The thin veneer of the gig economy

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For millions of Australians, the gig economy has brought greater convenience to our everyday lives. At any given moment, in metropolitan cities you can order that late night burger without even moving from the comfort of your own couch or secure a lift home with the click of a button. It’s a new era of what we want, whenever we want it with products and services delivered to us directly.

Uber Eats delivery driver (eggbank/Unsplash)

However, behind the slick advertising and high-tech veneer of on demand apps and services lies a bleak, hazardous and often dangerous reality: tens of thousands of people working at the fringe of the labour market as delivery riders and personal chauffeurs. When you remove all the tech, the sizzle and pop, it’s little more than modern day iteration of old-school precarious piece work arrangements.

To set the context, on a good night a delivery rider might, if lucky, earn somewhere close to the minimum wage, without accruing any employment entitlements. A 2020 report for the Victorian Government, Report of the Inquiry into the Victorian On-Demand Workforce, found that these workers are most likely to come from ‘vulnerable cohorts’ within our community: young people, students and migrants, often forced into ‘gig’ jobs as a last resort.

The COVID-19 pandemic and related lockdowns saw a surge in demand for these services and thousands of vulnerable workers found themselves thrown onto the frontline of the latest battle in the war for fair wages, safe working conditions and job security for Australia. 

But in some recent positive news, major food delivery service Menulog announced to a Senate inquiry recently that they at least agreed that gig economy workers are just that — workers — and the firm’s CEO Morten Belling announced that they would trial employing riders in Sydney’s CBD directly rather than treating them as sub-contractors.

Menulog was under pressure from riders, drivers, their union, as well as investors and regulators. They appear to have seen the writing on the wall and this pilot will extend minimum wage and superannuation rights to food delivery riders, and represents a break with other big gig economy firms like Uber and Deliveroo that refuse to treat workers as employees.

 

"Gig economy firms like to frame these developments as ‘innovations’ that ‘disrupt’ complacent market incumbents. The reality is that these ‘innovations’ can essentially be summarised as a set of new mechanisms to bypass existing labour regulations."

 

It’s a move that represents a small but significant victory for the Transport Workers Union and its members, whose campaign to grant gig economy workers employment status has gathered momentum from public outrage over the deaths of no less than five food delivery riders late last year.

It also comes as the other international jurisdictions like Spain and the United Kingdom have moved to classify gig economy workers as employees, and some investors have begun to shun food delivery services citing labour rights as a concern.

Yet Belling’s comments to the Senate inquiry show that the firm sees this as a necessary business decision rather than representing a real shift in how in how they view their workers.

'Ultimately, we want to employ couriers. However, the current regulatory framework presents a number of challenges, with specific regards to existing modern awards, the lack of flexibility they present and subsequent cost.' In other words: Menulog wants to extend basic employment protections to its riders but believe these protections should be watered down to fit the gig economy business model.

There’s a couple of things that set firms like Menulog, Uber, and Deliveroo apart from more conventional businesses, and they’re worth noting.

First, gig economy firms — especially food delivery and taxi services — often struggle to turn a profit. In 2020, Uber reported a net loss of $6.8USD billion. In fact, Uber has conceded that it may never achieve profitability. Instead, these firms churn through astonishing amounts of venture capital without ever generating a profit in the actual process of production or service delivery.

Second, these firms have significantly disrupted how we think about work organisation and service delivery. Gig economy firms like to frame these developments as ‘innovations’ that ‘disrupt’ complacent market incumbents. The reality is that these ‘innovations’ can essentially be summarised as a set of new mechanisms to bypass existing labour regulations. And the ‘disruptions’ have been to the lives of workers and small business owners in both the new and the incumbent industries.

Experience in places like California has shown us that gig economy firms will not easily allow regulatory arrangements to transfer risk back onto them and undermine the ‘innovations’ that have allowed them to bypass existing worker protections. We’ve seen companies going to extraordinary lengths not only to avoid existing labour regulations, but to re-write them to suit their business model.

In this context, Menulog’s announcement foregrounds more struggles to come: the defence of award conditions; advancing pay, conditions, and worker safety through enterprise bargaining; and the push for a return to industry wide bargaining.

When workers and their unions achieve employment status across the gig economy, the campaign to protect and extend hard fought award conditions from erosion and to extend workers’ rights through enterprise bargaining will intensify. The case study of the gig economy also lends further support to the Australian Council of Trade Union’s advocacy for return to industry wide bargaining, which would prevent gig economy firms from undercutting one another on workers’ wages and conditions.

The Victorian Labor government’s commitment to advancing the cause of workers is reflected in legislation on industrial manslaughter, criminalising wage theft, and controversially trialling a paid sick leave scheme for precariously employed workers during the pandemic.

Given the current federal government’s continued push to weaken collective bargaining and union rights to organise, we should not allow victories like the Menulog decision to be eroded to ultimately accommodate a flawed business model claiming to be ‘innovative’. When the thin veneer of technological ‘innovation’ is peeled away, all that’s left is the reality of unsafe, insecure, and poorly paid work. The opportunity to do what is necessary to protect workers and the broader community in the long term should not be missed.

 

 

Dustin Halse headshotDr Dustin Halse is the State Labor Member for Ringwood. He has held positions in academia and the union movement prior to his election to office. Dustin has a strong interest in industrial, environmental and social welfare policy.

