New Worker Banner

The Weekly paper of the New Communist Party of Britain

Gig jobs

by New Worker correspondent

THE GIG ECONOMY which means short-term contracts or freelance work as opposed to permanent jobs with workers regarded as contractors rather than employees with rights, has been coming under fire recently. And not just from the unions.

Some ruling class elements fear it is creating more problems than benefits. Right wing Prospect magazine (unrelated to the high caste civil service union) recently published an article warning about “advances in digital technology with a longer-term shift towards the casualisation of work” adding that “the rise of platform work accelerates long-standing shifts towards outsourcing and the weakening of labour protections, with platform workers denied the hard-won rights and protections of the traditional employment contract”.

That is what trade unions have been saying for years, but it is interesting that the bourgeois are thinking along the same lines. Perhaps they fear American competition and that the same trends will affect them before long. Online working offers bosses much more scope to see exactly what workers are doing, or not doing.

Even Andy Haldane, the Bank of England’s chief economist, warned in 2018 that there was of a “dark side of job flexibility”, which resulted in the rise of insecure work dampening wage growth.

There has been a rising number of workers in Britain who are self-employed or on zero-hour contracts. The number of working age adults working from online platforms at least once a week doubled to 9.6 per cent or 4.7 million between 2016 and 2019, according to a University of Hertfordshire report. Nearly a third of those made the bulk or all of their income from gig economy platforms, while nearly one in 10 gig economy workers are entirely dependent on gig work for their income

A recent example of the deepening trend towards casualisation is the recent announcement, by delivery firm Hermes, of plans to create 10,000 jobs as demand for home delivery continues to grow. Of these 9,000 will be couriers, mostly falsely regarded as self-employed with no minimum wage, sick pay or holiday benefits.

One problem of such businesses is that they eat up huge sums before they become profitable. Notorious taxi firm Uber reported a net loss of $5.24 billion last year. But they plan to dominate particular sectors in the long run. Huge start-up costs mean huge debts which will be paid for by an eternity of low wages and precarious work.

Court cases are underway to test claims of Uber and others that their workers are not real workers. In California a judgment that Uber drivers are employees not contractors and should be given benefits, such as health insurance resulted in Uber threatening to leave the state.

proper worker

In Britain the case of Gary Smith, a plumber who wanted to reduce his working days after a heart attack, was prevented from doing so by Pimlico Plumbers and he was sacked. Despite wearing a uniform and driving a branded van he was considered self-employed for tax purposes. The Supreme Court ruled that he was in fact a proper worker, but he later lost his claim for £74,000 when it went back down to the employment tribunal, a decision he is now appealing.

The Daily Telegraph recently quoted Charlie Thompson, an employment lawyer at Stewarts, as saying that the “overwhelming direction of travel in gig economy cases is in favour of the individuals. If the Uber decision goes the way it has gone every step of the way since the employment tribunal, what these drivers are getting is the right to the national living wage and paid holiday”. He adds that “they will not obtain stability in their job that a fully-fledged employee would get from unfair dismissal. The wider gig economy will no doubt sit up and take notice of it but they may be able to distinguish their specific arrangements.”

While the pandemic has boosted demand for some gig services others lost their jobs. Stephen Timms, a former Labour employment minister who now chairs the work and pensions committee said “I think there will have to be some clarification and changes to this area. One of the interested parties in all this is the Treasury; they lose out”.

Losing tax income might wake up the Government which also has to think about workers in the northern seats it recently captured.

One of Tony Blair’s advisors, Matthew Taylor, now head of the Royal Society of Arts, made a series of recommendations to improve the rights of gig workers. In December, the Government committed to a new employment bill vaguely promising to “build on existing employment law with measures that protect those in low-paid work and the gig economy”. But that has been put on the back burner.

perverse incentives

Taylor deplored a system which he says provides “perverse incentives” for companies to portray people “who should really be getting workers’ rights, entitlements, holiday pay and sick pay” as self-employed.

“One of the reasons why companies like Uber or Deliveroo like to portray their contractors as self-employed is because they don’t have to pay national insurance.” This “anomaly” in the tax system should be tweaked, Taylor says.

Needless to say Uber and others are fighting back with the best lawyers money can buy. Others are abandoning the gig model. Delivery firm Just Eat, which has expanded during the lockdown has pledged to end the company’s gig worker model and offer them more benefits such as private health insurance, healthcare cash and dental plans on top of legally required insurance. He did not say anything about higher wages