The gig economy is where post-industrial societies and devolved supply chains meet

The second part of this series focussed on the “combined and uneven” nature of the changes affecting unions globally. Unions in the developed — and increasingly post-industrial — world seem to be in decline when looked at in terms of raw membership figures. But in the developing and newly industrialised world union membership is probably increasing. “Probably” and “seem to be” because, as Peter Hall-Jones argues in an article on the New Unionism website, the measurements are too unreliable and incomplete to provide an accurate general picture of either membership numbers or, more significantly, the influence of unions.

Despite Hall-Jones’ caution, close examination of the figures that are available seems to confirm that union density — the percentage of union members in any given workforce — is shrinking in some parts of the world and growing in others.

Why should this be?

Firstly and perhaps most obviously, declining union membership may be a simple consequence of the decline of traditional forms of enterprise, based on the so-called “factory system” in which production is essentially collectivised and localised.

Unions grew in the 19th and early 20th centuries in response to factory organization and the rise of coherent enterprises. But by the late 20th century, enterprises were dispersing both geographically and functionally (“disaggregating” in the jargon). Supply chains (or “value chains” as they are sometimes described) were stretched out, sometimes across the world, and workers began to be more and more isolated and more and more mobile.

Firms that had once integrated the different stages of manufacture or service delivery increasingly outsourced or offshored parts of their businesses, bought in services or processing functions from third parties, and moved labour to cheaper (and less well organized) parts of the world. In some cases, this transformation was assisted by adopting a strategy of disintermediation, in which parts of the supply chain are removed and processes are collapsed. For example, a manufacturer may sell direct to customers rather than through intermediates such as wholesalers and retailers, thereby increasing its profit margin. Dell is notable for introducing the direct selling of computers, which are made from components manufactured and assembled in the east. This has the secondary effect of enabling the company to introduce “mass customisation” in which modular construction facilitates something that looks like bespoke production.

Financialisation and the migration of employment
Eventually, companies begin to mutate into financial centres, first buying in services and products, then buying companies, and ultimately trading in financial instruments rather than manufacturing products or providing services themselves. The process is known as financialisation, which, as economist Andrew Sayer notes, “prioritises making money out of money, instead of the tricky business of organising people to produce goods and services.”

Well-known examples of these changes include offshore call centres, payroll outsourcing, and contracting out cleaning services. Some companies like Apple or the UK’s ARM outsource all their manufacturing processes, while Deutsche Bank offshores some of its critical software development to the Ukraine. Once they reach a certain size, companies like Google, Apple, Facebook and Amazon no longer tend to innovate, but swallow up smaller innovative companies precisely to own their products and services. These changes have even been adopted by public service organizations. For example, the UK’s National Health Service, once an integrated operation, increasingly contracts out everything from hospital maintenance to core medical services to private sector companies, often controlled in the US or Canada.

India has built something of an industry in providing software engineering services to UK and US companies at a tenth to a fifth of the person cost of domestic provision of comparable work, while China manufactures everything from steel to plastic toys for businesses in the west. Property developers increasingly contract out architectural work, construction, building maintenance and security. Today, most clothing reaches consumers at the end of a supply chain involving the harvesting or manufacture and processing of natural and synthetic fibres, fabric manufacture and dying, design, tailoring, packaging and distribution, all of which may involve many independent companies working for one “economic employer” or lead firm in a supply chain.

One consequence of these and similar processes is the growth of the financial sector itself in many countries of the developed world and, with it, the decline of traditional industries and the collapse of conventional economic policies. Writing in 2012, one researcher noted that financialisation “over the past four decades certainly seems to have negatively impacted the real economy in the developed countries of the OECD by increasing inequality, slowing down economic growth, and contributing to unemployment. It appears that, when financial machinations supersede productive enterprise… the overall economy suffers.”

