It seems you can’t pick up a paper or switch on your news feed without coming across a story on the gig economy: Uber’s appeal against their employment tribunal ruling, Addison Lee losing their tribunal, Uber losing their London licence, Hermes being investigated by HMRC, Uber losing their General Manager, … you get the idea.
This is rapidly becoming the work issue of our day, and the lines are being drawn as an old-fashioned slugfest between ‘the little guy’ and ‘The Man’, between unions (GMB waded into the Uber tribunal on behalf of its ‘members’, which is odd considering that they are ‘self-employed’) backed by readers of Marx and the dark forces of capitalism unchained: Uber is a global powerhouse backed by an estimated $15 billion of investment funding and Addison Lee was bought by The Carlyle Group for £300 million.
But those who choose to see this in good vs. evil or black & white terms may miss the point that the grey areas contain so many aspects that require addressing – freedom of movement, low pay, work-life balance, lack of savings and pensions – to make all of us pause and consider.
Citizens Advice estimate that 500,000 work in the gig economy
The biggest question is whether or not the model is sustainable. Yes, for anyone who has sat in a black cab watching the meter whirr round or had to stand in a post office collection queue the benefits of using gig economy companies offering astonishingly low prices and to-your-door service seem pretty unbeatable.
But Uber’s model is to use their investment to loss-lead until they have wiped out the competition, at which point they have the monopolistic opportunity to hike up prices. So, potentially not great for customers.
However, there are much wider implications for the workplace and markets. The move into flexible working – whether or not Uber et al. can continue to class it as self-employment – is sometimes a matter of preference, but more likely of necessity. People may need second or third jobs to make ends meet, or to work around caring for members of their family.
But they face tremendous insecurity, late payment, no holiday or sick pay, no National Insurance or pensions if they forget or cannot contribute, no employee rights or benefits – hence, a significant percentage of the workforce (Citizens Advice estimate that 500,000 work in the gig economy) become bound to a barely living wage.
Add to that the estimated £314 million p.a. in lost tax and NIC revenue from badly calculated and collected self-assessment returns, and potentially not great for the consumer economy as a whole.
Nevertheless, flexible working in whatever guise is here to stay and will further undermine the notions of employee status and jobs for life upon which the Western model has existed since at least 1950s America. No more singing company songs or going on works outings, any unified corporate culture or unionised workforce will be extremely difficult to sustain.
flexible working in whatever guise is here to stay and will further undermine the notions of employee status and jobs for life
Furthermore, it’s clear to see a huge impact on the financial industry, let alone in the diminishing numbers contributing to pension schemes. Traditionally, banks, mortgage lenders, and credit companies have been excessively reticent to lend to self-employed people, treating them as second-class citizens, which is increasingly ironic in an age of decreasingly secure employment.
Maybe it’s time for them to have a serious rethink?
If self-employment, flexi-working, and portfolio careers are going to become the M.O. of not just 1 in 6 but say 1 in 2 of us, then there is another significant issue: it is clear that lots of people struggle with the administrative aspects of working for themselves, not just the annual self-assessment return itself but basic financial management, providing for their tax liability, thinking about pension alternatives, and so on.
There is a real need for people to be educated in how to look after things (and maybe that should start at school), as all too often they are focused on the job itself and not the responsibilities that they have to take on in place of an employer.
About the author – Laurence Taylor
I have been self-employed for most of my 22 years of work, and the total bookkeeping solution I have founded, Easy As 123, wants to get busy at the sharp end: helping self-employed contractors register for HMRC (not simple, especially given that many have English as an Additional Language and reading difficulties), taking care of their books every month, advising how much tax to put aside, and submitting their returns (which will be every 3 months under HMRC’s Making Tax Digital plans).
This should go some way towards reassuring the government that at least contractors are on the tax radar and paying their fair share, and in return we believe that companies should offer ’employee benefits’ and access to pensions and savings advice. We will be watching developments with interest.
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