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France's gig economy creates hope and tension as election looms
April 11, 2017 / 6:05 AM / 7 months ago

France's gig economy creates hope and tension as election looms

PARIS (Reuters) - It’s lunchtime and Parisians are queuing for baguettes at a bakery on the Rue Montmartre, a sight long typical of life in the French capital.

A bicycle and a delivery bag with the logo of Foodora a Berlin-based online food delivery company, part of the emerging 'gig economy' is seen in Paris, France, April 6, 2017. REUTERS/Gonzalo Fuentes

But three cyclists clad in neon-blue outfits chat outside and regularly check the smartphones strapped to their wrists, waiting for orders to whisk meals from nearby restaurants and bistros to other Parisians in their homes or offices.

They’re among an army of riders working for the British-based Deliveroo firm who have rapidly become a familiar sight pedalling up and down the city’s boulevards.

These recent scenes in the Montorgueil district of Paris offer two opposing visions for large parts of France’s services economy; each is championed by one of the candidates likely to contest the run-off vote for the French presidency next month.

Far-right contender Marine Le Pen wants to protect the likes of the traditional French baker or driver of metered taxis in towns and cities across the country from unfair competition.

Her centrist rival Emmanuel Macron sees the “gig economy” of firms such as Deliveroo and the U.S. app-based cab service Uber as a model for creating jobs particularly in the “banlieues” - deprived suburban housing estates where unemployment is almost three times the national rate.

Still, concern is growing about a new class of working poor with no social protection, and California-based Uber faced days of sometimes violent protests by its French drivers in December after raising fees it charges them to use the platform.

So, with the rapid emergence of new forms of employment creating such frictions, the next president will have to decide whether to say “stop” or “more” to the gig economy.

On the Rue Montmartre, the Deliveroo riders leant towards the view of Macron - a former banker who tried to push through liberal reforms as economy minister from 2014-16 - even though they work as self-employed contractors without protections such as accident insurance that salaried staff automatically enjoy.

One was 21-year-old Nicolas Usunier, who dropped out of college in his first year and looked in vain for a job at bakeries and supermarkets. By contrast, becoming a Deliveroo rider was quick and easy, he told Reuters.

“I was struggling. Then I saw a guy doing that; two weeks later I was on my bike going around Paris,” he said. “I know some would like a real contract, but I like the flexibility.”

Waiting for an order at the bakery in central Paris, an-hour’s commute from his home, Usunier says he has not seriously considered getting insurance. “I will think about it the day I have an accident,” he laughed.

(For graphic on business creation and bankruptcies in the transport sector, click tmsnrt.rs/2lkLqC3)

THE JOB ARGUMENT

France is famous for strong rights enjoyed by those people who have traditional employment contracts. Their working week is set at just 35 hours and firing them is difficult.

Critics say this makes employers reluctant to hire and the price is chronic unemployment which, at almost 10 percent is roughly double the rate in Germany or Britain.

Approaching a quarter of young workers have no job. France is also struggling to integrate generations of immigrants, failing to create anything like enough jobs for those stuck on the cities’ peripheries.

But contrary to France’s image of a country set in its ways, the gig economy - where people offer their labour without the security of a traditional employment contract, often in industries where smartphone apps connect customers to businesses - is changing the landscape.

France now has 1.1 million registered self-contracting workers, although only 643,800 were active as of the middle of last year. That compares with a labour force of about 29 million, including just under 3.5 million unemployed.

However, one in four jobs created in the first half of 2016 in the Paris region was due alone to cab services operated by Uber and its rivals, according to a study by the Boston Consulting Group commissioned by the U.S. company.

The figure for what is known as the VTC sector - “transport vehicle with driver” - was lower elsewhere as Uber is less active in provincial cities, but still significant at 15 percent of new net jobs in the whole of France.

Ironically, Uber and its competitors possibly have more growth potential in France than in generally less regulated economies such as Britain and the United States.

Last year, there were just 5.6 VTC and traditional taxi drivers per 1,000 residents of greater Paris compared with 12 in London and 17 in New York, making it hard to find a cab at times. Outside the capital, getting French taxi firms to answer the phone late at night, let alone send a car, can be an even more frustrating experience.

