The price of your Deliveroo dinner? £2.50 plus the cost of food. Tip optional.
The price of your Uber ride? £2.50, then 15p/minute. Tips will be optional, one day (eight years post-launch).
The price of your next day Amazon delivery? With £79-a-year Prime membership, nothing (or 21p a day, depending on how you look at it).
The price of convenience to the British economy? About 300 years of progress.
Read more: The hidden dangers of the global gig economy
According to the chief economist of the Bank of England, Andy Haldane, the emergence of the gig economy, while a boon for startup founders and even incumbents like Amazon (all of whom will extol the sacrosanct virtues of getting more consumers spending and more people working), is partly responsible for our wage growth sitting at a paltry 2 per cent. The result is an economy that, for workers, looks an awful lot more like pre-Industrial Britain than the tech utopia the likes of former Uber CEO Travis Kalanick have been promising.
“Prior to the Industrial Revolution, and indeed for some years after it, most workers were self-employed or worked in small businesses,” Haldane said in a speech given at Bradford’s National Science and Media Museum this week. “There were no unions. Hours were flexible, depending on what work was needed to collect the crops, milk the cows or put bread on the table. Work was artisanal, task-based, divisible.”
The key difference? This work was either a necessity (we did not have machines to do our agricultural work for us at scale), or specialist. Today’s gig economy can sometimes fit into that category - a freelance designer, for instance, hired for their unique skills and too expensive to keep on staff. But in this instance, the “too expensive” disclaimer is relative nonsense. Free services provided by the likes of Google, coupled with the demand for a constant flow of information and commerce, have produced a hungry beast of a modern day public. It wants to spend less and get more. Or preferably, spend nothing.
Monetisation models have not caught up to fill the obvious hole in that dichotomy in industries like publishing. In the gig economy, as typified by Uber and alike, the board members simply have no reason to try to innovate a new monetisation model – free and cheap is what they are selling, and their seemingly endless growth tells them they have done the right thing and cannot stray from the designated path.
In a now infamous video that shows Kalanick chatting, then fighting, with an Uber driver, we get a rare insight into that model.
When the driver questions why fares are dropping, Kalanick replies that Uber has to do it or “we’d go out of business”. “We didn’t go low-end because we wanted to. We went low-end because we had to because we’d be out of business...it seems like a piece of cake because I’ve beaten them (Lyft). But if I didn’t do the things I did, we would have been beaten, I promise.” The driver then proceeds to complain about the debt he is in - Kalanick responds “bullshit” a few times before suggesting the man take responsibility for his own “shit".
Read more about the Taylor Review on Modern Employment Practices
The total lack of disconnect between Uber’s role as a business and those that make that business possible – the network of 40 million riders (as of October 2016) is astonishing, and plainly clear in Kalanick's retort. Of course, this is how Uber and others have survived. They have refused to admit employer status. That 40 million figure is great for Uber and its customers. And pretty terrible for the 40 million (non-)employees. As Haldane explains: “There is power in numbers. A workforce that is more easily divided than in the past may find itself more easily conquered. In other words, a world of divisible work may reduce workers’ wage-bargaining power.”
Uber is an interesting example of how the apparent moral vacuum from which particular gig economy models were born, can be its undoing.
Since its launch in 2009, Uber's mounting reputation for brash tactics could be excused, a few times, as the unfortunate result of an almost admirable Silicon Valley no-nonsense desire for progress and growth. Its success has excused its behaviour for a time. But what really puts the brakes on that acceptance? The sexual harassment and bullying accusations that were finally Kalanick’s undoing, have proven the public will tolerate poor employer practices when they relate to the conveniences of their consumer lifestyle. Misogyny, it seems, is a step too far. But only a certain brand of misogyny: the kind directed at well-educated, highly paid employees.
When it was discovered Uber executive Eric Alexander had acquired a medical report in 2014 of a woman in India who said she was raped by an Uber driver (who was later sentenced to life in prison) to see if it was, in fact, a bizarre ploy by competitors, he was eventually fired. Two years later. The timeline is not exactly clear, but the series of events only came to light publicly during the internal Uber investigation carried out earlier this year by Perkins Coie and Covington & Burling in the aftermath of very public complaints about company sexual harassment. That investigation found Alexander kept the private records for months, even showing them to other employees including Kalanick.
At the time, Kalanick was publicly appalled at the crime. But in a statement, he also bizarrely blamed the lack of regulation in India over background checks for drivers.
So far, so 1750s.
The rights of the individual and the working classes are ignored. The rights of the highly educated (in the 1700s, the owners of the textile companies and alike; in the 21st Century founders and their elite teams), take priority. Treat an engineer poorly, and be lambasted (rightly so) across the globe.
****: The gig economy refers to an industry that is populated by casual workers - those on short-term contracts with no employee benefits.
****: Uber, Deliveroo, Amazon and many others rely on keeping costs low and demand high by avoiding the added costs of paying employer’s tax and employee perks and keeping wages low.
****: Couriers and alike are paid per delivery, with no standing wage. It provides, companies say, a vital service highly in demand that meets customer expectations in relation to speed and convenience, and provides a workforce with flexibility other professions do not.
