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Newsletter May 2020

More defects than advantages in the gig economy

An idealistic motto of the origins of the Internet, disintermediation, has become its opposite over time: the proliferation of intermediary companies - digital, of course - between the producer and/or distributor and the end customer. The criterion of "convenience" has encouraged the phenomenon, initially hailed by the media with the misleading name of "collaborative economy", or presented as a business model capable of transforming a labour market in crisis for other reasons. A study published by BBVA Working in the data age arrives in time. It is a compilation of texts that demystify some theories and reflect on their consequences.

Jamie Woodcock, a researcher at the Oxford Internet Institute of the University of Oxford, lists the nine requirements that he believes have been combined to extend the model throughout the world. The trend speaks for itself: by 2017, some 70 million people had found work through these platforms, while a McKinsey study estimates that by 2025 there will be 540 million people working for these companies, which it pompously calls "online talent platforms".

Only two of Woodcock's nine requirements are technology-related. The infrastructure that these platforms have been provided with and the massive connectivity at decreasing costs. Both factors - a 4G, 5G, cloud and smartphone orbit - are essential to reach more users and increase their reach. As this expansion is consolidated, other considerations of a social nature are being left by the wayside. These include environmental considerations.

Perhaps the most interesting analysis of this author is the one he dedicates to the actors involved, based basically on two types of the gig economy: 1) the delivery of food at home, a physical and street work, which was born locally and ended up assuming globalization and outsourcing as the basis of the model [Uber Eats, Deliveroo and Glovo, are three of its exponents] or 2) others that are made on the Internet, behind the scenes and difficult to control, an evolution of the classic freelance.

Contributes to the book of Phoebe V. Moore, professor and author of several essays on digital work, who warns of how human beings run the risk of mutating into depersonalized services, because of the potential that this business model has to dehumanize and depreciate labour. Precarization, she says, is not just a business model for certain companies, but helps to undermine the very roots of a productive economy.

Moore goes one step further: she warns how online micro-employment [she gives the example of Amazon Mechanical Turk] opens up possibilities for child exploitation, forced labour and discrimination. Not necessarily in the developed world, but they are making inroads. Woodcock adds to this vision by adding another requirement to its list: labour relations and their link to gender and race. The Oxford scholar reminds us that many of these workers are not covered by their countries' labour laws and are vulnerable to social marginalization and racism.

Turning to the material relationship between the platforms and the workers, Woodcock looks at the question of labour flexibility, which has been given questionable virtues for years. It is another of the requirements by which the Gig Economy has prospered with the approval of the venture capitalists. From the employer's point of view - says Woodcock - there is a tendency to look for workers who provide short-term services, with little guarantee of continuity. For their part, workers often believe that this flexibility will allow them to work à la carte, to better fit schedules into their daily lives.

For quite some time, the idea has been spread that this kind of occupation was ideal for students or people interested in managing their use of time themselves. The author of this chapter emphasizes that reality belies that vision: for various reasons, the gig economy has become the main source of income for many families. As a crisis that has triggered unemployment advances, many workers are choosing to take jobs under questionable conditions.

Examining how the gig economy is changing employment and income structures, the book points to abusive practices in the self-employment regime: high levels of precariousness, low pay and, in most cases, unpredictability of hours. Three well-known elements that contradict the mirage of flexibility.

Most of the model, Woodcock recalls, is based on the fact that workers pay their social security contributions [there are countless models, but this is the common denominator] and accident insurance out of their own pockets. These are common cases, not extreme ones, favoured by piece-rate payment, which was historically thought to be relegated to a few situations. It also draws attention to the fact that they pay the minimum contribution; it cites a study by the Zurich insurance company that estimates the number of people who "voluntarily" run the risk of not having enough insurance in the future at 5 million.

Brookings Institution researcher Zia Quareshi is adamant that income inequality has increased in almost all advanced economies since the 1980s, a period that coincides with the rise of digital technologies. Quareshi puts her finger on the pulse when she argues that the negative consequences of digitalization go beyond these signs of inequality. Productivity growth in the main economies has slowed down instead of accelerated as is often said [another key chapter in BBVA's book, which will justify another feature in this blog]. The analysis highlights that in all the economies of the OECD countries, there is a clear statistical correspondence between loss of productivity and inequality in labour income.

Following its title, this collective book highlights that in the "new economy" of small jobs, the situation of intermittent workers is being aggravated by the intervention of artificial intelligence, algorithms and the crossing of data generated by consumer assessments, a practice facilitated by the applications to which the users. Users - according to Phoebe Moore - tend to give frivolous opinions about the quality of the service received without considering variables (which they do not know) such as pay and the personal, work or family situation of the worker who has provided it.

Woodcock refers to other key requirements on his list: worker power and government regulation. In the first point, it refers to both those who were already part of the activity sector in question and those who are recruited by a digital platform. In the author's mind are the mobilizations of taxi drivers in London [repeated in other countries, not excluding Spain] and how their pressure obtained a regulation that has improved the coexistence between both models.

He also mentions the periodic strikes of drivers in Uber, a company that today has fallen into disrepute because of its own mistakes but which has been for years an emblem of what was called "uberization" of employment. One of the circumstances in which these platforms take refuge, stresses Woodcock, is the rejection of unionisation, which has taken root in many self-employed workers.

It links this issue to an additional, related one, namely regulation. For a time, the authorities favoured the growth of these platforms by action or omission, without resolving existing legal shortcomings, but recently governments and the judiciary have set about the task of correcting intolerable deviations. It is notorious the countless processes that Glovo has lost for abusing the hiring of false self-employed. Nevertheless, he continues to enjoy the media label of "Spanish style unicorn" (sic).

As Quareshi points out, policies have a crucial role to play in ensuring that the potential benefits are harnessed in an effective and inclusive manner. Recent years have shown that institutions were slow to address this component of the digital economy. This author argues for a thorough review of the social contract, putting pensions and health care at the forefront, as they have so far been linked to formal, long-term relationships between employers and employees. In his opinion, it would be appropriate to make them "more transferable and to adapt them to the evolution of labour practices".

The last requirement raised by Woodcock focuses on consumer attitudes and preferences. Because, in the end, these services can only grow if there is a market for them and if customers are willing to access them through digital platforms rather than in traditional ways. This author - chosen in this chronicle as the common focus, although not in the book - emphasizes the change in consumer habits, giving rise to "shadow" restaurants that only cook for home delivery, with the multiple implications that this has for the restaurant sector. Although, I could also point out that this sector has welcomed the change as an additional source of income, without asking itself uncomfortable questions.

As such, Woodcock is not particularly optimistic about the future. The current picture reveals that this supposedly sharing economy, instead of developing within the framework of existing relationships, has destroyed previous ways of working. This tendency is even directed to the segmentation of tasks of the same job to extract from this multiple minijobs (sic) that are incorporated to the platforms.

The risk that Woodcock contemplates in the skyline is that the gig economy acts as a practical laboratory of new forms of business management. Although it is impossible at this time to measure its real impact, it is reasonable to think that it could profoundly modify the future organization of work.

 

 

[Report by David Bollero]

 

Worker participation in GIG economyWorker participation in GIG economy

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