Tech firms are creating more jobs, but at what cost to the blue-collar industry?
Priya Wadhwa
10x Industry

Tech firms are creating more jobs, but at what cost to the blue-collar industry?

Can SMEs put their foot down to sustain the economy?

“Better never means better for everyone... It always means worse, for some.”

―Margaret Atwood, The Handmaid's Tale

Our lives have become so much easier. Amazon and noon provide access to a large array of products that are delivered right to our doorstep the very next day; while Zomato, Deliveroo, and other food delivery services see men racing through the streets to bring us food wherever we are. Ever wondered what life is like for these people who have enabled our on-demand lifestyles?

Contrary to popular belief, these thousands of delivery men and women (yes they are entering the sector too), are not always employed by the tech firms that we place our orders through. The ever-popular asset-light model sees them hiring third-party service providers to fulfil the deliveries.

This isn't bad in itself. On the contrary, it increases jobs in the country, meaning more people from lesser developed countries have access to better standards of living. The question is: at what cost?

These third-party companies, often small-sized businesses, are not at such high risk as that of tech bigwigs. Sadly, this sees many of them partaking in unfair and illegal practices that take advantage of the blue-collar workers.

We spoke to a number of delivery personnel regarding their experience with their current employment and some shocking truths emerged:

  1. Some delivery people said that before their employment commenced, they paid the visa charges (~ AED 6000) to the company.

  2. The insurance is not provided in some cases while in other the companies took money from the employees themselves (~ AED 100-200) to provide insurance.

  3. There are salary models and commission systems. In both, people mostly earned AED 2500-3000 per month. Moreover, salaries are often later than the date written in the contract.

  4. On days when, in this instance, an e-commerce company was observing a holiday during Eid Al Fitr in accordance with the holiday announcement, the third-party delivery company only gave employees a one-day holiday; and when the delivery person went to pick up shipments, and there were none, the salary of the delivery person was cut for that day through no fault of their own. The delivery person told us that this is a normal case; even if they are working and there are no shipments, they do not get their salary for that day.

  5. There are no gratuity benefits provided to delivery people as per the accounts of those spoken to, while some have had to fight for months to get their dues.

  6. As per their contracts, they are supposed to work for 12 hours a day and get just Friday as their weekly rest day.

I know it is illegal, but what to do? Whom will I go to? I need the job. Sometimes it is better to keep quiet and continue, at least I am earning. I need to support my family.
A delivery person who wished not to be named.

One person added, “It is a tough job, depending upon my shift, I can sometimes work till 11:30 pm in the night to deliver shipments to people. During the offer season, I sometimes start early morning at 7 am and work till late at night.” They also said that when items are lost, the burden falls on them to pay for it.

The dented cycle of market demand and fulfilment

Giving blue-collar workers their rights should not even be a question for debate. However, there is a reason why these business owners are not giving people their dues.

While there are more jobs created, they are tough on these people. The asset-light model and market growth strategy involving lower prices put pressure on tech companies, leading them to push for lower rates from third-party delivery fulfilment businesses, who in turn push salaries of end deliverers lower and avoid giving them benefits to make their own ends meet.

This creates another problem. Without the benefits of holidays, not receiving their salaries on time, nor the trust that they will get their dues when they leave, they are more prone to changing jobs quickly, and sometimes even be pushed to the brink of stealing money they have collected. They handle AED 10-20K on a regular basis — a lot higher than their salaries.

This then puts more economic pressure on the third-party businesses, which makes them wary of those they employ, forcing them to pay for visas, insurance, and such.

Legality is just one issue. The other is of economic feasibility. Somewhere along this chain, someone needs to put their foot down.

On the flip side, the issue is also that raising delivery amounts will affect the prices for the end customers, who have become so accustomed to lower prices, offers and discounts, as well as expecting things to be delivered now, that it will in turn affect the market share of these tech companies; especially in a globally challenging economic climate.

With backing from the world’s leading investors, can these companies afford to take the risk of implement this change?

Tech giants in the consumer segment are leading to a greater divide between the rich and the poor. In this cycle of investors, tech companies, third-party enablers and end consumers, who will put a stop to this cycle that is spiraling out of control?