A cyclist rides a bicyle as he delivers food for Deliveroo, an example of the emergence of what is known as the 'gig economy', in Paris, France, April 7, 2017. REUTERS/Charles Platiau

Boston Consulting said almost 60,000 extra jobs could be created in Paris alone by 2022 if it came close to matching the London or New York levels.

In the meal delivery sector, growth has been exponential. Deliveroo’s sales rose 650 percent in France in 2016, more than in other European markets, country manager Hugues Decosse said.

Decosse declined to give precise figures and with the gig economy new to France - Uber launched in Paris in 2012 and Deliveroo in 2015 - official data on the sector is scarce.

OPPORTUNITY FOR THE EXCLUDED

A study by Facta consultancy, partly commissioned by taxi companies, said the newcomers had gained market share by cutting prices but the overall taxi and VTC sector had not grown.

However, data from Thomson Reuters Datastream suggests the transport sector generates disproportionately large numbers of entrepreneurs and jobs: since mid 2015 it has created 20 new companies for each that goes bust, compared with nine firms for each bankruptcy in the broader economy.

GRAPHIC - The Uber effect tmsnrt.rs/2lkLqC3

Slideshow (5 Images)

Consumers are also benefiting. Inflation for taxi rides has fallen from nearly four percent three years ago to 0.2 percent, compared with overall inflation of 1.6 percent in January.

Government social affairs inspectors say the new economy offers an opportunity for people excluded from the labour market. Macron has also taken up this message for the elections, to be held over two rounds on April 23 and May 7.

“All those who became self-employed drivers, what did they do before? They weren’t taxi drivers; they were unemployed. They were on benefits, or even sometimes dealing drugs,” he said.

Macron denounced a French social model that he said cared more about protecting “insiders” on iron-clad permanent contracts than opening up to “outsiders”. “Let’s end this French preference for unemployment,” he added in a radio interview.

Not everyone shares his vision. Sayah Baaroun, who has set up a union for VTC drivers, accused Macron of patronising banlieues residents, many of whom have immigrant backgrounds.

“Basically what he says is: considering what you look like, where you’re from, where you live, you really shouldn’t be complaining and accept the crumbs,” he told Reuters.

Last week Baaroun called for a boycott of Uber to demand higher prices for his drivers.

LONG HOURS, POOR PAY

Abi Cheli, a 34-year-old cleaner who works for Deliveroo in his spare time to top up his income, says it is making a big difference in neighbourhoods which have endured riots and sometimes Islamist radicalisation. “I see these jobs as a way to absorb all this social tension, which is huge,” he said.

Deliveroo has unveiled free third-party insurance for its riders. But generally gig economy firms are reluctant to offer benefits in case this leads to court rulings that contractors are de facto employees who should have permanent jobs.

Hours can also be long and pay poor. The Boston Consulting study said Uber drivers worked 52 hours a week on average - much more than the statutory 35 hours for employees - for 1,400 euros ($1,500) a month. That is below the minimum wage of 1,480 euros.

Work for Deliveroo is often more a top-up than a living wage. A Harris Interactive study commissioned by the firm showed more than half of its riders were students and 82 percent were satisfied. But they worked 22 hours a week on average, with only 41 percent of them earning more than 750 euros a month.

On the election trail, Le Pen has leapt to defend traditional professionals such as taxi drivers from the newcomers. “What’s certain today is that this competition is unfair, it’s illegal,” she told France 2 television.

The National Front candidate said she did not condone incidents in which taxi drivers have set upon Uber drivers and their passengers. But she added: “This anger that is rising - any worker experiencing that would probably do the same if faced with the same situation.”

Le Pen’s promise to set a minimum tariff for Uber drivers and ensure it pays more taxes in France attracts taxi drivers, who have suffered big drops in their income since Uber launched.

“The whole profession was transformed in the last few years and not in a good way,” said 56-year-old driver Armando Calcada. “So for me it’ll be Le Pen, and straight from the first round.”

Additional reporting by Matthias Blamont, Leigh Thomas and Simon Carraud; editing by David Stamp

Our Standards:The Thomson Reuters Trust Principles.
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