Paying attention to supply chains
On a global level, disaggregation and disintermediation have helped move labour-intensive processes to countries with relatively low wages, poor conditions and little tradition of trade union organization. This has undoubtedly weakened unions in the developed world, but it has also begun to create the conditions for unionization and labour organization in developing and newly industrialised countries. As Hall-Jones observes, “It seems that unions thrive in the context of industrialisation. Where we are losing ground is in post-industrial nations, where we have not yet evolved to organise workers in new forms of work.”

Global unions are already focussing efforts on tackling disaggregated enterprises through their growing concern with attenuated supply chains. At this year’s conference of the International Labour Organization (ILO) in Geneva, Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC), spoke about the need to regulate global supply chains to ensure that tragedies like the Rana Plaza fire in Bangladesh never happen again, and that child labour, forced labour and poor pay and conditions become things of the past.

“Gaps in governance have allowed companies and governments to grow a global business model which is based on the exploitation of working people,” she said. “Transparency, responsibility and accountability need to be associated with global supply chains, not unsafe, insecure low wage work. Global supply chains contain exploitative and poor conditions for millions of workers. More than one fifth of the global population are in jobs where long hours, dangerous working conditions, forced labour and low wages have become the norm.”

The ILO has taken up the call for global supply chain regulation. In June, at the 2016 ILO Conference, tripartite negotiations between governments, workers and employers produced a joint statement on how to promote “decent work” through the many layers of global supply chains.

The spokesperson for workers in these negotiations, Catelene Passchier, indicated the challenges ahead. “Everyone is connected but no-one is responsible,” said Passchier. “We need accountability and governance, particularly from the ‘economic employer’…. We need standards that apply wherever the supply chain reaches. There can be no excuses, no exemptions, no blaming abuses on the local management just because it’s a subcontractor or far from the home country.”

The next stage in the process will be to convene a committee of experts to assess past failures in and probable challenges to global governance, and to identify potential guidance, programmes, measures, initiatives and standards to address the issue of global supply chain regulation.

Individual global unions are already taking action. For example, in August a meeting of seven national unions from Europe and the Caribbean — all affiliates of UNI Global Union — condemned the use by telecoms company Liberty Global (which already owns Cable & Wireless, Columbus Communications and Virgin Media, and is about to take over Formula One) of “outsourcing and mergers to lower labor (sic) standards, make work ever more precarious, and justify continued redundancies”. Global unions such as the IUF, IndustriALL and the ITF are also increasingly active in supporting workers in developing and newly industrialised countries and their successes contribute to the growth of unions in these countries.

Living in a post-industrial world
There are other reasons why we see a decline in union density in the developed world. Here, the watchword in post-industrialism — a world in which national economies are rapidly becoming dominated by the services sector (which includes finance, retail, transport, tourism and consultancy). According to the World Bank, in the two decades from 1995, the contribution of the services sector to global GDP grew by 19 percent, from 58 percent of the total to 69 percent. In the leading post-industrial nations of the world, the US, the UK, France, Spain, Italy, Belgium, the Netherlands, Denmark, Greece and Luxembourg, the World Bank records the current contribution of the services sector at between 75 and 88 percent of GDP.

Outsourcing and offshoring are frequently tactics for corporates to minimise the cost of labour, almost always the single most significant category of expenditure for any enterprise. Another way of minimising labour costs is, effectively, to outsource labour itself. There are two ways in which this can be done: an enterprise can buy-in workers through an agency, which is then the legal employer of those workers, or the enterprise can use freelance labour, so that the workers are then self-employed. Both these approaches are important features of financialisation.

Without its own workers, an enterprise is distilled into an organization for managing contracts. Increasingly, the growth of agency work and freelancing, and the correlated financialisation of companies, threaten traditional union models — the enterprise is moved away from production and distribution, and the workforce is moved away from the enterprise.

Freelance, atypical and contingent workers
It is difficult to estimate the overall growth of various forms of freelance labour and what might has been described as “atypical employment” in the global workforce, largely because the nature of freelancing is complex and changing, as is the disaggregation driving the evolution of supply chains.

