Tough gig: Making the gig economy work for everyone
Jenny Roper, December 13, 2016
Gig working is getting more popular, but has been heavily publicly criticised. So is it all it’s cracked up to be?
Deciding to drive for Uber in 2013 was a no-brainer for Yaseen Aslam. Made redundant from his IT job, Aslam had been working in the private hire cab business for some years. With Uber he could work four 10-hour shifts and take home £1,000 a week.
Cut to July 2015 and things were very different. Job bonuses had been reduced, then abolished, with fares falling to 75p a mile (from £1.75). Aslam’s accounts for the tax year 2014/15 show his income before expenses such as fuel, car repairs and insurance was £20,524. After expenses it was £7,497.
This was not the only issue. Uber’s rating system, which dictates whether drivers are ‘deactivated’, seemed one way. Passengers could be racist and threatening, and then leave Aslam a bad rating. A change in 2014 meant drivers could no longer see the destination until they’d collected passengers, when it was too late to reject a trip that didn’t make financial sense.
“We’d get messages saying ‘your rating’s too low,’ basically threatening us. A few drivers lost their jobs over this,” says Aslam. “I have three kids and a mortgage to pay. I need to earn a certain amount of money and it’s unfair if I’m working 70-hour weeks and not even taking home minimum wage.”
Contrast this with Steven Rowe. He started driving after years as a stay-at-home dad. Uber was his route into earning again in a tough jobs market. Uber now represents Rowe’s sole income, with the app allowing him to fit driving around his family and creative projects such as writing childrens’ books. He estimates he takes home around £10 to £12 an hour after expenses.
Rowe states communication with Uber is good, with plenty of opportunity to appeal ratings. “If anything Uber works for me; that’s how I see the relationship,” he says. “It’s doing the marketing and promotion for me as a small businessman, it generates the business, collects the money on my behalf, takes the risk on credit cards – all in return for what I think is a reasonable percentage.”
So who’s right? The matter (as anyone who’s kept an eye on the news of late will know) is far from clear-cut.
No easy answers
The latest, and most significant, instalment in the gig economy saga is October’s Uber employment tribunal. It found that Yaseen Aslam and the 18 other Uber drivers bringing the case should be categorised as workers, not self-employed, and therefore be entitled to holiday pay, paid rest breaks and the national minimum wage. The judgment only applies to these 19 drivers, so will need to be upheld at Employment Appeal Tribunal level for other Uber drivers and ‘giggers’ at other companies to bring similar cases. But it nonetheless gives a strong indication of the likely future legal direction.
So where does this leave the likes of Rowe, perfectly happy and worried reclassification could hamper the flexibility, high volume of customers, and (in his view) equitable pricing system offered by Uber? And where does this leave our rapidly emerging on-demand economy – and politicians’, lawyers’, policymakers’ and business’s stance to it?
It’s an area warranting ever more attention. Almost nine in 10 new UK jobs created in the past three months were for self-employed people, meaning that almost one in six UK workers now fit this category. And a recent McKinsey report found that 20% to 30% of people in the EU and US now engage in some form of independent work.
The most pressing question for those wanting to make flexible work not only fair for individuals but also good for the economy is just how exploitative the gig economy actually is right now.
There have been plenty of headlines to fuel the impression that firms are having their cake and eating it – enlisting contractors to save money on tax and employment responsibilities, but while still setting shifts, mandating a uniform be worn, punishing ‘giggers’ for turning down work, and so on.
Indeed the number of cases similar to the UK Uber case being brought worldwide against platforms such as CrowdFlower, Handy, Taskrabbit and Lyft is hard to keep track of. In the UK a group of workers at cycle food delivery firm Deliveroo have just issued a letter asking the company for recognition for the Independent Workers Union of Great Britain (IWGB) to bargain on behalf of the group on pay and terms and conditions. If Deliveroo ignores or rejects the request the union will take the company to tribunal.
More traditional companies are also in the firing line. UK courier companies Addison Lee, CitySprint, eCourier and Excel face cases similar to that brought against Uber before the end of the year. And Sports Direct and Hermes loom large in any debate regarding workers’ rights, with accounts of contract staff so afraid of having work withdrawn that they tolerate ‘Victorian’ conditions involving strip searches, monitored bathroom breaks, and working while ill – all while effectively being paid below the minimum wage.
