Here, City-REDI’s Prof. John Bryson discusses what the gig economy means for employees, the self-employed, workers and local economic development.
The so called ‘gig economy’ is transforming the nature of work, but only for some workers by providing alternative employment opportunities. These employment opportunities reflect the management of labour inputs by the application of technology that has the potential to co-ordinate and control many part-time ‘employees’ or self-employed contractors.
It is important to be careful with the language that is used to describe or classify involvement in the gig-style labour market. The recent UK court case concerning Uber taxi drivers transformed ‘self-employed’ drivers in to ‘workers’ with benefits and the court case revolved around employment status, employment rights and responsibilities. At a simple level, this was a debate about ‘employees’ versus ‘self-employed contractors’.
Under UK law there are three types of employment relationship: ‘employees’, ‘self-employed’ and ‘workers’. The majority of people are ‘employees’ under a contract of employment and entitled to minimum employment rights with an obligation by law for the employer to deduct Income Tax and National Insurance contributions. A ‘self-employed’ individual does not have a contract of employment, but will be contracted to provide services or some form of work for a certain period of time for a fee. The self-employed pay their own tax and National Insurance and do not have employment rights. ‘Workers’ represent any individual who works for an employer, under a contract of employment or any other contract, where someone undertakes to provide work or services. ‘Workers’ are mostly casual workers, temporary workers and some freelancers and have rights to the National Minimum Wage, rest breaks, paid holiday and some other benefits. These three categories give different types of protection in the labour market.
Today, another case involving a gig economy employer has emerged. Deliveroo, the takeaway app company’s riders are self-employed contractors with no rights granted to workers or employees. New forms of working relationship challenge established methods of organizing labour including undermining the role trade unions play in representing and protecting the interests of their members. The Independent Workers Union of Great Britain (IWGB) has written to Deliveroo’s chief executive requesting that the company formally recognises it as the union representing Deliveroo riders in Camden, north London. This request for collective bargaining challenges the Deliveroo business model that is based on self-employment limiting the company’s exposure to funding rights linked to ‘workers’ or ‘employees’ and maximising organisational flexibility.
Self-employed contractors are unable to engage in formal collective bargaining. The IWGB request is one that challenges the company’s designation of its riders as self-employed contractors rather than ‘workers’. A reclassification to ‘worker’ status and collective bargaining would enable the riders to negotiate pay and terms and conditions whilst automatically acquiring rights to holiday pay and sick leave and all the other rights that come with ‘worker’ status.
The gig economy continues to challenge existing employment relationships. The Uber court case and the request for collective bargaining from the IWGB for Deliveroo riders working in Camden reflect attempts to bring the gig economy in to line with established labour market practices. There are two issues to consider here.
First, the legal definition of work needs to be reconsidered. The category of ‘self-employed’ emerged to cover a particular type of employment relationship and often this category of worker is advantaged as they control and regulate their conditions of employment including pay. A second category of self-employed has emerged with the gig economy in which self-employment comes with no ability to regulate the terms of engagement with work. There is an important debate to have regarding how employment is categorised and the rights and responsibilities associated with particular types of work.
Second, the gig economy has been emerging for some time as firms challenge existing business models and employment relationships. There is as yet limited understanding of the relationship between gross domestic product, productivity and the gig economy. Important questions to consider here are: what contribution does a self-employed gig economy worker make to a local or national economy? Are the local economic multipliers of this type of employment similar to other types or very different?
The gig economy threatens established employment practices and existing business models and also alters the meaning of work, but it also has important implications for the functioning of local and national economies. The former issue is being explored in the courts and by trade unions, but the latter issue has been largely neglected.