As part of my application to the Hertie School of Governance’s MPP in Public Policy, I also applied to their Digital Governance Scholarship. I am proud to announce that I was successful in my application and I am a 2022 Hertie Digital Governance Scholar 🥳. Below is the essay I wrote for the application. It’s a thorny topic, regulation, and my thesis definitely is restrictive. Ultimately I think that regulation requires a push/pull from the private sector and the public sector, but that governance through law is imperative. Self-regulation is suitable in some situations, but not all. And, when it comes to the gig economy — labour law reform is also necessary.
Digitalisation has resulted in an explosion of new technologies supporting and changing how people live and work. Convenience and time-saving are unique selling points when it comes to consumers adopting new technology. Citizens in Europe and the US can order food, hire manual labour, or book private transport with Deliveroo, TaskRabbit and Uber, respectively. The latter is known as the ‘gig economy’, defined as “people using [platforms] to sell their labour.” Alternative definitions broaden the scope to include “work that is transacted and delivered remotely” and include platforms like Upwork and Fiverr, amongst others. When I mention the gig economy in this essay, I’m referring to work that is “transacted via platforms [or apps], but delivered locally and thus requires the worker to be present.”
In Europe, 44% of gig workers surveyed rely on it for up to 10% of their income. For these people, the gig economy allows them to take part in short-term, flexible work to top up their income, and this digitalisation of the labour market is mostly positive. However, for 65% of European gig workers, 50% or more of their income comes solely from these platforms. This amounts to 5,680,000 adults in the Netherlands, Austria, Sweden, Germany, Italy, the UK and Switzerland and for these people, the gig economy has negative consequences. The issue is that these platforms, specifically Uber and Deliveroo, misclassify gig workers as “self-employed contractors” which allows the platforms to evade the requirement of protections around employment status, payment and working conditions. This is possible because of gaps in outdated employment laws that “gig companies exploit to gain a competitive advantage.” In the report “Work in the European Gig Economy,” Ursula Huws writes: “‘old’ and ‘new’ forms of work increasingly overlap as labour markets rapidly evolve in the digital age. Since this has left many workers unprotected, [there is a] need for more stringent regulations in order to reap the benefits of digital technologies.” To improve public well-being and benefit all participants, gig economy companies should be steered and regulated through the United Nations (UN) “Protect, Respect and Remedy” framework for business and human rights.
Uber and Deliveroo use new business models and operate in environments currently regulated with traditional labour laws. Misclassifying workers allows them to reap greater profits without the need to pay for employee benefits. The New York Times wrote that platform companies save 20-30% annually, by classifying workers as contractors. In the US, this amounts to an estimated 831.4M USD annually in unemployment insurance taxes, and USD 2.54 billion in workers’ compensation premiums. Deliveroo argues the self-employed classification is because “riders… have… told us that flexibility is what they value most about working with Deliveroo.” However, this flexibility argument is weakened by the fact that Deliveroo only allows “highly rated” riders the opportunity to book shifts in advance, as an “incentive” to keep ratings high. For those who do not meet this level it leaves them with few bookings to choose from. They then have fewer opportunities to improve ratings which would, in turn, enable them to get more shifts — a Catch-22 that impacts regular working hours, and results in reduced income for many.