Insecure, not flexible
Kayley Hignell, head of policy and research at Citizens Advice, believes terms such as ‘flexible working’ and ‘gig economy’ are increasingly masking a growing trend in insecure, precarious work.
“When it comes to whether people want to be in that kind of work or not, it’s a tricky question. But just looking at the national data, we know people doing temporary work that wanted permanent work significantly increased during the recession. It went up from 350,000 to around 661,000. And it’s stayed at 528,000,” she says, highlighting Citizens Advice figures that show 92% of workers cite receiving a steady income as an important factor in looking for work.
“What we’re seeing is nothing like a recovery from the recession,” Hignell continues. “There’s definitely a degree of businesses needing to maintain [insecure working] because of changes around the immediacy and 24/7 nature of consumer markets. I think some of this is nervousness. Now we’re going into more uncertain times with Brexit, so I think employers are making sure they’re not closing doors for themselves.”
Such nervousness is spreading into more and more sectors, according to Hannah Reed, the TUC’s senior employment rights officer. “Often it is low-paid, low-skilled workers principally affected, but increasingly we’re seeing it among professions,” she says. “One trend following the recession is significant growth in insecure forms of employment, particularly zero-hours contracts, in parts of the public sector such as social care. The vast majority are on zero-hours contracts and there’s no choice.
“We’ve seen substantial growth of zero-hours contracts in further education colleges. People who previously would have expected to be on permanent contracts are required to be around college all day but are only being paid for their contact time with students, not for preparation time,” she continues, adding the surprising example of just-qualified pilots.
While many may associate precarious working with low-skilled, low-paid jobs, it is also coming for the professions. Further examples include those working on programme commissions not only from independent TV production companies, but also from major broadcasters including ITV and the BBC. Then there is the incursion of platforms such as Upcounsel into the legal profession, and the plight of junior doctors who are essentially being asked to sign up to gig contract terms.
While the plight of someone accessing jobs through an app might seem far removed from a care worker, college lecturer or doctor, many believe it amounts to the same thing. “If it’s work that would have been done before by someone with employment rights, and suddenly, because they’re now contacted through a different kind of platform, they don’t get these rights that’s not in the public interest,” says former employment relations minister Jo Swinson.
“What these tech-enabled ways of working are covering up is old-fashioned exploitation,” agrees Michael Newman, partner at Leigh Day, the law firm representing the drivers in the Uber tribunal.
The pressure to survive in an uncertain, post-recession, post-Brexit world may not be the same for thriving tech start-ups as for those in more squeezed sectors (“People have said changes could end Uber’s business model but I’m not convinced; they’d still make an awful lot of money,” says Newman), but the rationale of paying less to access labour is markedly similar.
Indeed the problems being managed by algorithm can create, in the case of Uber ratings for example, are on closer inspection nothing new, rather an extension of the scientific management process introduced into factories 100 years ago. The idea was to make humans more predictable and efficient by replacing the judgment of the individual workman and manager with rules and formulas.
“I think the idea that came after that, that you can’t just treat people as factors of production, has been forgotten,” says Alex Wood, a sociologist at Oxford University currently studying the gig economy and collective action.
Guy Standing, professor of development studies at the University of London’s School of Oriental and African Studies, and the author of books exploring precarious work, throws cloud working – where workers access all manner of desk-based knowledge jobs through the likes of freelancer.com and Amazon Turk – into the mix.
“This kind of gig working is often even more skewed in favour of the company over the individual,” he says. “Imagine you’re somebody in London and someone else is in Bangalore. You’ve got competition between people whose living standards are 20 times as high as somebody in Africa or India who will do the job just as well. They can drive down the price to ridiculously low levels.”
The devil’s in the detail
The problem, explains chief executive at the Recruitment and Employment Confederation (REC) Kevin Green, is that media reporting has tended to bundle many different ways of working, contract types and gig companies together. “Everything gets confused,” says Green. “When there’s a period of change lots of different things get thrown into the mix, whereas in reality they’re different things. There’s maturity in some areas and not others.”
He cites zero-hours contracts. “This is a legitimate part of the labour market,” he says, quoting CIPD research that zero-hours workers are as satisfied with their jobs as the average UK employee (60% compared with 59%). “Zero-hours contracts are just about engaging people in a different way,” he reiterates.