****: It’s also argued, however, that it’s simply a form of workers exploitation that keeps company profits high, and working standards low. UK statistics suggest around five million people earn money as ‘gig’ workers, none of whom are entitled to sick or holiday pay, all of whom can be terminated at the drop of a hat without reproach (this differs from a zero hours contract, where workers are considered employees and have rights, but no expectation of regular hours).
****: Increasingly UK courts - and courts across the globe - are hearing from gig economy workers frustrated at their lack of rights. In 2016 a group of Uber drivers won a case that dictated they should be classed as workers, with all the rights that go with that. Uber recently agreed to start providing sick pay, for drivers that have undertaken 500 trips and agree to pay £2 per week.
In fairness, the sexual harassment claims of Uber employees were not addressed until individuals came out publicly but many of the transgressions against gig workers have been publicly known for years. Well publicised claims of crushing working practices at Amazon, from the top down, have been largely ignored by consumers hitting the one-click purchase button. In 2015, the GMB trade union warned that staff in the UK were developing mental and physical illnesses because of gruelling “regimes”. Couriers that work ad-hoc via Amazon Flex are not afforded the kind of oversight and checks and balances a union provides.
According to Haldane, post-war Britain’s economy exhibited a “positive slope” in its Phillips curve (the relationship between unemployment and inflation). Post-Industrial Revolution, it also has an upward slope. But before, he says, it was “flat as a pancake”.
“Indeed, it bears a close resemblance to the Phillips curves which have operated, in the UK and globally, since 2008. There are many potential explanations of this flatness in the pre-Industrial Revolution Phillips curve, including noisy data. And its similarity with the present-day Phillips curve may be purely coincidental. Nonetheless, this pattern is at least consistent with a shift in working practices, towards a more divisible, idiosyncratic workforce, having contributed to a flatter Phillips curve relationship.
“None of this evidence is definitive or decisive. Taken together, however, it is at least suggestive that recent trends in the nature of work may have had some bearing both on wage-setting behaviour in general and on the weak wage puzzle in particular. Shifts in working patterns seem very unlikely, by themselves, to have been the prime mover of weak wages. But they have probably been a contributor in the past and, more significantly, are likely to continue to do so in the future if these trends, as seems likely, perpetuate.”
There’s little to suggest those shift patterns will change anytime soon.
We are told that as more work is automated and AI-driven it will be a good thing for humanity overall. Yes, we might have to introduce a universal wage so the millions it puts out of work will be able to survive but everyone will have more time on their hands. We’ll have more access to information and more time to consume it, so surely we will all begin to solve the “big problems” and focus on the truly human artisanal skills that no machine can replicate? Or, an alternative future will see money and education continue to play the role it has played for hundreds of years and open this utopia up to only a rare few.
Government is not totally blind to the impact these shifts are having. As Haldane points out, the increase in “self-employment, flexible and part-time working and zero-hours contracts” (self-employment is now at about 15 per cent, and almost one million people are on zero contract hours) has led to an independent review. He points out that for some, flexible working has been a huge benefit to their lifestyle. However: “For others, these same shifts are less a lifestyle choice than a necessity, increasing their degree of uncertainty and concern about income and jobs.
"Gigging can be fun for some. But not everyone wants to be a roadie when it comes to the world of work.”
Years of austerity are giving way to increasing public awareness about the cost of convenience, and pushing the government to take notice. Before the Grenfell fire, no single event has more closely pulled into focus the potentially devastating impact on society of cost-cutting. (Though investigations are still underway, it’s widely claimed that cheaper, flammable cladding, attached to beautify social housing in the heart of one of the country’s wealthiest boroughs - where the council has accumulated a reported £274 million in the bank - was to blame for the deaths of more than 70 people). It’s a vast generalisation of the situation, but it does increasingly seem that Labour’s unexpected rise in the 2017 General Election backs up the theory that calls for fairness and equality are no longer confined to a small minority on the left. They are on the minds of the many.
And in recent months, we have begun to see the fruits of that shift.
In May, the parliamentary work and pensions committee called for a change in law to protect workers from being exploited by gig economy (non-)employers. After interviewing the likes of Uber and Amazon, it demanded that anyone who falls into this category be classed as a worker and given the appropriate benefits. MPs argued the shift work did not provide a happy flexible working life and simply added strain to the welfare system and reduced potential tax revenue. “It is clearly profit and profit only that is the motive for designating workers as self-employed,” said Labour MP Frank Field. Of note, the Office for Budget Responsibility estimated last year that by 2020-21, the gig economy will cost the Treasury £3.5bn.
Uber’s definition of drivers as self-employed has been rejected by an employment tribunal, and it is finally relenting and offering sick cover to drivers (for a £2 per week premium). Deliveroo is finally removing a contract clause for couriers demanding they never challenge their self-employed status legally.
Kalanick’s resignation was painfully slow in coming but it might just show that the tide has already begun to turn, the remaining board members grown savvy enough, to admit their previously charming, now bullish and foolish refusal to build up good favour, will have to change significantly.
In a time of austerity, company profit might have been enough to allow for any practice to be overlooked. But today, when the Bank of England’s chief economist is alluding to our flat pancake gig economy, that argument is no longer relevant. Coupled with a moral argument for change that is growing louder, the gig economy needs to transform, again.
This article was originally published by WIRED UK
