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5 January 2016updated 09 Sep 2021 2:04pm

What impact are services like Uber, TaskRabbit and Airbnb having on workers?

Are these new forms of work part of the solution to low pay and squeezed living standards? Or are they eroding workers’ rights and the social safety net?

By Carys Roberts

Last year saw growing concern about the nature of the work being created by “on demand” economy companies such as TaskRabbit, AirbnB and Uber. Are these new forms of work part of the solution to low pay and squeezed living standards? Or are we seeing an erosion of workers’ rights and the social safety net?

The main point of contention is that Uber and other on-demand companies define themselves not as employers, but as online intermediaries providing a platform to match demand for goods and services with supply. This means that some argue they are displacing traditional employers not simply because they are using superior technology to offer an improved service, but because they are avoiding providing certain benefits, taxes and protections.

The debate this generates is still in its infancy in the UK. But in the US tech leaders and unions alike are clamouring to put forward ideas to improve security for those who earn a living or supplement their income by using apps to find work. In the UK the debate has largely been led by regulators such as Transport for London, and unions such as the GMB, applying traditional employment law to leading on-demand companies such as Uber.

It would be easy for those on the left to continue in this vein in the name of protecting workers’ rights. But our existing, 20th-century forms of employment protection are being rapidly outpaced by technological change. The “on-demand” economy is blurring the distinctions between work and non-work in a way that makes measuring work in hours virtually impossible. For example, if a driver is working with several apps at the same time, or is fitting work around personal tasks, how can their hours be attributed to any one employer? Forms of protection such as the minimum wage and overtime compensation may become redundant in this context.

Progressives must be at the forefront of shaping new alternatives in the UK as they are in the US. In December, IPPR hosted David Plouffe, Chief Advisor to Uber and formerly President Obama’s campaign manager, to reflect on how the ‘on-demand’ economy is changing the nature of work. Plouffe argued that Uber and companies like it are providing vital economic opportunities, rather than jeopardising income security, for several reasons.

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Firstly, because in the 21st century, people want flexibility in their working lives to top up their incomes or work around personal commitments such as caring. This doesn’t mean they want zero-hour contracts with hours that vary each week, handed down by managers; they want to control their own time. Uber has found that its drivers would have to earn 40 per cent more to give up the flexibility they have in their job. Uber claims that young people in particular value being able to log into the app, and only work at a price that’s right for them, at a time that suits them.

Secondly, he argues, we’re not seeing a brave new world of freelancers with portfolio careers, so much as the on-demand economy supplementing more traditional jobs: Uber helps people to top up and stabilise otherwise low incomes and meet unexpected or additional costs – such as replacing a broken washing machine, going on holiday or buying Christmas presents. It should be noted that in the UK, however, more drivers drive with Uber full time than in the US, partly because of high barriers to entry to the private hire market.

Finally, he claimed that Uber’s low prices are stimulating additional demand for private hire journeys, rather than cannibalising the market for taxis (though there is no data to support this for the UK).

Flexibility and autonomy, access to the labour market and greater earning potential for low-income workers are all progressive goals. So we must examine whether it is possible to shape new forms of employment protection that can improve the income security of so-called gig economy workers while embracing technological innovations that are becoming part of the fabric of our everyday lives.

Alternatives are being put forward in the US, such as Seth Harris and Alan Krueger’s proposal for a new legal category of the “independent worker” to address the uncertainty workers and businesses currently face. They argue that a number of rights should be extended to participants in the on-demand economy including the freedom to unionise and collectively bargain, the application of anti-discrimination laws, tax withholding services, and employer contributions for health insurance. But because of the difficulty of measuring work in hours, they stop short of arguing for the minimum wage or overtime compensation to be extended to this group.

The online “gig economy” may be a small part of the workforce, but it is growing rapidly. Rather than actively shaping its future, the UK currently faces the worst of both worlds: costly legal battles being fought on the basis of employment law that is not fit for purpose and ongoing uncertainty for on-demand workers and companies about their legal duties and rights. In 2016 we need a new debate about how to create 21st-century forms of protection for 21st-century forms of work.

Clare McNeil is an Associate Director at IPPR. She tweets at @claremcneil1. Carys Roberts is a Research Fellow at IPPR. She tweets at @carysroberts.

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