Many people admire companies like Uber or Amazon for the speed with which they build market share and “disrupt” the competition. There is more and more talk about “Uberisation” and when retailers go bust, they are said to have been “Amazoned.”
But we should perhaps stop and think: are we in fact praising nothing else but the return to old-fashioned exploitation? These companies’ main, crucial competitive advantage is cheap labour. OK, technology helps, but if they were to treat people who work for them properly and pay them higher wages, they would not be as rich as they are now.
Take Uber. It argues that the people who drive for it are not employees, because they set their own hours and choose when to work. Perhaps that is true for some cases. But for others, Uber is their sole source of revenue. The case won by two people last year in court in the U.K., when the judges decided they were employees, not self-employed, speaks volumes about what is wrong with this system.
Uber said it would appeal de decision, on the grounds that its 40,000 drivers in the U.K. are free to work where and when they want, enjoying more freedom than ordinary employees. The appeal will be heard over two days starting on September 27 and, understandably, it will be very closely watched.
With Amazon, things are different: warehouse operators may be employed, but the conditions are so harsh for such low salaries, that workers are in a precarious state all the time. Delivery companies in the U.K. have taken Uber’s example and often ask their drivers to declare themselves self-employed.
The issue of the so-called “gig economy” needs to be tackled urgently. It affects not only the people involved, but it is slowly eroding prosperity for everybody. The lack of security and the poverty of these people will end up weighing on the taxpayer.
Almost two million of the nearly five million self-employed people in Britain cannot save any money at all each month, according to research by insurance company LV=.
Around a third of the self-employed people in the U.K. could not survive for more than three months if they lost their income, while 62% said monthly bills eat up their wages, higher than the 56% national average.
Furthermore, the self-employed suffer more because of debt, with 38% hampered by debt compared to the 28% national average, while they are also more likely to be hit by unexpected costs like home or car repairs (33% compared to 28%).
Sure, it is the government’s responsibility to ensure a level playing ground and fairness for all citizens. But shareholders would do well to look at companies’ business practices, as well, when deciding where to put their cash.
Things to watch in the week ahead:
— ECB meeting, Mario Draghi news conference
— Details of second-quarter GDP in the eurozone
— UK Halifax house prices