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Exploitation or flexibility? The state of the gig economy in the UK
Working life is ever changing. While not unrecognisable from a generation before, the opportunities that crop up are more varied.
Full or part time jobs aren't the only routes into employment. Nowadays, there is more flexibility and one of the terms that fits this elastic lifestyle is a style of work you undoubtedly will have heard of: the gig economy.
Here, we look at what that phrase means, the work involved and crucially, how those within the gig economy can succeed and protect themselves.
Approximately 1.3 million people work in the gig economy.
What is the gig economy?
There isn’t an agreed definition about the phrase; one person’s flexible working environment is another person’s exploitation of labour and avoidance of paying employee benefits.
Becoming more and more prevalent, the phrase generally comes into the public conscience when thinking about workers who have been offered jobs of low pay, with shifts to suit the individual, without actually being termed as an ‘employee’.
In a recent BBC article, it is defined as “a labour market characterised by the prevalence of short term contracts or freelance work, as opposed to permanent jobs.”
When thinking of the gig economy, companies such as Deliveroo, Uber, Amazon and Hermes spring to mind - where drivers are hired to carry out piece-work, fitting work around their own lives.
It’s becoming a popular route of employment though. According to the CIPD, approximately 1.3 million people work in the gig economy.
Despite these numbers, the CIPD said: “The gig economy has not, as yet, fundamentally changed the nature of work in the UK. Over the past 20 years, the share of people in permanent employee jobs has remained high by international standards and has not greatly changed.”
The gig economy is here to stay. It is part of a massive change in technology and demographics. Like all changes, it means lots of people have no idea how to make the best of it.
The statistics come from ‘To gig or not to gig: Stories from the modern economy’, which shows that 4% of working adults between 18 - 70 years of age are working in the gig economy.
Job satisfaction for gig workers stands at 46%, which is similar to that of those in traditional employment (48%).
From the research, the feeling is that the vast majority work in these roles because they want to; only 14% of respondents work in the gig economy because of an inability to find other work.
32% of gig economy workers take on these jobs as a way to boost income, meaning that for many, they are a convenience in order to supplement an existing salary.
Indeed, only a quarter of gig economy workers said this is their main job.
There are problems though with this career choice. As many as 60% say they don’t get enough work and the wages reported are low too.
Despite this, more than half are satisfied with their level of income.
“It is often assumed that the nature of gig work is well suited to self employment and in many cases this is true. However, our research also shows many gig economy workers are permanent employees, students, or even the unemployed who choose to work in the gig economy to boost their overall income.”
Amazon are one of the largest companies offering freelance delivery work across the UK.
What seems to cause most contention is the balance between being a gig worker, and forsaking the benefits that come with being an employee - such as job security and benefits - in exchange for independence and flexibility.
In addition, gig economy workers are concerned about the control they feel businesses exert on them. Self employment means that the person should have the control. It is, according to Peter Cheese, Chief Executive of the CIPD, a ‘grey area’.
“This research shows the grey area that exists over people’s employment status in the gig economy.
“It is often assumed that the nature of gig work is well suited to self employment and in many cases this is true. However, our research also shows many gig economy workers are permanent employees, students, or even the unemployed who choose to work in the gig economy to boost their overall income.
“Our research suggests that some gig economy businesses may be seeking to have their cake and eat it by using self employed contractors to cut costs, while at the same time trying to maintain a level of control over people that is more appropriate for a more traditional employment relationship.”
What do people think of the gig economy?
As with any topic that evokes such debate, opinions on the gig economy are split; some feel it enhances flexible forms of work, and assumptions are lazy and outdated, while others believe the law needs to tackle the exploitation which allows businesses to profit.
Some are happy with the gig economy
You heard it right. There has been lots of negative publicity around the gig economy. Before the general election was called, the Prime Minister commissioned a review into modern employment which would tackle issues arising from exploitation.
As we define what good work is, it is important that there is a focus on actual workforce experience and that the trap of lazy generalisations informed by outdated assumptions about the way that people want to work are avoided.