Main image credit: Uber Eats delivery driver (eggbank/Unsplash)

Topic tags: Dustin Halse, gig economy, Uber, Menulog, unions, workers rights

 

 

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Existing comments

it’s little more than modern day iteration of old-school precarious piece work arrangements. you are being far too generous. It is nothing more than the Wests 21st century brand of enslavement
chris | 27 April 2021


I think the author has approached the topic a bit too subjectively rather than balancing the criticisms with some understanding of the business model of the "employers" (as he would have us believe) and their associated risk. Many gig economy models are purely connecting a consumer with a service, perhaps some value-added convenience; user choses, user pays. For the likes of Uber and Deliveroo there is the venture capital at risk if the business fails to achieve satisfactory returns; their business model was crafted to engage contractors (not employees) and control costs in that manner. The contract driver provides a delivery service and provides the vehicle as well; toss it up any way you like but owner/drivers have been delivering goods and fast food internationally since waaay before the notion of "gig" was concieved. The business don't want to be paying a workforce of drivers for hours while they aren't delivering. The "safety" concern (arguement) seems wholly irrelevant; I fail to understand how individual safety is not just transferred to Auntie Maud when you ask her to pick up a pizza for you instead of engaging a contract driver. For some who choose this contract employment it suits them... but some work under the terms of the agreement for a few years and then suddenly decide they're not happy. Really?
ray | 27 April 2021


The gig economy isn’t just piecework rebranded; it is serfdom rebranded: huge software businesses (completely disconnected from the actual labour force) are controlling the means of trading labour. I would really like to see Catholic Social Teaching applied to this issue and I think Eureka Street and the Jesuits are really well placed to do that.
Rob McCahill | 27 April 2021


Real jobs need substantial protections but not all jobs are real jobs. Real jobs are characterised by being of career interest and sufficient compensation to raise families and provide for retirement, ie. real jobs, by virtue of being full-time and permanent, produce the social dividend where individuals contract to add to society’s intellectual capital in return for household financial autarky. Gig work is for those training for career jobs or wanting something to keep them from becoming bored. The business model of gig work, which, like any other business model, needs to return a profit if it is to stay in existence, is to provide income at the margin to transitory employees. It is not the purpose of gig work to produce careers because, in its nature, it just can’t (except for some admin and IT staff to keep the system operating). If you want gig workers to be paid more, you have to encourage rival sources of employment and let the market bid up wages. The problem with the gig work industry is not the industry itself, which can pay little, but the lack of real sources of employment expressed in such terms as ‘hollowing out’.
roy chen yee | 28 April 2021


Men and women are taking on this work because they need the money for one reason or another, and articles on this matter should include testimonies from such workers. Piece work and poorly paid workers have been experienced in Australia by workers for generations and over our history the workers themselves have resolved these issues through forming trade unions and I think those of us who have benefited from the results of union actions should do our best to inform these exploited workers of the benefits of forming and belonging trade unions.
Kevin Vaughan | 28 April 2021


The effect of the gig economy deserves continued discussion and close inspection as it spreads like a pandemic across all work taking with it precarity, insecurity and poverty. I am old enough to remember the bull system where lists of numbers were read out on a radio station at 6am. These were ids for “wharfies” who then knew to go down to the port in hope of a days work. Today a text message from an agency alerts a worker to show up for a shift at a factory or site for a days work. Few realise how widespread this type of work is and how it is for people to survive on these comditions. These practices are insidious spreading across the labour landscape creating a marginalised residual work force without rights security or future. Even local councils use these agencies which parcel out work such as garbage truck drivers- giving 3 or 3 days at short notice each week. Not 5 days secure work to plan a domestic survival upon but a day here and there keeping them hungry and ready. As a nation built on ideas of a fair days work/ dignity of the Harvester wage case etc we are slipping into an abyss of nasty brutish tolerance for inequity and disrespect for workers rights.
Pamela | 01 May 2021


The ALP allowed Uber to eneter the market illegally and did nothing to stop it. It wanted the drivers so they could get $1 per fare from over 80,000 driver for each trip. Now they rattle on about congestion and they have got rid of taxi ranks. The sheer hypocrisy by labor and the way it treated the taxi industry is a shame
PHIL ROWAN | 02 May 2021


I’m with Pamela in questioning the ethics and morality of the gig economy. I too can remember the bull system on the waterfront, and before that the time when wharfies had to actually turn up every morning in the hope of getting work on the day. I can also remember the use of ‘day labour’ in local government construction works. If you spend any time in a hospital these days you will quickly realise that most of the staff, including nurses, are part of the ‘gig economy’, as are most of those working in call centres All of these people bring acquired skills to the work, all are producing ’social dividends’, and most are seeking ‘financial autarky’, as Roy puts it. Some, no doubt, are happy with the freelance nature of the arrangement but most, I suspect, would prefer a more permanent, predictable and mutually committed arrangement. In most case, gig employment exists, not for the benefit of the employee, but for the employer who is able thereby to outsource the responsibility for and cost of risk management to the gig worker. The political right encourages this sort of arrangement because it discourages combinations of workers and minimises the negotiating powers of individual workers.
Ginger Meggs | 03 May 2021


I often eat a Easts Leagues Club in Coorparoo, Brisbane. It is an old fashioned club which pays and treats its staff wonderfully. Part of a vanishing Australia? I hope not.
Edward Fido | 05 May 2021


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