A popular definition of the gig economy is that it is “a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs”. However, as political economy goes, how you look at it depends upon the value you place on labour and its ownership.
As ever this boils down to capital vs worker’s rights. So, you can see it as a working environment that offers flexibility with regard to employment hours, or as a form of exploitation with very little workplace protection. Most people that are familiar with the gig economy would have a mixed opinion, depending on their unique experience. Yet as recent events have shown, lower-paid workers are on the losing side of it, lest their rights guaranteed by the state.
The gig economy is not a new concept. Working multiple jobs was standard practice throughout the eighteenth century, with significant advantages that continue today. Accordingly, a gig economy provides more autonomy for someone to do the kind of work that they want to do, when they want to do it, for whomever they want to do it. It lowers fixed costs for businesses and allows them to seek out the most qualified people for specific tasks.
Workers in the gig economy are classed as independent contractors. That means they have no protection against unfair dismissal, no right to redundancy payments, and no right to receive the national minimum wage, paid holiday or sickness pay.
It is these aspects that are proving contentious. In the past few months two tribunal hearings have gone against employers looking to classify staff as independent contractors. Last October Uber drivers won the right to be classed as workers rather than independent contractors. The ruling by a London employment tribunal meant drivers for the ride-hailing app would be entitled to holiday pay, paid rest breaks and the national minimum wage. The same happened with Hermes, a leading delivery courier in June this year.
We have recently heard that Theresa May is pressing ahead with plans to boost the rights of workers in the gig economy on areas including flexibility and pay as part of a package of measures to overhaul employment laws. The prime minister plans to end a legal loophole that allows companies to pay agency workers less than full-time staff for doing the same job as she attempts to demonstrate that she understands concerns about inequalities in the world of work. Ministers are proposing repealing the so-called Swedish derogation rule even though the Treasury would be cautious about upsetting business, which reacted with alarm when it was first floated, when they are already facing Brexit uncertainty.
Business secretary Greg Clark has told cabinet colleagues that he hopes to implement several key recommendations from a review by Matthew Taylor, the chief executive of the RSA and a former senior policy advisor to Tony Blair, that was commissioned by the government last year. It comes after Labour promised a radical extension of workers’ rights, including greater representation on company boards and employees being handed a financial stake in firms, at its party conference in September.
The government’s proposals include: New legislation to give workers in the gig economy the right to request a temporary or fixed-hours contract after 12 months and to tackle the challenges in building up continuous service; Legislating to clarify the criteria that determines whether people are workers or self-employed by bringing tax and employment laws into alignment; Naming and shaming employers that fail to pay out after employment tribunals as a deterrent to those that are considering flouting the law; Changing the law so that the state can force companies to give paid holiday to vulnerable workers and, if they fail to do so, they would face tough financial penalties along the lines of those which already exists for underpayment of the minimum wage.
Ministers also plan to explore new powers, proposed by a separate review, to impose fines on companies that break the rules on agency worker regulations by failing to give staff holiday or sick pay, and demanding a payslip for all workers. They want to launch a pilot scheme to investigate the level of labour exploitation at hand car washes, which are regularly linked by the police with illegal labour and modern day slavery. Finally, they are considering setting up a single labour market enforcement agency, which would bring together the relevant parts of HMRC, the Gangmasters and Labour Abuse Authority and the Employment Agency Standards Inspectorate.