JOURNAL - #WORK

The Courier


2019/06/24 - Monocle Journal

Freelance work or independent contracting is fast becoming a global norm, with studies estimating that about a third of the working-age population in the US is currently engaged in some form of independent work. However, despite the growth of the gig economy and the subsequent change in the nature of employment, labour laws have remained steadfast in maintaining a division between independent contractors and bona fide employees, with the former receiving no formal benefits or protections in a highly competitive, and at times exploitative, market.

Advances in technology have enabled apps to provide a quick, effective and transparent means of connecting millions of service providers to customers, making it easier than ever for entrepreneurs to reach and grow a customer base. As a result, businesses like Uber and Airbnb have taken off – along with a myriad of lesser-known gig-based companies that offer anything from aircraft and tool rental, to grocery and fast-food deliveries, to plumbing and garden services. Central to this business model is the independent contractor: these businesses do not employ people to perform these services, but rather provide a platform to link independent contractors and customers, taking a match-making fee for doing so. The self-employed nature of the work means that independent contractors have the autonomy to design their own work day, deciding when to work, where to work and with whom to work, and multiple commentators have contended that this independence and flexibility is going a long way to meeting the demands of a younger workforce, often frustrated by the limits of traditional nine-to-five jobs. However, those who participate in the gig economy are not always those who do so willingly; studies estimate that at least 30% of US gig workers are forced to endure the instability of a non-traditional work structure due to a lack of other employment options.

The gig-based business model offers a fair amount of protection to customers, as the contractor is usually rated by other customers on the app – poor service will not go unnoticed. However, the potential for worker exploitation in this model is significant, given that labour laws do not apply. For those who are treating these gigs as a way to supplement their wages from more permanent positions, the risk may seem worth the reward; however, many workers are relying on gigs as a primary source of income. Workers – especially those in a country like South Africa where employment opportunities are scarce – are, thus, often functioning as full-time employees, but without any of the benefits of formal employment. In the UK, The Taylor Review of Modern Work Practices, conducted and released last year at the request of Prime Minister Theresa May, suggested that the government should consider establishing a new employment category – the “dependent contractor”. This worker would sit somewhere between an independent contractor and an employee and would attract some benefits and protections. Most notable of these would be access to a minimum wage and a clear written statement outlining employment terms and conditions.

With the gig economy quickly becoming a significant part of the larger economy, it seems only right that it should be subject to the rules that govern all other types of formal employment. However, whilst the inclusion of the dependent contractor in labour legislation would help to improve worker circumstances, it brings with it the problem of raising employer costs. Central to the gig economy’s ascendancy has been the ability for businesses to charge relatively low rates for services and to fire whomever they wish, whenever it best suits them. Should these companies be obliged to provide certainty of employment and employee benefits, profits will be affected, and rates will no doubt increase, causing their popularity to plummet. The very real threat of regulatory intervention is that it could, thus, collapse the gig economy, rather than strengthen it.

The way forward is unclear, but if only for the sake of their reputations, companies need to become actively involved in finding a creative, and ethical, solution. Courier firm DPD became one of the first to do this, when in March 2018 it announced that it would be offering its drivers the option to either continue working as independent contractors or to become “workers” – entitled to the benefits of a formal employee but still earning a per delivery rate, albeit a rate that is lower than that extended to independent contractors. In doing so, Gaby Hinsliff, columnist for The Guardian, argues that the company is providing the gig economy with a chance to defend its own model, to prove that “people genuinely do want to work this casually.” For those who favour more stable working arrangements, the move will ensure that both employers and employees are able to benefit from the boom in gig-based work. Admittedly, it took the death of one of their drivers, who collapsed after failing to seek medical attention for fear of forfeiting jobs, for DPD to implement this change. Having learned the hard way, the company has, however, set a new industry standard that many may soon find themselves under pressure to follow.

 



Recent Posts



 
 

Monocle is a results-focused consulting firm specialising in banking and insurance. We believe in doing business with integrity and transparency. We consult broadly – but specifically, we translate business and regulatory imperatives into tangible, data-driven results, bridging the gap between the business and its operations.


Learn More
OUR ADDRESS

South Africa

13th Floor, Greenpark Corner, 3 Lower Road, Morningside, Sandton, South Africa

United Kingdom

4 Lombard Street, London, EC3V 9HD, England

CONTACT US

South Africa

Phone: +27 11 263 5800
Fax: +27 11 263 5811
Web Site: www.monocle.co.za

United Kingdom

Phone: +44 (0) 2071 902 990
Web Site: www.monocle.co.za

Social



  

Copyright © 2019 Monocle Solutions. All Right Reserved.