A 2014 report on the French and British media industries observed that “official statistics often find it difficult to know how to classify freelance workers and, consequently, under-report their number.” One problem is that the legal status of freelances can vary enormously in different jurisdictions. For example, media freelances in the UK have almost no legal employment protection, while in France the unique status attached to them as “pigistes” gives them almost as much protection as conventional employees.

In fact, freelances belong to a category of worker more properly described as “atypical” which includes people on short-term rolling contracts, subcontractors, casual workers, agency workers and temporary workers, as well as the more conventional self-employed workers. Most estimates of the number of self-employed workers in developed economies suggest that they account for between 25 percent and 35 percent of the workforce. A further 10 percent may be classified as atypical. It seems clear that the number of atypical workers in post-industrial economies is growing rapidly. A recent report in the Financial Times indicated that younger workers in particular are increasingly in atypical categories, although anecdotal evidence suggests that, in a shrinking workforce, older workers, too, are involuntarily swelling the ranks of atypical workers.

According to a 2015 report by the Organisation for Economic Co-operation and Development (OECD), “In it together: Why less inequality benefits all”, more than half of all the jobs created since the mid-1990s in its 34 member states have been in “non-standard work”. This kind of work now accounts for about a third of total employment in the developed countries of the OECD.

We covered the concept of precarity in the first of this series. But another popular term for those whose working lives may be described as precarious or atypical is “contingent”. According to a 2010 study by the software company Intuit (which specializes in financial software for small and medium sized enterprises) more than 40 percent of the US workforce will be so-called “contingent workers” by 2020. The report defines contingent workers as those who are “hired on a non-permanent basis and don’t have full-time employment status”. It lists “freelancers (sic), temps, part-time workers, contractors and other specialists”. It might also add workers on zero-hours contracts, who are employed without a commitment on the part of the employer to engage them for defined hours, or indeed for any hours at all.

From gigging to sharing
The growing numbers of contingent workers has given rise to the concept of the “gig economy”, using a term derived from 20th century musicians’ slang to refer to a single performance, the archetype of a short-term engagement. This idea reflects the growth of non-traditional forms of employment — microwork, collaborative work, occasional work — in which workers have no firm engagement to a single boss and are paid no agreed wage but are typically expected to bid for work, under conditions and accepting rates determined by employers. Needless to say, the employers have no duty of care to their workers and frequently deny that the workers are employees at all.

This is where post-industrial economies and devolved supply chains meet.

At the beginning of 2016, following a 2015 seminar organized by Actrav, the ILO’s Bureau for Workers’ Activities, Sharan Burrow noted that the transformation of supply chains has been facilitated by a no less significant transformation of employment. “The supply chain model, which accounts for some 60% of global production, is failing workers,” she said. “It is driving increased poverty and inequality, leaving working families without enough to live a decent life and threatening sustainability. Our recent report on the scandal of exploitation in global supply chains revealed that only 6% of the workforce of 50 of the world’s largest corporations are directly employed.”

Writing in the Guardian, the economist and commentator Will Hutton encapsulates the problems with the gig economy. The case against it, he says “is well known. It bids down wages. It makes working lives episodic. It displaces risk on to ordinary people, a source of growing stress and mental ill health…. Gigs are one-to-one relationships between the contractor and the contractee — easy to abuse and hard to monitor. They are also tricky environments, at least using conventional means, in which to organise trade unions.”

Hutton recognises that some consumers enjoy the benefits of the gig economy, but he argues that the precarious forms of employment at the heart of the gig economy are increasingly the model for all employment, at least in post-industrial economies — the places where so-called immaterial products (those that can be fully digitalised) and services live and prosper.

The gig economy is often confused with the so-called “sharing economy”, but they are distinct phenomena. The sharing economy is dependent on the gig as the unit of economic engagement, but the gig economy can exist without sharing.