The Conservatives have put protecting gig economy workers in their manifesto, with Theresa May promising to “ensure people working in the gig economy are properly protected.” This will guard Uber drivers, Deliveroo drivers, Hermes couriers, all of whom get paid for each individual ‘gig’.
The review is being fronted by Matthew Taylor, Chief Executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), and will set guidelines for workers, including the self employed.
However, some feel that the gig economy provides valuable flexibility to workers. The CBI labelled assumptions that people prefer fixed employment as lazy and outdated.
“As we define what good work is, it is important that there is a focus on actual workforce experience and that the trap of lazy generalisations informed by outdated assumptions about the way that people want to work are avoided.”
Carolyn Fairbairn, Director General of the CBI, added: “Let’s not demonise flexible and praise fixed. It’s not about flexible versus fixed, it’s about good work.”
A further report - which has been curtailed for now - notes the fact that self employed workers are receiving almost equal access to services funded by national insurance contributions (NICs) as employees, despite contributing much less.
Companies in the gig economy are free-riding on the welfare state, avoiding all their responsibilities to profit from this bogus ‘self employed’ designation while ordinary taxpayers pick up the tab.
The report suggests that this disparity needs to be ironed out but for now, it’s certainly attractive to gig economy workers. While they’re not receiving the same pension / holiday benefits of an employee, having access to similar benefits employees gain through vastly superior NICs must be an attractive reason to continue their flexible career.
Exploitation of gig economy workers needs to be ended
However, for all the defending of the gig economy, there is evidence that workers are being taken advantage of and shunted into self employment for the benefit of employers.
This has been touched upon in the above report, in which a parliamentary work and pensions committee has called upon whoever the next government is to change laws in order to protect workers from exploitation.
This is where much of the opposition to the gig economy is focused: pushing people into self employment unnecessarily, and therefore depriving them of access to benefits such as pensions and holiday pay.
Labour MP Frank Field, outlined another issue - namely, depriving the state of funds.
“Companies in the gig economy are free-riding on the welfare state, avoiding all their responsibilities to profit from this bogus ‘self employed’ designation while ordinary taxpayers pick up the tab.
“This inquiry has convinced me of the need to offer ‘worker’ status to the drivers who work with those companies as the default option. This status would be a much fairer reflection of the work they undertake, which seems to fall between what most of us would think of as ‘self employed’ or ‘employed’. It would also protect them from some of the most appalling practices that have been reported to the committee.”
It is clearly profit and profit only that is the motive for designating workers as self employed.
The exploitation has previously manifested in court rulings against powerful businesses whose workers are self employed when they should be actual employees.
In an employment tribunal last year, Uber drivers were found to be wrongly classified, though the company plans to challenge this ruling.
It has, however, forced Uber into changing some of their practices. While they maintain many of their drivers want to remain self employed, they will offer drivers sickness cover for £2 a week, giving these workers cover for illness or injury.
Seen as one of the major reasons for workers to enter the gig economy, flexibility of hours and the payment-per-gig are also challenged.
In the aforementioned inquiry, the idea of flexibility only being possible in the gig economy as it stands was dismissed as a fallacy driven by “profit and profit only”.
Frank Field MP said that self employment could still be rewarding without businesses using it to exploit workers.
“It is clearly profit and profit only that is the motive for designating workers as self employed.”
As such, MPs want companies to change staffing practices.
In absence of a traditional workers union, organising less formal routes for employees to feed concerns back to management would also help to boost morale and decrease staff turnover levels.
What needs to be done to protect workers
This is not only a question for workers to think long and hard about - it’s also something that employers should have at the forefront of their minds.
The reason for this is it gives the worker in the gig economy the best chance of protection while decreasing the chances of being exploited.
And for businesses, it means they are seen to be doing the right thing by employees, and crucially also protect their own interests.
Protect your legal status
It is one of the most important issues. Why would you want to work for somebody without knowing the terms of a contract? Have you even seen a contract?
A professional who is prominent in speaking about the gig economy and supporting groups of clients about its legal complexities told us of the need for workers to “know your legal status, as employee, worker or self-employed business person.”
Annabel Kaye, Director of Koffeeklatch.co.uk urged workers to use the tools available on the HMRC website.
