March 8, 2019 / 1:41 PM / 4 months ago

Breakingviews - Review: Gig-economy firms tread precarious path

LONDON (Reuters Breakingviews) - The world of casualised work is in a state of flux. Companies like Uber have become global giants by tapping so-called gig workers, but face challenges to the way they treat these “employees”. “Will the Gig Economy Prevail?” by Colin Crouch is timely, but its analysis misses some significant recent developments, while proposed reforms underplay deeper trends.

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Crouch, an emeritus professor at the University of Warwick, mounts a fierce critique of the moral and logical contortions required by companies that rely so heavily on those whom they refuse to recognise as employed workers. These giggers are given the empty title of “independent contractors”, which means they have no employment rights and are not entitled to minimum wages.

Some egregious abuses have prompted change. British parcels group DPD, owned by France’s La Poste, scrapped fines for self-employed workers after it penalised an absent driver who was receiving medical treatment for diabetes and later died from the condition. Courier Hermes – whose parent is German group Otto – offered its drivers worker status following a ruling by a UK employment tribunal.

Crouch suggests that DPD’s former practices exemplify a neoliberal dream of “employment”: the employer has no responsibility to its workers, but has the power to discipline and penalise them. His main targets, however, are ride-hailing firms like Uber and Lyft, and food delivery services like Deliveroo and Just Eat, which have designed their businesses to avoid permanent employment. They often provide workers with little more than a digital application and a bag.

Moreover, they have defended their strategies in court. Uber plans to appeal to Britain’s Supreme Court after a lower court dismissed its claim that it acts as an agent connecting drivers and passengers. Food delivery group GrubHub offered a similar defence in the United States.

In Asia – a region Crouch neglects in his analysis – casualised labour has long been the norm. But China has seen signs of protest against precarious work. Delivery startup Meituan Dianping, ride-hailing giant Didi Chuxing and truck-hailing app Manbang all experienced protests by their workers last year.

Crouch argues that digital platforms are simply indulging in old-fashioned exploitation by transferring all the employment risk to employees. While gig workers enjoy a certain amount of freedom and flexibility compared with regular wage slaves, they are often dependent on a single company and may have been forced into this one-way relationship due to adverse circumstances. These people form the “precariat” – a class of workers who have little choice but to accept low-paid, low-skilled work.

Crouch also gives short shrift to the Taylor review of modern working practices, a UK government-commissioned study published in 2017. The report backed the idea of flexible work, but also proposed a new intermediate employment status for giggers – the “dependent contractor” - entitling them to paid holidays and sick pay.

Supporters of flexible work argue that many giggers prefer to retain flexibility at the expense of more job security. McDonald’s backs this up. The fast-food giant says the majority of its 120,000 flexible-hours workers in Britain have opted to keep their status, rather than moving to fixed contracts with minimum guaranteed hours.

Will the gig economy prevail? Crouch answers the question in his title in the negative, because there is a “lie” at its heart. “The platform firms … tell their workers they are autonomous entrepreneurs while their efforts are in fact very subordinate, heavily monitored parts of a large profit-maximising machine”.

The author offers his own solution: a new type of universal social insurance scheme. This would require all “users” of labour to pay into the national fund, with exemptions for those providing employment contracts and other benefits such as training. All individuals would also make contributions – unless exempted – and would be eligible for a range of social welfare benefits.

This seems a distant dream in a globalised market, though. And while Crouch points to technology as a potential threat to workers’ liberty through the overuse of surveillance, he only touches on the broader impact on work as automation replaces manual labour. When self-driving vehicles arrive, Uber will no longer need drivers at all.

Maybe full-time and organised employment, which evolved in the West over the last 100 or so years, will prove a historical anomaly. Regulated casual work may the best alternative on offer.

One hope for workers may be that pressure from consumers and shareholders forces companies to change. Uber and Lyft, which are both pursuing stock market listings, may find that life as a public company brings greater levels of scrutiny and corporate responsibility than they have so far experienced. In the meantime, though, the gig economy will persist.

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