Where they come together is in the rise of businesses based around internet apps. Apps like Uber and Airbnb, Handy and Taskrabbit promote themselves as “dating agencies” helping individuals make some extra money by connecting them to others who might be willing to pay for their services. A man who needs a ride finds someone who has a car; a woman who has a spare room finds someone who needs somewhere to stay; a couple who fancy a takeaway curry find someone who can pick it up and deliver it to them. It can be no surprise that many have (mistakenly) seen in the appearance of mutuality and co-operation the seeds of capitalism’s collapse.

Something for nothing
The journalist Paul Mason now occupies a well-upholstered niche as the prophet of “Postcapitalism” (it’s the title of his latest book). Mason’s view is that the internet has created the basis of a revolutionary new social reality which is being stalled by self-serving institutional structures built on outmoded frameworks of law, property and finance. In Mason’s postcapitalist paradise, the “sharing economy” makes good its promise, based on “a zero-carbon-energy system; the production of machines, products and services with zero marginal costs; and the reduction of necessary work time as close as possible to zero.”

Unfortunately, Mason has got it badly wrong on each of counts. First, since all forms of energy require infrastructure, “zero-carbon-energy” assumes zero manufacturing, maintenance and distribution costs. This is simply not feasible in the foreseeable (or any?) future. Second, production costs are never zero. The “zero marginal cost” paradigm (or, more accurately, “near zero marginal cost”) is based on the observation that digital products can be produced very cheaply once the initial development is complete. The familiar examples are software, recorded music, photographs, video, e-books, and news; these can be easily reproduced and freely (if sometimes illicitly) shared. Hence the idea of the sharing economy. But not everything is like this.

The production and distribution of food, clothing, buildings and battleships can be facilitated by digitalisation, but the products themselves cannot be easily reproduced or freely shared. There are raw materials, tools, machinery and labour to consider. Not even the development of 3D printing, which has sparked a great deal of interest in the possibility of zero marginal cost manufacturing, provides a viable post-industrial alternative to conventional manufacturing.

The 3D printing company Sculpteo, for example, offers services to industries as diverse as aerospace, education and food. The company believes that 3D printing can dramatically reduce lead times and set-up costs in manufacturing, but calculates that for the large-scale volume production of a relatively simple component (a GoPro camera handle in this example) injection moulding is much cheaper. According to Sculpteo website: “3D printing remains an economically valid option for the first 486 units”. If you want to produce more than 486 units, conventional manufacture is still the answer.

And thirdly, the idea of reducing necessary work time “as close as possible to zero” has, in practice, given rise to insecurity and underemployment. Without some form of enforceable basic income — which we discussed in Part 1 of this series — “as close as possible to zero” will remain a recipe for the immiseration and exploitation of workers.

The prophets of the sharing economy have discovered is that certain types of product — the immaterial ones — can be reproduced, even in extremely low volumes, at near zero marginal cost. But they mistakenly assume that everything we want to produce can in time be fully digitalised and, therefore, dematerialised.

Jeremy Rifkin is one of the prophets, twenty years in the game, whose most recent work, “The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism”, comes complete with breathless buzzword explosions, the hallmark of dreamy-eyed futurologists everywhere: “The rise of the collaborative commons offers us a path to biosphere consciousness in an empathetic civilization … and a sustainable cornucopia.”

The zero marginal cost of employment
A couple of years ago, Rifkin wrote a piece in the Los Angeles Times analysing the rise of Airbnb, the company whose website is used by tourists seeking to rent people’s spare rooms. “Airbnb owes its meteoric rise to a new phenomenon — near zero marginal cost — which is disrupting entire sectors of the global economy and giving rise to a new economic system riding alongside the conventional market,” Rifkin wrote. Enterprises like Airbnb and Uber have become the icons of the sharing economy because they seem to represent the quintessence of sharing: the buyer shares the seller’s house or car and everyone should benefit — buyer, seller and enterprise.