A contract is the most obvious way to set in stone your rights and working arrangements with an employer. For somebody working in the gig economy for a number of different organisations, that is especially important according to Annabel.
More and more people are turning to gig work to generate extra income.
She said: “Most of the ‘rights’ between a freelancer and a client are set out in the contract. The problem is that quite often nothing is written down. So having a good set of terms of business that you apply to all your clients is a start.”
“Dr Woodcock suggests that in the absence of a traditional workers union, organising less formal routes for employees to feed concerns back to management would also help to boost morale and decrease staff turnover levels.”
Get union protection
Trade unions are the go-to for many who have grievances with employers. For gig economy workers, this is an acutely difficult process to be integrated into, as they are seen as freelancers.
However, now more than ever, this is necessary. As we have spoken about, the gig economy can result in low pay and low job security, while simultaneously failing to provide employment rights including guaranteed hours, sick and holiday pay.
An added issue for gig workers is the fact that, in this age of technology, their work can be easily - and unfairly - judged at the touch of a button thanks to the rise in app-based services.
For example, workers for Deliveroo could find their standards of delivery unfairly criticised by the customer, therefore putting them under greater strain.
A Fellow at the London School of Economics Department of Management, Dr Jamie Woodcock, believes that it is in the employer’s interests to provide protection to workers.
He said: “Sooner or later, without a sufficient conduit in place for employees to air concerns with management, workers will find routes through which to take their own action and rebel.”
Dr Woodcock’s research has shed light on the dangers of hiring gig economy workers but not treating them as employees; he went undercover for six months at a UK call centre and found a lack of regular work, increased pressure and limited control over working conditions resulted in staff rebelling.
“Most of the ‘rights’ between a freelancer and a client are set out in the contract. The problem is that quite often nothing is written down. So having a good set of terms of business that you apply to all your clients is a start.”
This ranged from taking longer breaks than permitted, to damaging equipment.
All of this points to a need for union representation, to look after the rights of these workers.
Uber, as has been mentioned, have been taken to court by employees who want access to sick pay and holiday allowances, while just last month, the importance of trade unions was displayed by the fact the smaller Independent Workers Union of Great Britain (IWGB) took Deliveroo to court, saying that their drivers are in fact employees and should be treated the same as fully-contracted workers.
This perfectly illustrates the advantages of being affiliated with a union to gig workers.
Dr Woodcock suggests that in the absence of a traditional workers union, “organising less formal routes for employees to feed concerns back to management would also help to boost morale and decrease staff turnover levels.”
What should employers do?
For their part, business owners can help the situation by providing conditions that give their workers more security and make them feel valued.
Of course, workers still need the contractual and legal rights to protect themselves but their morale could be improved by a gig economy employer who shows willingness to understand their situation.
“The gig economy has not, as yet, fundamentally changed the nature of work in the UK. Over the past 20 years, the share of people in permanent employee jobs has remained high by international standards and has not greatly changed.”
An understanding about the worker’s situation, providing flexibility on this, and ensuring there is some way for workers to speak to management about any concerns will all have a positive effect on morale and turnover, according to Dr Woodcock.
“Affording greater flexibility on workers’ terms can mitigate the most difficult problems and greatly improve working conditions.
“In absence of a traditional workers union, organising less formal routes for employees to feed concerns back to management would also help to boost morale and decrease staff turnover levels.”
There’s no doubt that the gig economy model poses real challenges for management and workers alike but, as Annabel Kaye told us: “The gig economy is here to stay. It is part of a massive change in technology and demographics.
“Like all changes, it means lots of people have no idea how to make the best of it.”
Annabel is adamant that business need to protect workers who have not chosen the gig economy lifestyle and educate them on its processes.
Contracts and the correct processes being in place all matter here.
Workers, for their part, need to guarantee they have the greatest possible understanding of their own rights, and the support they should expect from the employer.
Unions or organisations of that ilk come into their own. Dr Woodcock says that this support outside of a company, as well as what workers are entitled to from within, “helps to make up for the security such roles lack.”
Written by John Train