So just as questionable arrangements exist in both traditional and newer parts of the economy, so too do more responsible setups.
The devil, explains Xenios Thrasyvoulou, founder and CEO of cloud platform peopleperhour.com, is in the detail. He claims his model is the reverse of online platforms that drive prices down through a global bidding process. Between 60% and 70% of giggers on PeoplePerHour are British, with most of the remainder American. Jobs are mainly posted by Asian companies keen to access high calibre copywriting, design, marketing, and other skills in the English-speaking world.
Thrasyvoulou adds that there is no auction functionality, which avoids a race to the bottom mentality. “It’s not that different to any other situation; 95% of the work gets awarded at an above average price,” he says. “We haven’t really changed the rules, we’re just making it easier for people to connect and get the job done.”
Elaine Rashbrook, a writer and self-employed user of PeoplePerHour, confirms this. “It’s inevitable with a platform like this people sometimes go for the cheaper option. But quite often they’ll come back and say ‘it didn’t work out’. People realise you get what you pay for,” she says.
In fact so-called ‘ethical’ gig platforms are now springing up in many sectors. Companies who’ve decided to switch workers from independent contractors to employees include virtual assistant platform Zirtual, package delivery firm Parcel, on-demand laundry service FlyCleaners, and office cleaning app Managed by Q. Others are launching as responsible challengers to more established brands in the first place, not necessarily through contracting people as employees but through other innovative means.
Take TappCar. The ride-sharing app launched in Edmonton, Canada earlier this year and has now spread to several other Canadian regions. In contrast to the likes of Uber and Lyft, TappCar doesn’t take a percentage but charges a $1.50 ‘tech fee’ to cover the cost of the app. Spokesperson Pascal Ryffel estimates that as a result TappCar fares end up 5% higher than Uber’s. The company charges drivers a flat weekly fee of $250 for insurance, pension payments and healthcare. This fee also covers union membership, a step announced this September that Ryffel says is key to driver morale.
“We are very hands-on. Where other companies might never meet in person with the drivers, we are quite different,” he adds. “We put all of our drivers through training before they start. We have a much more intimate relationship with them because they’re not just a number, they’re not just accessing a platform.”
Need for change
It’s clear that the growing casualisation of work, both in the UK and globally, is a complex nuanced phenomenon. The difference between whether the balance of power is fair between ‘worker’ and firm can be a subtle yet crucial one. And this presents policymakers with a tough challenge. But the bogus self-employment, zero-hours and agency work abuses that exist mean the bottom line for many is that something has to give.
“Governments shouldn’t just be relying on more ethical businesses to come forward with different options,” says the TUC’s Reed. “The courts have gone some way. It’s been helpful that we’ve seen some decisions looking at the reality of the relationship rather than what’s written in the contract. But our view is this cannot just be left to the courts.” What is needed, she says, is better clarification from the government around what constitutes employment, worker and self-employed status.
It’s currently a very “hazy” matter indeed, agrees the REC’s Green. “We’re often in different places to the TUC but we agree on this,” he says. “Both left and right agree we need to sort this out; we need some clarification. And the only people who can do that are government.”
The problem, explains Alan Price, CEO at employment law, HR, and health and safety consultant Croner, is that employment status isn’t set down by statutory definitions. Instead it’s subject to a series of often ambiguous tests and case law. Complicating matters further is the fact that HMRC’s tests for tax purposes don’t match those used by employment tribunals.
“The two things that would make a massive difference are HMRC and the employment tribunals harmonising their tests, and greater clarity around worker status – the government making it clear through legislation what self-employed is, and what worker and employment status is,” says Price.
“The simplest way to do it is if someone is truly self-employed and happy with that status then they should have to set up as a limited company. That gives complete visibility of their status. So you’d have Joe Bloggs working for Uber. There’d be clarity of the people involved in the relationship and it would lift the corporate veil.”
Another way of ensuring self-employment as a more mutually deliberate arrangement, says Leigh Day’s Newman, would be to “shift the presumption so that in any working situation we assume you’re an employee and it’s for the company to arrange otherwise, rather than start at the opposite end, which is what we currently do by allowing the parties to define their relationship”.
