Job Security Eludes Europe’s Gig Economy Workers

Job Security Eludes Europe’s Gig Economy Workers

In a recent feature at the New York Times, Liz Alderman shed some light on the experiences of young European professionals who have struggled to cobble together steady incomes in an economy where full-time, permanent positions are scarce:

While the region’s economy is finally recovering, more than half of all new jobs created in the European Union since 2010 have been through temporary contracts. This is the legacy of a painful financial crisis that has left employers wary of hiring permanent workers in a tenuous economy where growth is still weak. Under European labor laws, permanent workers are usually more difficult to lay off and require more costly benefit packages, making temporary contracts appealing for all manner of industries, from low-wage warehouse workers to professional white-collar jobs. …

The temporary-work trend is accelerating around Europe, as employers seek more flexibility to fire and hire workers, and shun permanent contracts with expensive costs and labor protections. In Spain alone, the government reported that 18 million temporary contracts were handed out last year, compared with 1.7 million long-term jobs.

There are signs of this phenomenon in the UK as well as continental Europe. Annie Makoff at People Management recently flagged new research from the Trades Union Congress claiming that three million UK workers are now in what the TUC calls “insecure work”: a 27 percent rise from 2.4 million in 2011. The TUC defines insecure work as “seasonal, casual, temporary or agency work, as well as those on zero-hour contracts and low-paid self-employed workers,” Makoff explains, though there’s some debate over how to define “insecure”:

Peter Urwin, professor of applied economics at Westminster Business School and director of the Centre for Employment Research, warned that while insecure work made it easier for employers to “hire and fire”, many workers still experienced “dissatisfaction”. However, Samantha Hurley, director of operations at APSCo, told People Management that the TUC statistics did not take into account the differentiation between unskilled, potentially vulnerable workers who may be forced to work on a self-employed basis, and professional contractors who chose to.

She said: “Independent reports suggest there has been a significant increase in contracting within the professional sector as well as in lower-paid sectors. Rather than assume this is bad news, it’s important to differentiate between these two very different labour markets and continue to look at the self-employed status and the ‘safety net’ that might be put in place for those in the lowest-paid roles.”

Policymakers in Europe are aware of this problem, which is driving efforts to ensure that the gig economy does not erode the rights to which European workers are accustomed. Last month, the European Parliament passed a resolution declaring that “all workers should have their basic rights guaranteed, whatever their form of employment and contract.” As BloombergView columnist Leonid Bershidsky explained at the time, this vote signaled to gig economy platforms like Uber that the EU would not shy away from regulating the rights of people who find work through them:

The resolution isn’t binding, but potentially, the issue presents a bigger threat to companies such as Uber than the resistance of their more traditionalist rivals. Europe is not afraid to appear retrograde when it comes to worker benefits, and though that may drag it down economically, it’s also what makes it a nice place to live and work. …

Mandated employment standards, however, could break these companies. After all, their true innovation isn’t the rather straightforward and easily replicated tech behind them, but their ability to bypass labor standards and thus undercut competitors on price — perhaps even after the money they get from investors is used up and they can no longer subsidize their services.

In the UK, a series of labor tribunal rulings has shown that judges are inclined to consider gig economy workers such as Uber drivers employees of the companies through which they work, even though these companies consider them self-employed and argue that treating them as employees would make their business models unfeasible. The latest such ruling came out last week, in the case of a plumber who had signed an agreement with his company stating that he was self-employed but was judged to be entitled to certain rights as a worker, Stephen Simpson reported at Personnel Today:

Yvonne Gallagher, employment partner at law form Harbottle & Lewis, said it was important to note that this case did not find that the plumber was an employee of Pimlico Plumbers.

“Those categorised as workers have a right to minimum wage and to paid annual leave, along with some other procedural rights, such as a right to be accompanied at any form of disciplinary meeting,” she explained. “But they do not enjoy the full range of protections given to employees and perhaps as importantly, are not subject to the PAYE system applicable to employees.”

However the judgment included a warning to commentators: “Although employment lawyers will inevitably be interested in this case – the question of when a relationship is genuinely casual being a very live one at present – they should be careful about trying to draw any very general conclusions from it.”