Rifkin’s argument is superficially attractive. “It’s not difficult to see why the [Airbnb] service has soared in value,” he writes. “For a traditional hotel chain to add another room to its inventory, the room must be built or acquired, at a significant cost. Airbnb can add another room to its inventory at almost no cost, since its website is already up and running.” But, of course, this is a conjuring trick in which the audience is easily distracted by talk of “the collaborative commons” and “peer-to-peer (P2P) production” while a hidden hand squeezes profit from a transaction entirely shorn of the direct and indirect costs (and benefits) of employment. App-based enterprises like Airbnb and Uber make services available. The services being sold take the form of immaterial products — a listing in an app or website.

This is not to dismiss the importance of technology-facilitated collaborative enterprises, like Wikipedia, Mozilla, Linux, MariaDB or the internet itself. But these are heavily focussed on IT, which has a strong culture of collaboration, and while most of these endeavours have an effective system of governance they have nothing resembling a system of popular democratic accountability.

There are some adventurous projects like Wikispeed, which has already produced a carbon-efficient automobile using crowd-funding, collaborative development and open source licensing and methods. And there are other well-established collaborative platforms or services such as bitcoin, blockchain, crowd sourcing and crowd funding, and peer-to-peer lending. These will undoubtedly have a disruptive effect on the economies that embrace them but the question of whether they represent more than an evolution of capitalism remains unanswered. Capitalism has always managed to find a space for co-operative alternatives and not-for-profit organizations and that will undoubtedly continue.

According to Michel Bauwens, the founder and director of the P2P Foundation, “We are witnessing the emergence of a new ‘proto’ mode of production based on distributed, collaborative forms of organisation. It is developing within capitalism, rather as Marx argued the early forms of merchant and factory capitalism developed within the feudal order. In other words system change is back on the agenda but in an unexpected form, not as a socialist alternative, but as a commons-based alternative.”

Not the accommodation or the ride
Bauwens may be right, but it would be mistaken to identify enterprises like Airbnb and Uber with some form of commons. These companies are not socialists, co-operators or volunteer matchmakers; they are hardnosed businesses whose product is not the accommodation or the ride, but the app or the website enabling sellers to market their services to buyers. It may look like sharing, and it may even feel like sharing, but it is actually profit-making. The near zero marginal cost involved here is the cost of adding a room and its renter to a website, or a car and its driver to an app. It is not the cost of providing the accommodation or the ride. And the service they sell is not accommodation or a car ride, but marketing. Their clients or customers are not the people who buy services through the app or website; they are the hosts and the car drivers who do the work and, for the privilege, pay Airbnb or Uber a substantial percentage of their income.

It’s easy to think of this in terms of sharing, but it’s no more sharing than an estate agent, a travel agent or a flea market. In these cases, there are typically direct interactions between buyers and sellers. In the world of the sharing economy, those transactions are mediated. For some people, this mediation is welcome. Buying and selling are fraught with risks; some Uber drivers, for example, welcome the fact that the transaction is virtualised and no cash is carried; some Uber users prefer an app to standing on a street corner in the cold or the rain waiting for a taxi to stop. But the problem is that the actual service providers, the hosts or drivers, are reduced to ciphers in a virtualised transaction. The transaction has been “gamified”, in the new jargon of marketers, and the participants reduced to faceless characters.

For the workers who drive, deliver, clean or maintain this process means that their freelance status is denatured. The dignity of labour that being your own boss provides is extracted in virtualising a transaction. The workers at the end of an online transaction are one remove from automata, and the companies that use them treat them with disdain. We should not be fooled into believing that these workers are freelances, or even less credibly that they are, in Uber’s language, “partners”. They work in a twilight zone where they suffer all the indignities of being employed by callous and dismissive bosses without any of the benefits of genuine freelancing. This is why companies like Deliveroo (which uses motorcycle couriers to deliver takeaway meals) and Uber find it so easy to lower rates of pay and change the terms of their workers’ employment, without consultation, at a moment’s notice, and why Uber is working with Volvo to develop self-driving cars for its service (although the economic logic of Uber owning a fleet of cars seems perverse and self-defeating).

