A crisis of control – what should the on-demand workforce be demanding?

Alice Martin - Subject Lead - Housing & Work, New Economics Foundation

Wages have been giving way to profits for decades

The rise of insecure work over the last decade picks up the baton from a longer-term macroeconomic trend of wages giving way to profits.  In most developed economies over the last thirty years, the UK included, there has been a shrinking of the slice of the GDP pie for employees, with a growing slice going to business owners and investors\.

What has caused this shift?  Technological change is the answer usually given –machines increase productivity and replace workers in certain roles, the wage bill is reduced, and profits rise.  But a survey of the evidence suggests that it is in fact changes in the structure of the labour market, and in particular, the steady decline of trade union bargaining power, that has had a more substantial impact on wage suppression in favour of profits across the continent.  Taking the UK as an example, the fragmentation of collective bargaining structures, the decline of manufacturing and public sector jobs in favour of a growing service sector, and a hostile policy environment for trade unions – exemplified most recently with the Trade Union Act – have all underpinned the shift.

So, with the march forward of self-employed and ‘on-demand’ work into an increasingly Uberised jobs market, the weakening of the workforce’s control over issues like job security and pay is set to become engrained.

Why does this matter?  Our sense of security is one of the most important ways our jobs affect our overall wellbeing; lack of control at work is a major cause of stress.  But for those who favour more mechanical measures – national income itself is likely to suffer.  The UK is a wage-led economy, meaning that the less money people have in their pockets to spend the less economic activity overall.  So much so that the decline of collective wage bargaining could in fact represent an annual GDP loss of £27.2 billion, that’s £444 per person.

If the economy stagnates when the workforce loses its grip over work quality and pay, should the Government step in?  Recent horror stories from people in agency, zero-hour and falsely self-employed work have sparked an outbreak of parliamentary investigations into whether our employment laws and tax policies are fit for purpose.  Welcome though these investigations are, it would be naïve to ignore the fact that they are up against major countervailing forces that threaten to ossify insecure work as the new normal.  For instance, the Brexit negotiations, despite apparent reassurances from the Government, could well signal an erosion of employment rights when faced with a strong corporate lobby from the global monopolies of the moment.  And then there is the belief that flexibility equals autonomy and control.  Why work 8 hours a day as an employee when you could work 18 hours as your own boss..?  These trends spell bad news for workers in the new economy.

Technological innovation makes us replaceable – not with robots, but with each other

The gig economy growth surge, so far centred in the capital, has seen what are categorised as ‘businesses with no employees’ growing by 72 per cent in London, and 28 per cent in the UK as a whole.  These companies offer rock bottom rates to customers through flooding their platforms with ‘independent contractors’ – or ‘workers’ as the courts recently concluded they are more appropriately categorised.  We know that for young men in particular, entering this type of work is not always based on choice, but necessity.  It is often the result of ‘under-employment’ – they have no other options to earn a living.

The platform organisation of the on-demand workforce means there is always someone else ready to take the job of an unhappy worker – and this is really the crux.  Whilst it may not be technological innovation in the sense of machines taking jobs that is directly suppressing the wage share, technological developments allowing algorithmic HR and employee surveillance to be matched with an ample supply of fraught contractors, may now be doing that job instead.  This is definitely not the techno-utopia some of us have in wistful moments dreamt about.

There is also a worrying trend emerging within the gig economy to put obstacles in the way of workers’ right to establish and participate in a union.  For example Deliveroo put legally unenforceable terms in their contracts to prohibit workers from raising disputes though an employment tribunal.  They have also used their own app against workers attempting to unionise by diverting orders and riders to other locations during union recruitment drives.

So, when faced with this loss of control, what can workers in the gig economy do?  What are the first steps towards building better working environments in the future?

Building unity between those in work and those looking for a ‘Job Today’

The recent call for a recruitment freeze from the Brighton Deliveroo Riders branch of the Independent Workers Union of Great Britain shows that the issue of labour supply is ripe for politicisation.  As businesses requiring contractors and agency workers grow in place of other forms of work, there are more people in the labour market who are unprotected by regulations that put boundaries around how long we can work and for what pay.  And as job quality and pay declines or stagnates across the board, there’s an increasingly elastic, flexible workforce willing to take on any job.  That’s probably why the new ‘Job Today’ app, dubbed ‘Tinder for recruiters’, is expanding in the UK.

Those Deliveroo drivers should be commended for drawing attention to the impossibility of withdrawing your own labour supply to raise a dispute, when it’s so readily replaced. But there are risks with this strategy.  Though targeting excessive recruitment in a company may be a logical tactic for workers at the level of a particular firm or branch, it risks assuming too readily a deterministic link between increasing numbers of contractors on the books and decreasing pay and conditions.  What’s more, in a broader context, calling for a recruitment freeze has a protectionist undertone that feels troubling as we enter the age of Trump.  We too often hear the idea of excessive labour supply in the economy being ‘weaponised’ in debates on migration, despite the ample evidence showing the positive economic effect of migrant workers.

So what is an alternative?  Rather than fearing those who might take jobs (whether robots, workers from abroad or indeed anyone making up the increasingly elastic labour force) the aim could be to join forces with them.  Collective bargaining in the on-demand economy could seek to address the needs of not just the current workforce of a company, but the potential workforce – aiming to raise the expectations of people going into work and moving in between jobs.

The Fight for $ 15 campaign in the US has achieved something similar for the fast food industry by bringing consumers and the general public on the journey with the workers.  With the gig economy’s likely expansion in more UK cities alongside the existing raft of poor quality retail and hospitality jobs, the challenge is to bring together the demands of people already in work with those looking for a casual ‘job today’ and those who may be looking tomorrow.

Everyone has a role to play in this.  Businesses and unions, politicians and campaign groups –all have an interest in building an economy that gives workers security and autonomy.  The speed of change in the workplace feels disorientating – but it is part of longer term trends that scary as they are, present opportunities for us to shape what emerges.

This article is part of SPERI and openDemocracy’s joint series on labour and work in the modern economy. Alice’s article is an expanded version of a blog written in February 2017 for In the Long Run.