Asking necessary questions about the Gig Economy and annoying many with the answers

Profile picture for user slauchlan By Stuart Lauchlan July 11, 2017
The Gig Economy has been a revolution, not an evolution, in the world of work. A new UK government report on workers rights provides some food for thought for policy-makers around the globe.

The growth of the Gig Economy globally has raised a number of challenging social and economic questions that need to be addressed. This has been seen most dramatically perhaps in the (often violent) arguments around Uber and its drivers and the reactions to the firm’s arrival in various nation states.

It’s fair to say that the Gig Economy is a work in progress at best. The problem is that the rise of the Ubers and the Deliveroos and the Lyfts has been revolutionary, not evolutionary and the important questions haven’t been addressed en route.

A couple of weeks ago I referenced the stunned reaction from former Uber CEO Travis Kalanick when asked by Salesforce CEO how he knew if his firm had a heart? That led to platitudes from Kalanick that indicated all too clearly that a lot of things were being made up as the firm went along:

We’re on the road, we’re driving, it’s a bit foggy, we don’t know where we’re going.

Uber’s not alone in this. The Gig Economy can deliver enormous benefits to consumers and users of its services. But is that convenience able to be balanced out with the necessary checks and balances to ensure that the ‘little people’ delivering those services aren’t being exploited?

Is there a societal responsibility that needs to be factored in or is this the ultimate manifestation of capitalism and free enterprise that needs to be left unfettered by excessive regulatory interference?

Good work

Those are questions that need to be addressed by individual governments of course and cultural preferences and prejudices will inevitably come into play. But every policy maker, whatever their nationality, would do well to take a look at the new report from the Royal Society of Arts, commissioned by the UK government as a good starting point for a wider discussion.

Good Work - The Taylor Review of Modern Working Practices is actually a wider study of the present and future nature of work in the 21st century, but the Gig Economy’s impact inevitably forms a large part of its focus and recommendations.

Perhaps the most notable thing to emerge from the report is that it does not call for the imposition of full employment rights for those working for Gig Economy firms. That’s already led to protests from trades unions and left-wing commentators that the Taylor review will actually make life worse for the 1.3 million in the UK who are part of the Gig Economy. For example, Frances O’Grady, General Secretary of the Trades Union Congress, said:

I worry that many Gig Economy employers will be breathing a sigh of relief this morning.

Now the question here is whether the report is politically or ideologically predetermined. Actually it looks pretty balanced on paper. The main author of the report was commissioned to produce it by a Conservative government, but his credentials include a stint as an advisor to Tony Blair at the height of New Labour.  That said, today’s Labour Party leader Jeremy Corbyn dismissed the review as a “huge missed opportunity”.

What the Taylor report does do is to posit some interesting recommendations, including a much-needed re-examination of work categorisation. Alongside the self-employeed, who basically have very few rights and employees, who have full rights to holiday pay and the like would come a middle category of dependent contractor, defined by the Taylor reviews as someone who is:

not an employee, but neither are they genuinely self-employed.

Such contractors would be entitled to the likes of sick pay, holiday pay, and parental pay, but not parental leave, for example. This would replace the current middle-tier category in the UK of ‘worker’, someone with limited benefits and rights. That’s a definitional adjustment for the UK system. It would be a far more radical proposition in the US, for example, where there are only two categories - employed or self-employed.

Again, provoking fury from some quarters, the Taylor review does not state that dependent contractors would be entitled to the minimum wage. Instead it pushes responsibility back onto Gig Econmy firms, suggesting a complex mechanism that would allow for different wages depending on whether demand was high or low, or simply paying according to tasks completed.

Firms would have to ensure that dependent contractors earn above the minimum wage, provided they log in and carry out tasks at times of strong demand. Gig Economy firms would aksi be obliged to use data analytics to inform dependent contractors what the best times are to earn more money. The Taylor review says:

If an individual knowingly chooses to work through a platform at times of low demand, then he or she should take some responsibility for this decision…Platforms have access to a vast amount of data on current demand and work being carried out at any given time. Government should explore options for requiring that platforms provide real time data in addition to a ‘notice’ increasing transparency for workers.

Inevitably these proposals fall well short of what critics of gig economics were hoping for. The TUC’s O’Grady warned:

We’re particularly concerned these proposals might even weaken gig workers’ rights. Introducing a new category of “dependent contractor” looks like caving in to special pleading from app-based companies, who are claiming that they cannot pay the minimum wage like any other employer.

But Uber's head of policy Andrew Byrne made the point that most taxi and private hire drivers have been self-employed for decades, long pre-dating Uber:

The main reason why people say they sign up to drive with Uber is so they can be their own boss. With our app drivers are totally free to choose if, when and where they drive with no shifts or minimum hours. We would welcome greater clarity in the law over different types of employment status.

Drivers using Uber made average fares of £15 per hour last year after our service fee and, even after costs, the average driver took home well over the National Living Wage. We know drivers want more security too which is why we’re already investing in discounted illness and injury cover, and will be introducing further improvements soon.

For the government, UK Prime Minister Theresa May insisted that 21st century working practices need to avoid over-regulation and deliver a labour market that is “a home to innovation, new ideas and new business models”, while ensuring that “people working in the 'gig' economy are all properly protected”.

My take

This report was always going to be controversial - whatever side it came down on, it would alienate another group of vested interests.

The Gig Economy elements are the ones that have attracted the most attention as the ‘Uber factor’ kicked in, but the wider report raises some interesting questions about the future of work, including the impact of AI and robotics.

The Taylor Review does not answer the questions that need to be asked about the Gig Economy, but it does provide a set of recommendations that will allow both supporters and critics to formulate or hone their thinking. It’s a UK-sourced report, but the questions are applicable to other economies around the world and, as I said above, it’s well worth a read outside of the UK.