In a genuine sharing economy, there are “commons” — the sharable resources that can be jointly and severally enjoyed. But companies like Airbnb and Uber have “enclosed the commons” and built their enterprises on charging labour a fee to enter the enclosure where corporate profit is now created. Their impact is still small, locally and globally, and perhaps regulation or the organization of labour can help avert a modern “tragedy of the commons”. But we need to act soon, because the influence of these  companies, and sometimes the company itself, is growing.

According to Jeremy Rifkin, “A recent survey showed that in New York alone, Airbnb’s 416,000 guests who stayed in apartments and houses between mid-2012 and mid-2013 cost the New York hotel industry 1 million lost room nights.” Writing on the Bloomberg website last year, Nadja Brandt quoted a figure published by hospitality industry researchers STR Inc. “The number of New York hotel rooms jumped to 112,940 last year (2014) from 93,254 in 2009”. This is consistent with the 80,000-plus rooms in higher-price hotels belonging to members of the Hotel Association of New York City.

Considering hotels only, the annual figures for New York translate into more than 40 million room nights and 55 million visitors using those rooms. Whichever way you look at it, Airbnb’s impact is still tiny even though its market capitalisation might be gigantic.

Uberization – the highest stage of capitalism?
Although relatively small operations in terms of world market share, Airbnb, Uber and the rest are global operations with a substantial market reach. Airbnb itself has garnered a poor reputation for its attitude to both guests and hosts. The company has been known to remove even long-term listings from its site without warning or explanation. The web-based system drives down prices and in that way encourages hosts to ignore local regulations, health and safety requirements, and the provision of basic facilities. The company takes a cut of the money paid by guests and a further cut of the money received by hosts.

The wave of dissent among Uber drivers across the world is so significant that a new concept — Uberization — has now joined the ranks of economic jargon as though it was the inevitable next stage of industrial development after the division of labour, factory production, mechanization, mass production, automation, computerisation, mass customisation, and the decline of the factory system.

But Uber’s business model is not in itself new. The most significant thing about it is the global reach that the internet facilitates. Like many of its fellows, Uber became a global business valued in the billions by creating a strong brand, ignoring local regulations, and recruiting workers at poverty rates, many of whom thought they were just making a bit of money on the side.

Businesses taking the same route as Uber have not invented a new kind of capitalism; but they have created a labour force of precarious workers whose working conditions and remuneration they control while at the same time denying any of the legal responsibilities typically discharged by traditional employers: training, health and safety, insurance, pensions, and paid parental leave, sick leave and holidays. Even conventional businesses have adopted similar employment practices — most notoriously the use of zero-hours contracts. And, as we’ve seen, the global supply chains of giant manufacturers and retailers are built on the foundation of a widespread adoption of unregulated and exploitative employment practices.

Clearly, the workers who keep the “sharing economy” moving need to be organized as much as those in along the supply chains; and they are getting organized.

Regrettably, recruiting and organizing freelances and other atypical or contingent workers is often a problem for more traditional unions. A newer type of organization is emerging, but these “independent trade unions” tend to focus on the informal economy and are more in tune with syndicalism than the democratic socialism of most contemporary trade unions. They are direct or indirect descendants of the Wobblies, the Industrial Workers of the World or IWW, founded in Chicago in 1905 and now representing workers in a number of informal and low-wage sectors including sex work, office cleaning and prison labour, and in some more conventional sectors such as agriculture and transportation. The IWW still operates in a number of countries, notably in North America, Australia, the UK and German speaking territories of Europe.

USiLive examined independent unions last year. Among others, we covered United Voices of the World (UVW) and the Independent Workers Union of Great Britain (IWGB) who have both been active in London supporting recent actions by Deliveroo takeaway couriers, resisting the unilateral imposition of new and inferior rates, and the UberEATS couriers, who struck over pay rates and the reinstatement of a victimised worker in the meal ordering and delivery service launched by Uber in 2014. The IWGB has also recently been involved in establishing a union for foster-carers in the UK. Foster carers are another group with a problematic employment status: technically self-employed but commonly tied to a particular local authority or children’s agency.