He adds: “What happens is you have a contract that says you’re self-employed and the employer shoves it under your nose. I’m an employment lawyer but when I get offered a job even I don’t say ‘what about that clause?’ That’s the difficulty: freedom of contract means we let the parties decide themselves what their relationship’s going to be. In reality that means the employer deciding. You need a new law.”
Citizens Advice’s Hignell adds that even once such clearer definitions and presumptions have been set down, more effective enforcement of employment status law will still be needed. She points to the issue of access to justice following the 2013 introduction of tribunal fees of up to £1,200.
“What we really want here is something along the lines of a Fair Work Authority,” she says. “Currently employment enforcement in the UK is quite disparate. You have the Employment Agency Standards Inspectorate, you have HMRC enforcing the National Living Wage, you have The Gangmasters and Labour Abuse Authority, and you have individuals pursuing cases through the employment tribunals. What that means is the public don’t necessarily know what exists in terms of enforcement.”
Citizens Advice is also calling for companies to be required to publish the percentages of workers on different kinds of contracts. “The concern is that this kind of decision is made on a store by store or setting by setting basis,” Hignell says. “There’s not necessarily a corporate direction on where they want to go on staff and the types of jobs they want to offer to people. We’re suggesting that is stimulated by making things transparent.”
This chimes with, and would hopefully aid, calls from many for better labour market statistics. “If I was a politician I would demand a radical overhaul of our labour statistics,” says Standing. “That may not sound sexy but we have absolutely no idea how many people are working in these different statuses, what pay they’re getting, what contract they’re on, what hours they’re doing, what proportion of the time they spend working they’re actually being remunerated for…”
Having such information would be an important first step in differentiating between those genuinely benefiting from a gig lifestyle, and situations where previously secure work has been replaced with insecure, says Standing. Publishing stats on an individual company by company basis could also incentivise that factor often most instrumental in stamping out exploitation: reputational damage.
Newman suggests the threat of a flood of cases post-Uber could be the push for many. “If there’s a critical mass of these cases being won businesses will start to change voluntarily,” he says. He adds that in his view significant change to legislation and much stricter regulation and enforcement is unlikely, with reputation damage the more likely push factor: “Governments want to be friendly to business. Unless you have a very adventurous administration it’s unlikely to come in.”
Either way, the threat of a damaged brand could prove the decisive factor, agrees Standing. “While many companies would say ‘we’re businesspeople, we’re trying to make as much money as possible, it’s up to government to lay down the rules’, I think many will grudgingly admit the odds are stacked against the little man, so are beginning almost to hope for a modest set of reforms that will allow them to continue to make money but make it fair,” he says.
It’s imperative unions and other campaigning and pressure groups focus on this, says Wood. “What you see is more forms of reputational damage through campaigning; we’ve seen that quite effectively with Sports Direct,” he says. “The coverage didn’t bring production to a halt but has given Sports Direct a bad reputation. That campaigning will often involve the state as much as the workers and unions.”
Positive action needed
The worry for some is that campaigning pressure could end up focusing on the wrong things. Just ‘naming and shaming’ companies who engage with a high volume of people in less traditional ways could prove counterproductive, with some businesses garnering unfair criticism.
Price confirms many of his clients are being panicked into counterproductive decisions. “A lot of employers are getting confused because of the amount of press the gig economy is getting and confusion around status,” he says. “Some employers are saying ‘we’re going to make all our contractors employees’.”
It’s important in light of this, feels Wood, that campaigning organisations and unions relinquish long-held views on the automatic superiority of permanent work to engage with non-traditional workers. “Unions need to use their strength among employees with bargaining power to create more campaigning-type networks,” he says. “The problem for unions is giving up power and accepting they can’t control everything. You need to allow autonomy within networks and provide a role of co-ordinating that.”
What is needed is more positive creative thinking around our emerging gig economy, feels political economist, writer and chair of the Big Innovation Centre Will Hutton. “We could be talking at least 15% and maybe as much as a quarter of the UK labour market now being part of the gig economy, and it’s growing vigorously,” he points out.
“One needs some inventive social institution building and a revived trade union movement and getting the credit movement going, better social housing…” he says. “You could have employee mutuals: unions directly employing people they hire out to the gig economy.
“I like the flex security structures that have emerged in Denmark and Holland,” he continues. “That’s the idea of a refashioned social contract in which employees acknowledge the necessity for employers to be able to reshape labour forces fast. Employers might get rid of people fast but the state gives two years’ unemployment benefit at 90% of their old wage, and the employer who wants that arrangement has to spend money on training you.
