How contagious will the Uber-ruling be?

Uber 2.jpeg

Deliveroo “workers” campaigning the day of the Uber ruling

The complicit agreement between those who work in the “gig-economy” not to work for those who run the gig-economy has succeeded for much longer than Uber and Deliveroo. The same arguments were being had about the status of self-employed insurance agents in the 1980s. The assumption is that the taxman will get you if you stick your head over the parapet, so keep your head down – and  carry on.

But the gig-economy, where workers treat work opportunities as things you “rock up to” in your own time is a far cry  from insurance sales. The formulations about UBER, AirBnB and Amazon as “driver-lite, hotel-lite and bookshop lite” has been trumpeted as the triumph of the internet over terrestrial ludditism. These businesses are anything but low-profile and they have come under intense scrutiny on tax, working practices and now employment conditions.

In losing its first instance Industrial Tribunal in London, Uber has put in jeopardy not just its reputation for treating its drivers fairly, but the fragile balance that allowed drivers to maximise the immediate utility of their earnings while minimising their “on-cost to Uber. In commercial terms, the short-term consequences of the ruling to the gig-economy are a “lose-lose”. Sceptics will say “that’s what comes of sticking your head above the parapet!”

If the immediate consequence of the Tribunal Ruling is to put at risk the Uber business model, the longer term issue is whether such a business model could be integrated into Britain’s social economy. We are a mature nation with strong worker protections and functioning employee representatives (the case against Uber was taken to the tribunal by the GMB union). There are strong existing lobbies including the licensed cabbies on one side and local Government and the police authorities on the other. All represent a traditional order.

Finally there is the Department of Work and Pensions and above it, a Government professing to be on the side of those “just getting by”. It is no surprise that one of the first major enquiries of Theresa May’s Government will be into the new employment practices of firms like Uber. The enquiry, to be led by a left-leaning think tank CEO (Matthew Taylor) is enjoying cross party support. Frank Field, the labour Chair of the DWP select committee was recently championed by the Prime Minister in his condemnation of the messenger firm Hermes’ work practices.

This tide of hostility to the behaviour of the gig economy in flouting traditional employment conditions (sick-pay, holiday-pay , minimum and living wage and auto-enrolled pensions) is infuriating those in Government as it infuriates those in traditional industries.

Ironically, the least talked about aspect of converting self-employed drivers to “workers” may be the most important. Steve Webb, former Pensions Minister and now working for AE provider Royal London has calculated that the cost of enrolling Uber’s 42,000 drivers doing 35 hours a week for 52 weeks at ah hourly wage of £7.29 would be £3m a year at current minimum contributions. This would rise to £12m by 2019 as the living wage kicks in and AE contribution rates triple.

The implications of this focus on the self-employed worker as an eligible jobholder will be of concern beyond the bounds of Hoxton. Hundreds of thousands of employers are having to make marginal decisions on whether contractors “look, think and smell like an employee” to quote Neil Esslemont. In many cases the decision is being ducked in favour of measuring a workforce by what’s on payroll.

The problem for employers is contagious. If Uber wins and the impact is widely publicised, it won’t just be the GMB pressing for greater worker participation. Many employers who have already enrolled will be looking again at whether they have personal service workers and what to do about them.

They may have a number of immediate issues

  1. to get the personal services workers assessed and potentially deemed as “in”
  2. to get existing providers to agree to take them (in some cases these workers will necessitate a new workplace plan)
  3. to establish an interface to providers either on or off payroll to maintain compliance for these new workers
  4. to address back-dating issues and the thorny problems of ex-contractors who should have been enrolled.

In “outing” the gig-economy, Uber may have opened a much bigger can of worms. As Steve Webb says

“The government needs to take action to ensure that many thousands more people across the economy are not missing out on their right to a workplace pension because they are artificially treated as self-employed”.

As I hope my article makes clear- self-employed workers petitioning Government for pension rights, may be knocking at an open door.

deliveroo

Will workers organise?

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , , , , , , , , , . Bookmark the permalink.

2 Responses to How contagious will the Uber-ruling be?

  1. DaveC says:

    As long as this regulation change is transparent to existing freelance/contractor/self employed who are happy with their arrangements, and can opt out of anything, I’ll be happy.

    I’m against all these web-based supply/demand aggregators working like franchises simply for lining up supply/demand.
    They are much more like employment agencies but avoid the regulatory burden, somehow.
    We see them in delivery, fast food, taxis, hotel/b&b to name a few.

    I’m far from an expert but surely redefining these businesses so they fall into line of an agency would be better?

    They’re disruptive because they’re innovative.
    They also avoid the financial/social drag of regulation so are often highly competitive.

    We need to think about regulation more to make sure it’s not stifling innovation, but also avoid it being used for protectionism.

    I see a 50:50 balance of good and bad regulations.
    Uber and airB&B have shown innovative new approaches, they’ve exposed some terrible protectionist licensing systems, but sadly they’ve slso failed to protect the important parts of the regulations the mature services employ in return for higher margins.

    But it’ll be lose lose for investors as the stock valuations for these tech businesses are based on hype only.

    Once employees get their extra cut, protectionist cronies theirs, and all the regulatory overheads theirs, there will be nothing left again to support high valuations.

    Once EV AI cars arrive, we’ll be saying goodbye to all these taxi/delivery jobs. High employment costs will be the main reason.
    We’ll be pricing ourselves out of business against AI and robots if we’re not careful.

    Liked by 1 person

  2. henry tapper says:

    I look forward to handing over the keys to my job and my car – sick of driving- sick of work- give me a set of golf clubs and a fishing rod- I’m heading for the country!

    Liked by 1 person

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