On-demand economy draws complaints
Backlash against Uber fuels action across Europe.
Mohaan Biswas was speeding takeout orders to customers in London for the online food delivery startup Deliveroo when he fell from his motorbike, breaking his foot in two places.
Because Deliveroo classifies its riders as self-employed, he received no sick time or insurance, and hasn’t been paid for the past six weeks as he recovers.
“In a job you can negotiate with the boss — we can’t do that,” said Biswas, who had dragged himself on crutches to a demonstration against precarious forms of work recently in central London. “We’re stuck in a perpetually insecure system, where we all get exploited.”
Like thousands of people in Europe and the United States, Biswas, 24, was discovering an uncomfortable reality about the on-demand economy: He got a paycheck when there was enough work to go around, but had little to fall back on if there wasn’t.
Now, Europe is pushing for tougher protections as self-employed workforces and nontraditional work con- tracts proliferate. A back- lash in Britain and other European countries against Uber, which profits handsomely from such systems, has helped to spur the drive.
Last month, in fact, Transport for London, the agency that oversees the city’s subways, buses and taxicabs, declared that Uber was not sufficiently “fit and proper” to operate in the city and declined to renew the com- pany’s license. Uber has said it will appeal the ruling, and the company’s new chief executive, Dara Khosrow- shahi, apologized for its “mis- takes.”
The European Commis- sion backed a proposal last week to combat what crit- ics say is a race to the bot- tom in social standards for workers with ultra-flexible working hours and no regular salary, a group that accounts for about a third of Europe’s workforce. It is part of a broader push in Brussels for better access to social benefits, from written contracts to unemployment insurance, for self-employed and temporary workers, as well as for hundreds of thousands of people in jobs with no minimum hours or pay.
The resolution isn’t binding and is still subject to public debate. But it has opened a rift with businesses and politicians who say too much regulation will ensure that Europe falls behind in the global economy by stifling innovation, reducing competitiveness and thwarting job creation.
Business groups are warn- ing of a threat to compa- nies such as Uber and Deliveroo, which offer people work through online plat- forms. Tighter protections also would increase costs at companies ranging from fast-food restaurants that use “zero-hours” contracts without guaranteed work, to behemoths such as cutrate airline Ryanair, which relies on agencies for pilots and staff.
A flexible workforce allows for “billions of euros of economic growth, millions of new jobs, flexible working hours, and more balanced work and family life,” Juri Ratas, the Estonian prime minister, said at a European Union summit in Septem- ber in Tallinn that focused on the future of the digital economy. “Who wouldn’t want that?”
Companies like Uber and Deliveroo are seen as successes of such a model. They and similar platforms take commissions from work- ers’ earnings, but classify those workers as self-employed. That lets the compa- nies avoid paying for social security, parental leave and other workplace benefits.
The approach has been lucrative: It has helped turn Uber into a behemoth valued at nearly $70 billion.
But the company’s aggressive cost-cutting and expan- sion tactics, championed by its founder Travis Kalanick, who was forced out this summer, have begun to draw unrelenting scrutiny. And as an outcry rises against precariousness in the flexible work economy, governments are being forced to take a harder look.
“Companies have been gaming the system, coming up with loopholes and saying this is a great new world of work,” said Esther Lynch, secretary of the European Trade Union Confederation. “But people are seeing how harsh those circumstances can be.”
Britain recently undertook a review of “modern work- ing practices.” It looked at firms that rely heavily on precarious contracts and urged changes such as closing legal loopholes that let temporary workers be paid less than regular employees in the same jobs; extending holiday and sick pay to on-demand “gig economy” workers; and allowing parental leave for the self-employed.
In France, President Emmanuel Macron is trying to overhaul the rigid national labor code to energize the economy and encourage a trend toward freelance work. But under pressure from social partners, he is also proposing a minimum safety net, including extending unemployment insurance to the self-employed.
Courts, too, are increasingly regulating the gig economy.
The European Court of Justice is expected to rule this year in a major case centered on whether Uber should be treated as a taxi service, which would mean it was subject to rigorous safety and employment rules, or merely as an online platform connecting indepen- dent drivers and waiting pas- sengers.
Uber and Deliveroo face legal hurdles in Britain, too. A British tribunal is investigating whether Deliveroo riders are workers or con- tractors after an effort to unionize in London. And last year, a British court issued a landmark ruling that would require Uber to classify driv- ers as employees, pay them minimum wage and grant them paid vacation.
Two Uber drivers, James Farrar and Yaseen Aslam, had challenged the company on behalf of a group of 19 drivers, saying the ser- vice denied them basic protections by classifying them as self-employed. Uber relied on an argument it has used repeatedly around the world: Its drivers were independent contractors.
But judges in the case derided that idea.
“The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous,” they said in the ruling.
“Drivers do not and cannot negotiate with passengers,” the judges added. “They are offered and accept trips strictly on Uber’s terms.”
Uber appealed that decision Wednesday, setting off the demonstration in cen- tral London that Biswas, the Deliveroo driver, joined.
If the ruling is upheld, it could hit the business model on which Uber, Deliveroo and similar online platforms rely. That could mean a major recalibration of the gig economy, or it could drive companies out of those countries that choose to impose stiffer regulation.
Outside Europe, there have been signs of that happening: Uber said it planned to leave Quebec this month if the government there pressed ahead with tougher standards for drivers.
For Farrar, defeating Uber would represent a win for many workers trapped in what he said were exploitative conditions.
In an interview before Uber’s court appeal, he said he had turned to the ride-hailing service a few years ago to put money aside while he considered switching careers.
“I wanted to do other things,” he said. “I thought I would supplement my income a little bit. I could pick my hours, go to my meetings. I drank the KoolAid.” A few months later, he was assaulted on the job. Because he was considered a self-employed worker, Uber disclaimed any responsibility.
Farrar contacted a lawyer. “I asked a question: is this right? Is there no duty of care?” He recalled the lawyer’s stark reply: “You’re not employed. You don’t have any rights.”