Flexible labour contracts are the new norm. But the left need not fear, for Deliveroo’s workers have shown that social organisation is still possible in the “Gig Economy”.
Historically, global economic activity has always been highly uneven across time and space; fundamental structural changes in the global economy have created both winners and losers. For some on the left (and indeed the right), policy-makers should look to the past. Traditions should be restored and old methods brought back: we should return to “how things used to be”. But this is neither realistic nor desirable.
Economies, like organisms, are constantly in a state of evolution. Policy-makers should not reverse or halt that evolution but manage it as smoothly as possible. With flexible labour contracts the new economic norm, the left need to avoid making simplistic policy-prescriptions. They need to think more creatively about how structural economic changes can be better managed. Specifically, the left need to recognise that the “Gig Economy” presents both opportunities as well as challenges.
During the 20th century, the Fordist production system was the dominant business model, adopted to fuel growth and industrial development. Workers were involved in the mass production of standardised goods, performing specialised tasks as part of major assembly lines. Since the late 20th century, however, this system has gradually been replaced by what scholars refer to as “post-Fordism”. Production is increasingly carried out on a smaller scale using information and digital technologies. Significantly, labour has become increasingly flexible and semi-casual.
Consequently, we have seen the emergence of what some economists call the “Gig Economy”. Musicians tour the country playing gig after gig. The more gigs they play, the more they earn (and vice versa). If they are feeling upbeat, they can gig every night. However, there is no contractual obligation to play a certain number of gigs; the ball is well and truly in the court of the musicians. Equally, music venues can host as many (or as few) gigs as they so choose. Again, there is no contractual obligation to host any gigs at all.
Essentially, the “Gig Economy” works in the same way. Employment is semi-casual. Employers do not offer fixed hours contracts but instead offer hours as required. Employees can then work as many (or as few) hours as they so desire, subject to availability. The growing trend in semi-casual employment was raised during the 2015 UK general election, when Ed Miliband pledged that a Labour government would ban zero-hours contracts. Months later, his leadership successor, Jeremy Corbyn, echoed Mr Miliband’s sentiments, pledging to tackle “exploitative” zero-hours contracts. Collectively, the left are concerned by the economic insecurity brought to households by the flexibility of these contracts. Although their concerns are legitimate, the recent Deliveroo episode suggests that all is not lost yet and that the left should remain hopeful.
Deliveroo is a classic example of a business rooted in the “Gig Economy”. Founded in 2013, the company delivers food from restaurants to customers via bicycles and motorbikes. Employees do not have fixed hours contracts but are paid £7 an hour, plus £1 for every delivery they make. Deliveroo proposed changing its payment scheme such that employees would receive £3.75 per delivery (with no fixed hourly pay-rate). Employees average two deliveries per hour, although clearly this can vary. Hence, under the new scheme, some employees could earn well below the new national minimum (“living”) wage of £7.20, which came into effect in April 2016.
This low pay is exacerbated by the fact that Deliveroo employees rarely receive tips for their deliveries; the cash transfer is done electronically via credit/debit card in advance of the delivery. In retaliation to the new proposed contract, the workers organised a series of strikes on 11th August across Central London. Customers became frustrated as their orders were subsequently cancelled and the story made national news headlines. Aware of the damage being done to the negative publicity, Deliveroo were forced to U-turn on the proposed new pay scheme. They began negotiating with their employees and a settlement appears to have been reached. In short, Deliveroo employees fought and won. CEO William Shu has since apologised, declaring that no action will be taken against staff who were involved in the strikes.
During the 2015 general election campaign, David Cameron argued that some employees appreciate the flexibility zero-hours contracts can offer (especially students). Working fewer hours can also give individuals more opportunities for leisure time; recent polling suggests 65 per cent of employees on zero hours contracts are happy with their work-life balance, compared to 58 per cent of people on regular contracts. Flexible labour contracts also improve the UK economy’s international competitiveness and therefore help to attract foreign direct investment (FDI). Following Brexit, attracting FDI is crucially important in terms of restoring market confidence and maintaining economic health.For those on the left that fear the emergence of “Gig Economy”, the recent Deliveroo episode offers hope: it suggests that temporary contract workers are still capable of social organisation. Interestingly, the digital tools that were used to make Deliveroo so successful in the first place (social media, SMS, phone calls etc.) were the same tools used by the Deliveroo staff to socially organise and carry out the strikes. Hence, the left must exploit the digital tools at their disposal. Modern technology needs to be used to build social capital and help workers socially organise, thus strengthening their collective bargaining power.
Thus, flexible labour contracts are here to stay, be it for better or for worse. Rather than simply proposing to ban zero-hours contracts, more creative policies should be explored by those on the left. Lessons must be learnt from the recent Deliveroo episode in terms of how workers can socially organise using modern technology. In order to successfully manage the “Gig Economy”, the left need to change their tune.
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