Can the firm keep its prices below market average while giving its workers a fair deal?by Clive Lewis / November 3, 2016 / Leave a comment
Scandals such as that seen at Sports Direct have made it popular to lament a return of “Victorian employment practices” in modern Britain.
One commonly cited example received a blow last week, when an employment tribunal ruled that drivers for app-based minicab company Uber could not be classed as self-employed. The case was brought by the GMB union, which argued that categorising drivers in this way served to deny them fundamental rights.
Jo Bertram, Uber’s manager in the UK, has claimed that the self-employed status of its drivers grants these workers “freedom.” Instead of the grind of a nine to five, Uber drivers have the choice of when to work and for how long, and the ability to make extra money alongside a second job, or to more easily juggle work with other responsibilities, such as childcare.
In the run up to the verdict, news producers across the country were able to find contented Uber drivers, eager to expound the virtues of this new style of working. This vocal minority may have made for seemingly balanced TV, but they are far from representative.
The Tribunal ruled that the categorisation of Uber drivers as self-employed was bogus, and highlighted the miserable conditions endured by many of them. In a country where the minimum hourly wage is £7.20 for those over the age of 25, one Uber driver earned a pitiful £5.03. There have been horror stories of drivers being unable to take toilet breaks, or stop to eat. If Uber brings freedoms, for most they have come at the price of dignity.
We should not underestimate the significance of the tribunal’s ruling for both employers and employees within the gig economy.
In the short-term, the ruling will have a dramatic impact on Uber and their 30,000 drivers. The firm may now have to top up the earnings, potentially including back pay, not just of the drivers who appealed but of any others who come forward, until they are in line with the minimum wage. Uber drivers may now also seek employment rights such as sick pay and holiday pay, or parental leave.
All this will greatly improve the quality of life of Uber’s drivers, but we may also see some changes to the firm’s business model. Here, the million dollar question is: can the firm keep its prices well below market average, while giving its workers a fair deal?
If it can, we will have taken a significant step forward in learning how to harness new technology in a way that benefits everybody. If it can’t, it will be hard to escape the impression that Uber’s success is based, not on the way it has utilised cutting edge technology to develop an innovative new business model, but on good old-fashioned exploitation.
The significance of the answer to this question is what makes Uber a landmark case.
We must be clear—if it can’t, then Uber’s business model isn’t viable and we need to accept paying more for our taxis. But the search for business models that are able to share the benefits of new technologies will continue.
We are in a period of rapid technological change that is opening up new possibilities for our quality of life, in and out of work. This includes not just flexibility, but new forms of mutual and decentralised ownership and management. We can look forward in our lifetimes to the automation of activities, such as driving, that hitherto seemed irreducibly manual.
Embracing these new technologies has enormous potential to improve people’s lives. There is no doubt that Uber has brought benefits to the travelling public. But the Uber verdict has confirmed by law that it cannot be at the price of intensified exploitation.
Part of figuring out how to harness the benefits of new technology for all is improving protections given to workers, and driving out such practices as bogus self-employment. The pivotal role played by the GMB in bringing the Uber case is a reminder of the importance of giving workers not only rights, but a voice and channels through which to express it.
But if—as Uber’s decision to appeal suggests even they fear—Uber’s business model cannot survive these measures, then we also have a responsibility to work with tech companies to develop business models that can.
It is business that will be at the forefront of developing and deploying new technologies. And policy-makers must play their part in enabling them to do so in a way that is not at odds with giving the workforce a share of the spoils.
The lesson of the Uber verdict is, therefore, not simply that new technology must not be used to violate people’s rights. It is also that government needs to do better to create an economic framework in which businesses can embrace cutting edge technology and succeed in new markets, without being forced into a race to the bottom.
Despite comparisons with the Victorian era, bogus self-employment and similar practices are contemporary problems that will require contemporary solutions. As the new Shadow Secretary of State for Business, Energy and Industrial Strategy, I look forward to working closely with business, trade unions, and other stakeholders to develop them.