After Uber’s U-turn, ministers must stop giving gig economy bosses an easy ride
Putting the brakes on the gig economy is a good thing. Bingeing on something commonly makes you feel ill. But in the case of the stratospheric growth in online services and the deleterious effect of this on stressed-out, poorly paid workers, overindulging makes others sick.
From Australia to Canada, Chile, Brazil and much of Europe, gig economy firms have faced legal action, government enforcement or both as countries try to improve the rights of their workers.
Ride-hailing service Uber has built a global business on exploiting the loopholes in worker protection rules to maintain an arm’s-length relationship with those who sign up to work as drivers. And so it is with a slow handclap that we welcome the decision last week of the American corporation’s UK division to accept that the 70,000 drivers on its books qualify as workers, with rights to a minimum hourly wage and holiday pay, in line with a supreme court ruling last month.
It’s a slow handclap because Uber insists that the ruling allows the company to restrict pay to those minutes when a worker is driving a passenger to their destination. Time spent cruising around waiting to be hailed is not part of its new package.
For years the company insisted that it merely connected customers with self-employed drivers via its app, and this latest move by Uber shows that since the court action started in 2016, its bosses in California have not moved very far.
As one driver told the Guardian: “It’s a step in the right direction, but we’re not there yet.”
Not surprisingly, the drivers’ union is preparing to drag the company back to court. It is to be hoped that drivers will receive further backing from the judicial system for their – reasonable – claim to be paid from the moment they clock on to work until they clock off.
Government ministers have until now abdicated responsibility for a crucial area of employment, and failed to offer gig-economy workers much more than verbal support.
Business secretary Kwasi Kwarteng said last week’s judgment was “absolutely to be welcomed” but has not offered any tangible help.
If anything, Kwarteng’s brief record in charge at the department for business, energy and industrial strategy has seen the government take several steps back.
In January he told employment tsar Matthew Taylor that his services were no longer required. Taylor, who is also chief executive of the Royal Society for Arts, Manufactures and Commerce, was hoping to help Kwarteng devise new standards for a world where the gig economy provides employment for a large proportion of the workforce.
Without him as interim director of labour-market enforcement, there is no one setting the strategy for the UK’s three workplace enforcement bodies: the Gangmasters and Labour Abuse Authority; the division of HM Revenue and Customs that oversees minimum wage compliance; and the Employment Agency Standards Inspectorate.
After the Uber ruling, Taylor, a former policy adviser to Tony Blair, said it was obvious that legislation governing how gig-economy firms operated was needed, and quickly.
But there is resistance to legally enforceable workers’ rights from many in the business world, and they clearly have Kwarteng’s ear. While the minister protests that Brexit was never a cloak behind which he would be busily downgrade employment rights, he is a longstanding free marketeer and believes the UK has a unique opportunity to become more business-friendly outside the EU.
Since ditching Taylor, Kwarteng has scrapped the Industrial Strategy Council, which saw its job as promoting secure, well-paid and sustainable employment in the regions. If he wanted to cement his reputation as a tactical operator with little time for longer-term strategic thinking, it was the right way to go.
Workers and their unions are now left to challenge by themselves the piece rates that gig economy firms consider reasonable. If Kwarteng wants to match his rhetoric with action, he needs to join their cause.
America walks fine line between recovery and overheating
Hold on to your hats. Wall Street is in two minds about what to make of recent developments in the US, and that means there is turbulence ahead.
On the one hand, buying shares looks like a no-brainer. The US economy is on the mend and on course for its fastest annual growth in decades. Restrictions to prevent the spread of Covid-19 have been lifted more quickly than in Europe and the world’s biggest economy is exhibiting its traditional ability to bounce back from adversity.
The new Biden administration has just succeeded in passing a $1.9tn stimulus package, which – among other things – hands cheques to American citizens, so increasing their spending power.
Meanwhile, the US central bank – the Federal Reserve – said last week that it remained committed to its ultra-stimulative approach. It is pumping $120bn a month into the economy through its quantitative easing programme and has no intention of being rushed into a increase in interest rates.
All of which adds up to a booming economy and rising corporate profits, both of which equity traders love.
On the other hand, there are concerns that the Fed and the US Treasury are overstepping the fine line that divides recovery from overheating. Fears of inflation last week pushed bond yields – the interest rate on US government debt – to the highest level in 14 months.
The potential for trouble is glaringly obvious. There is a risk that bond yields will continue to rise if the Fed sticks to its current doveish stance, eventually reaching a level that will raise fears of a slowdown in activity and even a hard landing for the world’s biggest economy.
So far, this tension has been resolved by investors becoming warier of the more speculative stocks. That seems a wise precaution.
Blind auction is no way to tackle Premier League TV rights
As Premier League bosses continue to wrestle with how to handle the next multibillion-pound auction of live UK TV rights, they would be well advised to take a leaf from the NFL’s playbook.
Last week the American football league unveiled an 11-year deal with its existing TV partners worth $100bn and, crucially, announced Amazon as the first streaming partner to win exclusive broadcast rights. Under the deal each partner, from Fox and Disney to NBC and CBS, pays between 75% and 80% more than under the existing agreement. And Amazon is paying a reported $1bn a year for exclusivity on 15 games per season.
As the value of football rights drops across Europe, the Premier League could not be facing a more different situation. The three-year deal with Sky, BT and Amazon that expires at the end of this season will bring the Premier League £600m less than the previous auction did.
An agreement between Sky and BT ends an era of competition that fuelled rights inflation, and Amazon would find it difficult to squeeze enough spend from new subscribers to recoup a huge extra investment.
The NFL has the huge advantage of bigger free-to-air audiences, with live coverage consistently attracting the highest viewing figures on US TV, and the highest-priced ad breaks.
The Premier League commands neither of these, with live coverage sitting behind TV paywalls, but then terrestrial broadcasters such as the BBC and ITV cannot hope to successfully commercialise the cost of the rights. Still, Amazon’s willingness to pay $66m per NFL game, compared with Sky’s $9.3m per Premier League match, shows the online giant is willing to make big game-changing bets.
Premier League bosses will be paying close attention this time, looking at the difference between the NFL’s 11-year, directly negotiated deal and their wn blind auction model. If they learn the right lessons they could still score a financially rewarding rights goal.