Independent unions are certainly active and imaginative, but they need the clout of the labour movement behind them and they need it on a global level. The movement has noticed this need and is responding but, regrettably, in an uncoordinated way.

For example, Uber drivers in cities across the world are organizing, and forming their own self-contained groups and networks. As is often the case with independent unions and groupings, some of these have approached established unions like the Teamsters in California and the Machinists in New York, who have agreed to represent the drivers.

Under a recently negotiated five-year deal between Uber and the International Association of Machinists District 15, a new group called the Independent Drivers Guild has been created to represent Uber’s 35,000 New York drivers in talks on job security and other grievances.

In Seattle, a different kind of relationship was established in 2014 when around 500 Uber drivers elected to create the App-Based Drivers’ Association under the wing of Teamsters Local 117, which already represents taxi drivers. A spokesperson for the Local said, “Drivers want to bring transportation companies into compliance with municipal, county, and state regulations and laws. They want sufficient liability coverage to protect themselves and their customers, and they want companies to end the predatory practices of disconnecting drivers from their apps without cause and arbitrarily gouging drivers’ pay.”

New York’s Independent Drivers Guild has opted to fight for a different tax structure to increase their pay, rather than protest Uber’s “gouging”. This has led to criticism. Bhairavi Desai of the New York Taxi Workers Alliance said that the deal lets Uber continue to evade employer responsibilities and puts the focus on New York’s sales tax. She described the deal as “Uber’s way of buying complicity from the union”, while the Guild’s founder, James Conigliaro, Jr., a legal adviser to the Machinists, argues that the goal is to get more money for the drivers “without raising rates.” Conigliaro said the union “had to adapt to this new economy.” Meanwhile a senior Uber adviser said the company supported the Guild and that it preserved the “independence that comes with being your own boss.”

There’s still a long, long way to go.

It’s not impossible for companies like Uber to become better employers, but it will mean that they are less competitive. In the long term that might be the best way to survive, because the cost of entry for web and app based businesses is low enough to encourage substantial competition. At least two new “ride-hailing” companies, TappCar in Canada and Juno in the US have been launched to provide a “responsible” alternative to Uber at only a small premium. However, both Uber and Lyft (numbers one and two in the market) seem committed to getting rid of drivers altogether. While nobody really knows if that’s achievable or advisable, it betokens an attitude to business which is profoundly illiberal and literally dehumanizing.

Meanwhile, many local and multinational “Uber-killers” have joined the fray: ride-hailing companies like Didi Chuxing, Lyft, TappCar, Juno and Hailo; local taxi companies with their own apps; and a number of commercial and non-commercial car pools and car sharing schemes including Autolib in Paris, with 2,000 short-term rental electric cars, Carpool.com and Bla Bla Car in Europe, and various local authority managed integrated transportation schemes including car and van pooling.

The new global app-based service companies are already extremely lean, but they are fragile, apparently requiring large and frequent injections of capital to survive and grow. Sidecar, an Uber competitor, closed down at the end of 2015. Lyft, is looking for a buyer with deep pockets because the cost of expansion is just too high. Even Uber sold its Chinese operation to the local market leader, Didi Chuxing, in order to avoid the ruinous cost of battling to dominate China’s ride-hailing business.

In effect, the only financial tool at the disposal of these companies is the fee or commission they charge their workers — 20 to 25 percent of the cost of each ride. This means that Uber or Lyft drivers, who have to meet all their own operating costs, are earning substantially less than their conventional competitors. It is important that the union movement does not let the app companies get away with depressing pay even further and hiding behind the pretence that the workers are their own bosses. The global union movement has a rare opportunity to take on the new internet-based global enterprises, and help educate consumers at the same time. It’s part of the same struggle as the one against the dangers of attenuated supply chains, and it is an opportunity that must not be missed.


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Gary Herman

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