utilise new opportunities. Proper licensing and tax enforcement for foreign companies like Uber and Careem are essential to prevent exploitation and ensure fair market practices. Legislative reforms should offer all workers a minimum safety-net of social protection, including insurance for accidents, injury, sickness, and redundancy, most of which are offered by Careem but neglected by others. This could involve creating a benefits fund to distribute social security burdens across platforms.

There is a pressing need for regulators to utilise the same data-driven technologies as platforms to ensure efficient and precise regulation. One proposition to counter this issue is collaboration between platforms and regulators, incentivized by lower taxes, which can help maintain economic progress while enforcing fair practices. Another issue is the lack of collective bargaining rights and unionisation, which could give platform workers a voice and strengthen their position in negotiations and litigation in Pakistan.

Effective enforcement agencies are crucial to implementing reforms. The government should empower institutions like the Ministry of Overseas Pakistanis and Human Resource Development to create and enforce a national plan of action, supported by provincial labour departments. Strict fines for companies evading laws can reduce the need for complex litigation. Developing adaptive regulatory frameworks requires robust consultations with platforms and workers to understand their needs and conditions, ensuring comprehensive and effective regulations.

To address the adaptation challenges of platform work, it is essential for Pakistan to form committees and technical working groups comprising platform workers and stakeholders. These groups should develop tailored policies for specific sectors. Governments can experiment with regulatory sandboxes to test different approaches and determine appropriate employment classifications for platform workers. Enhancing institutional capacities and social protection measures will create adaptive and inclusive regulatory frameworks that safeguard workers’ well-being.

Pakistan currently lacks specific legislation for platform work, leading to the misclassification of workers as independent contractors and depriving them of labour law protections. Therefore, standalone legislation is necessary for effective regulation. The Centre for Labour Research, in collaboration with the Wageindicator Foundation and Fairwork, has proposed the Platform Workers Protection Bill 2023 to protect platform workers’ rights. The bill defines key terms and establishes criteria for determining an employer.