The Uber London employment decision – implications for contingent and gig labor

SUMMARY:

The London UK court decision to uphold the earlier decision to treat Uber drivers as workers raises questions about the future of work and contingent labor.

terms of employment, contingent labor

When I saw the news that Uber has lost its appeal against a UK employment tribunal decision, it was the words James Farrar, one of the protagonists used that caught my attention. From The Guardian:

If Uber are successful in having this business model, obliterating industrial relations as we know them in the UK, then I can guarantee you on every high street, in retail, fast food, any industry you like, the same thing will go on.

I’m not going to argue the political nuance in the choice of words but instead, concentrate on the phrase ‘industrial relations.’ It’s the kind of thing that harks back to the 1970s-80s when UK labor unions were systematically destroyed by Margaret Thatcher’s government, a job that Tony Blair finished off. Since that time, there has been little effective labor representation and so today, while Farrar might like to think in terms of ‘industrial relations,’ it doesn’t exist in any meaningful form. At least not in the UK.

Hello contingent labor

Instead, I suspect that Farrar understands only too well that we’re moving rapidly into an era of contingent labor, where workers have virtually no rights other than those that an ’employer’ is prepared to confer. It is a topic that I find few in the technology industry wish to discuss except at a technology level. I think I know why.

For example, in a Spend Matters paper, sponsored by WorkMarket, (sub) the authors say (my emphasis added):

As businesses seek to eliminate bloated costs and embrace more sustainable and competitive cost structures, an ondemand labor model based on digitally intermediated, analytics-enhanced work arrangements will become a critical enabler to those goals.

I find this incredibly disturbing because if you deconstruct the sentiment here, what we have is a reductionist view of labor as a cost to be eliminated or optimized and guess what, it will all be taken care of through a technology platform from which, I presume, WorkMarket hopes to prosper. Approached in this way, it serves to distance management from the very human elements of holding a relationship between business and labor. It’a way of sanitizing the unpleasant reality of workers as serfs.

And it does not go un-noticed that SpendMatters is a procurement analyst firm and you know what procurement officers advocates? Cost cutting.

Skills as disposable objects?

From a business perspective, I don’t see how this works. It is not as though skills are hanging around waiting for someone to come and make an offer, however mobile or digitized it may be. If anything, it is quite the reverse in the many needed STEM-based types of work both now and into the future where the shortage of suitably qualified people is regularly cited as a reason for the lack of productivity in business. We could debate that one a while but let’s leave it on the table for the moment since it fits into the model of labor cost reduction.

There may be application in the US for contingent systems, the audience to which the paper is addressed but in the UK, where there is the concept of zero-hours contracts, it’s hard to see how this takes hold except as a mechanism to further embed ‘zero hours’ into the collective psyche, effectively automating the acquisition of low-value work.

For those unfamiliar with the concept, this from Fullfact is useful:

“Zero hours contract” isn’t a legal definition. The government and the Office for National Statistics both use it to mean a contract where no work is guaranteed. The employer can offer no hours, and the employee can choose not to work any hours they’re offered.

The key is no minimum guarantee: in practice people might work regular shifts. About 34% of people on these contracts consider themselves full time.

In other parts of Europe where organized labor retains a level of employer engagement, the chances of contingent labor systems taking hold are slimmer, but then I notice that the levels of part-time work across Europe are steadily rising, suggesting that labor’s power is being chipped away.

A gig or a zero hours contract?

Interestingly, Fullfact specifically excludes ‘gig economy’ workers from its definition of ‘worker’ but I am not so sure that’s entirely correct. But it does seem to fit neatly into the concept of contingency.

Moving forward, what we are seeing is an unraveling of labor laws as technology takes the concept of labor to an entirely different place from that with which we are used. Whether that’s the kind of business model disruption that Uber evokes or the drumbeat of RPA and AI, the outcome is the same.

Labor no longer has ‘jobs’ in the conventional employer/employee sense but is, with some exceptions, wholly contingent upon the whims of industrial leaders, schooled in a management ideology that dictates, nay demands, that labor costs must be (eventually) eliminated.

In the Uber model as elsewhere, it’s dressed up as ‘opportunity’ and ‘freedom of choice,’ expressions that are sure to make management gurus like Tom Peters smile. But the hard reality is that many of these soothing expressions are little better than saccharine sops.

We’ve been Unleashed

I got a sense of that at the recent HR Tech World event which I attended but chose not to report upon. The reason is simple. On the big stages, we saw plenty of vendors talking the AI, blockchain etc buzzwords du jour. Much of what they were really saying was neatly wrapped up in a polemic address by Prof Danny Thorniley who, at one point, when discussing the bleak future for those in the 20-30 age group said:

The one great wish of the children of baby boomers is that their parents die – and soon. Inheriting might be the only way they will afford to own a house.

