Francisco A. Casanova participates in the IR Virtual Series – Shock Of The New: What is the impact of the gig economy on the traditional workplace?
Foreward by Andrew Chilvers
Whenever the gig economy comes up in conversation, app-based technology companies such as Uber usually get a mention as the emerging business models for ‘gig’ workers. And while these new ‘gig’ business models are changing the way people work, many jurisdictions are resisting the changes taking place.
Back in the pre-COVID-19 days of 2019, two London-based Uber drivers sued the company claiming they should be classified as workers and given a minimum wage, holiday pay and other benefits due for company employees.
They argued that Uber was a proper taxi company employing drivers to provide a service for customers. Uber employment rules included standardised routes and fares, similar to any employer-employee relationships, and driver standards and conduct, under the Uber brand banner. Indeed, they said if drivers failed to keep to these standards their driver accounts would be deactivated, essentially sacking them like any other company.
Meanwhile, Uber argued that it was not a taxi company but rather an app-based software company providing a direct contact (via the app) between the driver and the customer. Simply put, the app helps freelance employees gain customers and the company’s terms of business state that drivers work for themselves. They are not obliged or indeed contracted to work solely for Uber. An employment tribunal upheld the taxi drivers’ claims, while Uber was set to appeal the decision.
The issue of companies such as Uber and Deliveroo as employers of gig workers and drivers of the gig economy is a talking point the world over. The debate goes well beyond taxi and delivery services and highlights the fundamental shift now happening in the modern workplace. This shift eschews the traditional nine-to-five office hours in favour of employment based on often casual, remote working underpinned by digitisation. Above all, it’s a generational shift based on technology, as our members discuss in the following pages.
The recent resurgence of the gig economy can be seen as an extension of the technology revolution in the workplace. Does the gig economy offer benefits that older models of employment lack?
If we look at the workplace post World War II, there are several phases – up to 1990s and the start of the 2000s. It’s that model which has lasted for most people’s lifetimes, with all the usual work benefits. That’s the first phase. The second involved mass immigration of labour where the workplace and workforce started to change. In this second phase, employment was no longer for life, but most people would be employed on several jobs during a lifetime of work. After this came the third phase, which is the gig economy – and that’s where we are now
I don’t think the gig economy is an extension of the technology revolution per se, but more a direct result of the development of technology in the telecoms sector. It’s a process that happens over time, not necessarily overnight.
What are the benefits of the gig economy? We need to establish whether a worker relies on the gig economy or on the traditional workplace for their income. For instance, today’s workers can draw income from some form of traditional employment and also develop a sideline in the gig economy.
There is also a generational shift going on. Millennials have taken to the gig economy as their employment model and in many cases are not familiar with old fashioned labour models. In many respects they only know the gig economy and don’t really know or even understand how the old economy works.
As employers see the benefits of the gig economy in terms of cutting the costs of social security payments, pensions and health insurance, how important is it for companies in different jurisdictions to understand local legislation and court precedent?
First of all, let’s remember that there are countries, especially in Latin America, where labour legislation is far more favourable to full time employees. Thinking about the gig economy in Venezuela, if there is a provision of personal service the issue is going to be one of either employment or unemployment. The gig worker as service provider needs to make clear they are not subject to supervision or control, that he or she runs their own risks regarding employment status. This also includes the ability to find work as a gig economy worker. For example, if there are no clients requesting your delivery service, you’ll have no income.
Consequently, as well ensuring there is work in the particular service sector for the gig worker, that person also has to prove they have developed their business sufficiently. This will include providing sales information, order books, client lists, income streams etc. This is the employment test that is required legally in Venezuela to prove you are providing a personal service as a gig worker and that your gainfully employed.
What is the gig economy’s impact on employment patterns in different jurisdictions?
The gig economy gives workers an opportunity to work from home and allows flexibility for their working lives. During the pandemic, the whole country was essentially based on a serviced/ delivery economy. If you wanted something, it was delivered to your home.
That’s the same for service providers now. You want a teleconference? Someone will provide that. In Venezuela, due to the employment legislation, if you are a gig worker and a qualified worker, as such, you’re provided with security and employment benefits. But that is only if a gig worker is qualified as a worker; for example, an accountant.
The negative issue arising from the gig economy is the loosening of the labour market. Working conditions are declining and there is a decline in benefits or the elimination of them altogether.
In Venezuela, the real change is in employment patterns due to the different expectations from younger generation – and the rise of the digital workplace. Above all, the younger generation has adapted immediately to this new digital workplace. In many respects, the ability to work from home is actually driving the economy at the moment and that is also driving competition between companies. Those that have the value added element of remote work, for example, are able respond to clients in moments and this is playing a huge role in determining the difference between companies’ abilities to offer services. We believe that if gig workers are able to unite, to be somehow empowered, they can be a huge economic driver because they are flexible enough to be able adapt to all the latest technologies.