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8 February 2018updated 05 Oct 2023 8:17am

How the gig economy is widening racial inequality

Of the 1.1 million people on zero-hour contracts, a quarter are black and ethnic minority workers.

By Zubaida Haque

This week, the government has responded to the Taylor review, commissioned by the Prime Minister, on modern day employment practices, with a strong focus on the “gig economy”. Under this government, the gig economy has grown substantially from around 200,000 people on zero-hour contracts in 2011 to approx. 1.1m in 2017. The employment practice encompasses a variety of short term, freelance, “casual gig” or zero hour contracts through “touch-of-an-app services” such as Uber, Deliveroo, Hermes and Yodel.

The gig economy numbers and diverse demographics are worth reflecting on. Unlike other employment sectors, there are higher proportions of young people (approx. a third compared to one in ten in non-zero hour jobs), people in full-time education (approximately a fifth of the workforce) and in part-time work (some 65 per cent of the workforce compared to 26 per cent of part-time workers in non-zero hour work). That suggests that the gig economy has addressed a gap in the labour market that is not necessarily accessible in the traditional employment sector.

But evidence now suggests that the emphasis on “freedom of choice and flexibility” has been oversold, masking considerable differences between worker groups and blurring the distinctions between “positive choices” and “enforced choices” The cases of exploitation and unethical working practices have become the norm. The Sports Direct warehouse scandal in 2016 where workers were paid less than the minimum wage now seem to pale into comparison with the sad and tragic death of Don Lane. The parcel courier, who had diabetes, did not take time off to attend vital medical appointments because of the pressure he felt to find cover for his round or face the threat of a £150 fine each day.

If the idea of“flexibility and choice” is now being widely debated, there is another less discussed feature of the gig economy: race. Of the 1.1 million people on zero-hour contracts, a quarter are black and ethnic minority workers. Black workers are twice as likely to be on zero-hour contracts compared to their white peers. A report by the TUC in 2015 noted a sharp rise in the number of black women in particular on zero hour contracts over the recent years. This matters because we know that there is racial discrimination in the traditional labour market, with BME people twice, and sometimes three times more likely to be unemployed compared to their white counterparts. A significant growth of BME people in the gig economy is therefore not an accident or necessarily by choice.

This is problematic. A key reason Matthew Taylor was asked to review the gig economy is because it represented a growing sector where there were well-founded concerns about a lack of rights and entitlements, a lack of guaranteed hours and increasing evidence of workers being paid lower wages (after you factor in commission back to the employer, maintenance costs and so on).

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For black and ethnic minority workers in this sector, this has substantial implications because not only are they excluded from the traditional labour market because of discrimination, but now they are more likely to be pushed into an employment sector where there is less financial security and less opportunities for progression. This matters because BME people are already affected by substantial structural inequalities: they are more likely to live in poorer households, more likely to face multiple disadvantages in the labour market (race, gender and religious discrimination) and more likely to have higher rates of child poverty in their households than white groups. Recent analysis by the Runnymede Trust and the Women’s Budget Group on the impact of budget and austerity cuts also shows that BME people, and BME women in particular, are the worse hit by the cuts. The gig economy is exacerbating structural inequalities between racial groups.

BME young people, BME fathers and BME part-time mothers with caring responsibilities now face more insecurity about their income, more unpredictable hours and less able to make plans for the next week, let alone the next several months. More importantly, because of the lack of guaranteed hours and income, they are less able to get a rental contract, or even a mobile phone contract, let alone apply for a mortgage.

The government has a dilemma. In 2016 Theresa May spoke passionately about addressing the “burning injustices” in society, and launched the Race Disparity Audit, a review of how people from different ethnic and racial backgrounds are treated. Yet simultaneously there has been a growth of a two-tier labour market system, that is not only divided by worrying working conditions, but also by race.

The government’s response to the Taylor review is to enforce holiday and sick pay entitlements, give all workers the right to demand a payslip and allow workers to demand more stable contracts. However, the question remains whether this goes far enough to protect vulnerable and BME workers, who are increasingly working in a two-tier labour market system which is evidently open to exploitation, no guarantees of a job, low prospects and enormous financial insecurity. Without addressing these racial disparity issues, the employment gap, pay and long term prospects between different racial groups will not only remain entrenched, they will widen.

Dr Zubaida Haque is Research Associate at the Runnymede Trust. She tweets at @zubhaque.

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