DIY Investor Magazine
| Oct 2017
28
THE RISE OF THE ‘GIG’ ECONOMY
AND THE NEED FOR FINANCIAL
SELF-DETERMINATION
It seems you can’t pick up a paper or switch on your
news feed without coming across a story on the ‘gig’
economy: Uber’s appeal against their employment
tribunal ruling, Addison Lee losing their tribunal, Uber
losing their London licence, Hermes being investigated
by HMRC, Uber losing their General Manager, ... you
get the idea.
This is rapidly becoming the work issue of our day,
and the lines are being drawn as an old-fashioned
slugfest between ‘the little guy’ and ‘The Man’, between
unions (GMB waded into the Uber tribunal on behalf of
its ‘members’, which is odd considering that they are
‘self-employed’) backed by readers of Marx and the
dark forces of capitalism unchained: Uber is a global
powerhouse backed by an estimated $15 billion of
investment funding and Addison Lee was bought by The
Carlyle Group for £300 million.
But those who choose to see this in good vs. evil or
black & white terms may miss the point that the grey
areas contain so many aspects that require addressing
- freedom of movement, low pay, work-life balance, lack
of savings and pensions - to make all of us pause and
consider.
The biggest question is whether or not the model is
sustainable. Yes, for anyone who has sat in a black
cab watching the meter whirr round or had to stand in
a post office collection queue the benefits of using gig
economy companies offering astonishingly low prices
and to-your-door service seem pretty unbeatable.
But Uber’s model is to use their investment to loss-lead
until they have wiped out the competition, at which point
they have the monopolistic opportunity to hike up prices.
So, potentially not great for customers.
However, there are much wider implications for the
workplace and markets. The move into flexible working
- whether or not Uber et al. can continue to class it as
self-employment - is sometimes a matter of preference,
but more likely of necessity.
People may need second or third jobs to make ends
meet, or to work around caring for members of their
family.
But they face tremendous insecurity, late payment, no
holiday or sick pay, no National Insurance or pensions
if they forget or cannot contribute, no employee rights
or benefits - hence, a significant percentage of the
workforce (Citizens Advice estimate that 500,000 work
in the gig economy) become bound to a barely living
wage.
Add to that the estimated £314 million p.a. in lost tax
and NIC revenue from badly calculated and collected
self-assessment returns, and potentially not great for the
consumer economy as a whole.
Nevertheless, flexible working in whatever guise is
here to stay and will further undermine the notions
of employee status and jobs for life upon which the
Western model has existed since at least 1950s
America.
No more singing company songs or going on works
outings, any unified corporate culture or unionised
workforce will be extremely difficult to sustain.
Furthermore, it’s clear to see a huge impact on the
financial industry, let alone in the diminishing numbers
contributing to pension schemes. Traditionally, banks,
mortgage lenders, and credit companies have been