Meanwhile, in the customer sessions, much of what I saw was what I call pedestrian, incremental improvement to well-established practices. The yawning gap between the near future and the immediate past felt like time has been distorted. I sensed a genuine air of fear about what comes next, not least of which must surely be the automation of drudge tasks in recruitment and the whole HR admin arena. In short, those HR managers attending HR Tech World, or as it is now branded Unleashed, must have left wondering…unleashed what? I walked away depressed.

Next steps

Uber has said it will appeal the UK decision all the way to the highest court of the land. It may yet prevail. As I said in the commentary on the earlier judgment:

The problem for all parties involved is that the current written and case law around employment was never designed to deal with technology enabled business models or working practices of the kind we see embodied in the Uber model. Right now that doesn’t matter because the judges in this case could care less about that aspect but it is not something that can be ignored.

It is hard to see how the majority of drivers benefit from this ruling in the long term. By restricting their arguments to employment versus self-employment and focusing in on the minimum wage, it seems to me the Tribunal claimants are taking away the opportunity to earn more than the law prescribes. Is that what they intended?

As of today, does that mean my ability to tip drivers disappears?

One interesting sidenote. It’s not clear to me whether the decision becomes of national import. In the US, similar cases are being fought on a state by state basis. But then I continue to see a wide variety of experience in the shires where most drivers I’ve encountered have little interest in court actions which for them, might as well be on the other side of the world.

In the meantime, Uber drivers have secured some protections. Only time will tell whether the decision turns out to provide a long-term improvement through an adjustment to the business model. The history of labor cost reduction suggests otherwise.

Image credit - via andiafaith - fotolia

    1. says:

      Dennis, I was beginning to think we’d never find alignment again and voila, you write this. Mind you I can’t pretend to agree with everything you say.

      And yes, anyone using language like “an ondemand labor model based on digitally intermediated, analytics-enhanced work arrangements will become a critical enabler” really does need to take a step back and ask themselves why they are unable to say what they really mean.

      To answer a few points you raised about the case law being behind the technology curve. In this appeal Uber argued that it was not a gig economy poster child and that it’s business model was no different from any other traditional cab firm who also employ people on similar terms. We agree and unfortunately for them Addison Lee just lost a similar copy cat claim a few weeks ago as if to prove their own point as an own goal.

      Finally, why would you think because drivers look to protect their right to the minimum wage as self employed workers that they would be satisfied to earn only that? We see the minimum wage as a floor in the market not a ceiling.

      Anyway, well done on the analysis. Look forward to more explorations from you.

      1. says:

        I’m not going to get into the legal arguments because it seems to me that Uber has argued this wrong almost from the get-go.

        Nevertheless, IF the final decision comes down to say minimum pay is the minimum then I don’t believe there is an incentive for Uber to pay anything beyond that, other than to leave it for individual riders to pay tips as is the case in the restaurant trade. So in turn that is likely to mean that surge pricing pushes all the value back to Uber. Unless of course, they have a fundamental rethink about the business model.

        I DO think though that Uber has set the stage for a possible reset of the relationship between business owners and those who work for them. That is another story.

    2. says:

      I’ve heard this argued before but never could follow the logic about incentives.

      If Uber is compelled to pay the minimum wage why would it have suddenly lost the incentive to pay more than that as a result of the market floor?

      As for flexibility – with it’s powerful real time analytics capability it is better placed than anyone to predict and balance supply and demand through algorithmic nudging to make sure it can push all its drivers across the minimum wage threshold while preserving the flexibility drivers so value.

    3. Den H says:

      Remember this is a VC backed US business operating under Milton Friedman’s maxim and Tom Peters management thinking. In short: maximise profit, drive out cost for the benefit of a single class of beneficiaries, shareholders.

    4. Unfortunately as I see it, the push to the “gig economy” and the proliferation of these “flexible working arrangements” is sounding the death knell for the future employment prospects of the next generation workforce.

      All 3 of my children are now in jobs where they can have their shifts cancelled with 40 minutes notice – not good if it takes 90 minutes to get to work and your shift is only 4 hours long. Its a high degree of uncertainty for the contingent workforce and 90% of the workforce is operating under these conditions.

      The social contract has now been removed under the guise of flexibility and freedom, however in the longer term, everyone will lose and the HR role here seems to be enabling this further eroding of the current balance…of course, many of the HR folks are in full time employment and get bonused on how much they can save the company in workforce costs.

      Employees obviously lose out on security and benefits but employers also lose out as there is no loyalty and no longer term engagement with a workforce that is building its experience and getting the opportunity to add more value to the business.

      This kind of structure works quite well if you have a highly valued skill set where your skills are in short supply and experience is valuable but otherwise…

      I am an optimist and I hope that as we have started to see a slow retreat from offshoring and outsourcing that this trend will also reverse – short term thinking and profit at all costs mind sets in management will change eventually once the reality sinks in…I hope

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