by Santiago de la Presilla

Only a few years ago it was called the ‘sharing economy’. A term so innocuous that the talking heads and pundits who began to refer to it as anything else were all criticised as ‘Luddites,’ as then-London mayor Boris Johnson infamously said. After all, sharing is caring, right?

Uber, the new enfant terrible of the gig economy, took regulators by surprise when it launched its UberX service in 2012, allowing the average car owner to begin driving app users across most of the United States. It then began a swift expansion across European markets, disrupting the traditional taxi industry by offering lower prices and the comfort of a ‘seamless’ payment. It took the European Court of Justice’s latest ruling for Uber to comply with transport rules, as it ceased to be considered a technology platform. As of 20 December 2017, Uber’s European party was over, at least legally speaking.

For a continent that prides itself on high working conditions, both the EU and its Member States have been too slow to adjust to the realities of today’s job market. Although not a competence of the European Commission, 40% of the EU’s citizens are part of the ‘irregular labour market’, as opposed to 30% in the U.S., according to the European Commission. However, for years Uber has been allowed to register all of its drivers as self-employed contractors, therefore not entitled to benefits such as paid holidays and a minimum wage. Only after a surge in traffic accidents earlier this year did the ride-hailing giant introduce a limit on the number of hours a driver can work uninterruptedly in the UK and France. This was deemed as a step in the right direction, according to the usual critics.

Not so controversial?

Food-hailing apps like Deliveroo and Foodora were the least controversial of the bunch, providing the opportunity for small and medium-sized restaurants that cannot afford to hire couriers. This too changed. On 12 May of this year, on a rainy Philadelphia afternoon, a Caviar app courier was killed in a car accident that was marked as the first high profile case of this level of severity. Caviar, much like UberEats and Deliveroo, claims to be a food-ordering platform, not a food delivery service. These couriers are considered independent contractors. In the current gig economy, the liability for work injuries, even death, falls upon the worker and their loved ones.

Uber has tabled some free-market alternatives to this particular issue in Europe. Since January of this year, a partnership with insurance giant AXA was announced. It offers free insurance to contractors, including sick leave and some small form of paternity leave. Some have criticised the insurance scheme as a blatant PR stunt, as it still pales in comparison to what labour laws in most EU countries require when hiring a full-time employee. The possibility of being with your daughter or son when he is ill is important to many, but that is a perk of working for a good company, not for Uber and Deliveroo.

Not giving an inch

Some countries have decided to side with the unions and partially, or entirely, ban these types platform-based services. 9 out of 28 EU countries have done that. These services continue to grow across the board, particularly in countries with chronic unemployment such as Spain and its neighbours. Spain has the largest share of independent earners across the EU’s top economies, and still, 40% of all of the gig economy jobs are low income.

The gig economy has, of course, its upsides. A worker can download an app and find a job in a couple of minutes, set his or her hours. This has made Britain’s working-age employment rate, for example, “exceed 75%, almost reaching its highest ever,” as per The Economist. As a self-employed worker myself, I enjoy the perks that come with the arrangement. However, is the trade-off enough?

Nations with double-digit unemployment cannot afford the luxury of shutting down some businesses only to prop-up other ailing business models, but should instead begin the process of smart regulation. Protectionism and outdated laws make the average consumer poorer and worsen services. This has been proven repeatedly where Uber has been banned in some cities only to see no improvement in the taxi industry, much like London and Brussels.

The gig economy is here to stay. Governments and competitors can close their eyes and pretend it has not changed the way markets operate in their entirety. Alternatively, they can embrace it with common sense legislation that will allow Europe to maintain high labour standards and set an example for the rest of the world: employment benefits and employment do not have to be a choice.

20 September 2018
This text was published in Bullseye issue 73