Gig economy doesn’t need more regulations

Matthew Taylor’s report on the gig economy seems to have satisfied no one, which suggests he has got the balance about right. Campaigners and trade union bosses called it a missed opportunity to end the “exploitation” of selfemployed workers while some companies are worried that it will hamper their ability to hire staff. Mr Taylor, a former adviser to Tony Blair, acknowledged the economy’s success in producing new jobs, largely because the labour market is not hamstrung by the regulations that apply in other European countries. The UK has record levels of employment, low levels of unemployment, high levels of voluntary flexibility and wages are growing fastest amongst the lowest paid.

The most important thing, therefore, is not to mess it up. There is, however, another side to the “jobs miracle”. In many cases we are not talking about lifetime careers in the traditional sense: companies do not necessarily offer such security any more and not all workers want it if it restricts them to one employer or set hours.

Mr Taylor recognises the importance of flexibility and that a job without all the protections of a staff employee is better than no job at all. Moreover, he accepts that the costs of taking on a new worker are already high and insists that employers have nothing to fear from his review.

However, Mr Taylor sees an interventionist role for government to ensure all work is “fair and decent”. It is hard to see how this can be fulfilled without the regulatory structures inimical to the very flexibility that he wants to encourage.

No one should want people to be exploited or forced into undignified, poorly paid, dead-end tasks, and it would be naive to pretend such employers do not exist. But a balance needs to be struck; and Theresa May needs to be careful in asking opposition parties to come with their own ideas to avoid tying up the gig economy in new rules when the main economy is burdened by over-regulation. Labour would do away with zero hours contracts (something the report does not recommend) and impose rules on how to pay and treat self-employed people that would threaten what matters most – a paid job. Legislation is recommended to “define the boundary between self-employment and worker status” and to align their taxes. If the Treasury gets its way, that alignment will inevitably be up, not down.