“One does need to act and do rather than think of reasons why it might not work. We need to experiment. He suggests the example of portable benefit platforms where holiday pay and a pension, for example, might be accrued even when someone works for several organisations at once.
But it’s not just trade unions, policymakers and social enterprises who need to embrace an ever-expanding gig economy. Business has an even bigger role in actively engaging with less traditional arrangements. Organisations must trust that treating people well whatever their status, rather than fixating on it, will protect them from reputational damage, says Green. They must not lose sight of the fact that it’s been the failure to treat people well that has led to brand damage – presenting a huge opportunity for HR to step up in all organisations and take responsibility for all workers, regardless of contract type.
For Corina Forman, HRD at courier APC Overnight, this will entail HR departments no longer playing a complicit role in reducing people to numbers and savings on a spreadsheet. “A trend that we’ve seen is the pressure on HR to become more commercial. Rather than curating a dynamic team, HR departments are increasingly asked ‘how can you save the organisation money?’” she says, in response to the question ‘where was HR?’ in cases of bad practice.
For Craig McCoy, interim COO at learning disability charity Brandon Trust, the answer is: ‘looking the other way’. Or rather: preoccupied with the permanent employee base and so oblivious to temporary workers.
“A lot of HR people in these organisations are quite operational so they maybe wouldn’t think they were neglecting a major part of the workforce,” he says. “I would hope there’s been enough outrage in the press now to wake HR people up to the fact that they have a duty of care, and if they’re not the conscience of the organisation then who is?”
Stepping up should involve not only protecting worker rights and brand, but also recognising that engaging with people on a less traditional basis could add value, says Green. “You’ve got to look at your people and supply chain of talent in a different way if you’re a HR director now. You cannot ignore this,” he says. “In a time of talent and skills shortages [engaging with the gig economy] is a great way of being able to source talent from around the world using a range of different platforms.”
“For many organisations it’s a real way to accelerate change,” adds McCoy. “I would think about consulting, outsourcing, offshoring, freelancers, fixed-term contracts, temps…”
HR truly embracing all potential facets of a workforce is crucial, particularly because engaging with non-traditional workers is arguably the bigger HR challenge than full-time staff, McCoy points out: “You’ve got to be able to assimilate quickly so you need strong on-boarding processes; you can’t have a lengthy induction process. Waiting a month for your laptop isn’t going to work.”
“I think [HR] people focus too much on employment status. We have to stop thinking about all that rubbish – who gets invited to meetings, who gets included in the employee survey, who gets invited to the Christmas party – and start thinking about how we engage with the broader workforce, a more flexible workforce,” agrees Gemma Dale, former UK HRD at Tunstall Healthcare.
“How do we manage these people if they’re just coming in, how do we induct them, who needs to know our policies and procedures? All that practical stuff requires real thought.”
The question of HR stepping up at the likes of Uber, Deliveroo and Freelancer.com is a trickier one. But a brief scour of LinkedIn for HR professionals at such firms is an illuminating experience that reveals significant HR resource.
This shouldn’t be a surprise. Records of how many headquarter staff Deliveroo and Uber, for instance, employ runs into the thousands each globally. Clearly drivers and cyclists just don’t fall under these HR teams’ domains. And the question of whether they should do – or should be forced to by upcoming employment tribunals and changes to legislation – is a knotty one.
Future changes must take into account the very valid nature of many ‘gig’ arrangements; self-employed relationships that are not much different to those that have existed quite happily for years. The ultimate difficulty comes where the lines are more blurred.
Which takes us back to the fate of our Uber drivers Aslam and Rowe – to the fact that the exact same arrangement is apparently working brilliantly for some (perhaps due to the geographic, demographic and other subtleties of their situations) while feeling like exploitation for others.
There are no easy answers here for government, policymakers, unions, business and HR. But it is a conundrum becoming ever more pressing by the day.
The brave new world of gig working seems here to stay, and could be an incredible force for good – if we can get our heads around it. But the increasingly fragmentary nature of employment relationships in our economy presents a serious threat to workers’ rights – both those who want more security and those who crave flexibility and freedom. We must not hesitate in giving our full attention to this ultimate tough gig.