Article published by The Guardian on 4 September 2016
Written by Will Hutton
Featuring: Big Innovation Centre Purposeful Company Taskforce is an active part of the push for stronger ownership and governance system that part frames, part persuades, part obliges and part incentivises all firms to be fairer and more innovative employers and assures everyone they are all acting under the same rules.
As the number of workers living in poverty grows, is it possible to have an ethically driven system?
What to do about today’s capitalism? As ever, it is the bearer of the modern, the change agent whose innovations are welcome even as its social effects are deplored. It reinvents our lives with everything from the iPhone to the internet, just as it overturns the settled and stable that had made our former lives tolerable.
Today’s digital capitalism is creating a world of consumers delighting in apps for a cheap taxi or delivering groceries to their door. But it is also creating a world of disempowered workers who have to labour in this on-demand world – the gig economy in which a working week is no more than a series of “gigs” contracted out by the online dispensers of on-demand work.
The case against the gig economy 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. Gig work does not come with pensions, sick pay, holiday entitlement and parental leave. Mortgage companies are wary about lending to people with insecure work. 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.
There are workers – some students, older workers and adults with childcare responsibilities – for whom the gig economy presents opportunities. There is also a truth that bears repeating: there is no gig economy without consumers who relish its convenience, cheapness and flexibility. I doubt there is a reader of this column who has not helped it along with on-demand buying.
But for the mass of workers it is not great news, especially as, increasingly, it forces mainstream employers to compete on the same terms. Thus the independent TV production companies, working on programme commissions from the major broadcasters, typically offer job contracts on gig terms. Both the BBC and ITV have followed suit, increasingly organising themselves along similar principles, creating a contractualised workforce required to bid again and again to continue doing a job that used to be full-time, tenured and part of a career. No more.
The same phenomenon is at work in our high streets as retailers compete against the Deliveroos. It is also in part behind the crisis in the NHS, with the new junior doctors’ contract incorporating gig terms. This new world is reshaping the pattern of the country’s poverty. Only some 13% of pensioners now suffer poverty incomes, declares a new Joseph Rowntree Foundation landmark report, We can solve poverty in the UK, down from 40% a generation ago, protected by the steady real increase in the state pension. But the numbers of working-age adults without children in poverty has shot up to 20%. Overall, 13 million people live in poverty.
The stubborn persistence of these figures has many causes – from rising fuel, food and house prices to George Osborne’s assault on the benefit system. But the main driver is the growth of low-wage, insecure jobs. Four out of five low-paid workers fail to escape low pay after 10 years, declares the report, while 30% of working-age people can’t afford to pay into an occupational or private pension scheme. These levels of poverty are shameful, yet could be corrected by 2030. There is a long list of feasible recommendations on benefits, training, housing and work and the report hopes that the now 30 companies in the FTSE 100 that have committed to pay the living wage – up from two in 2011 – could be further extended.
This is one of the more encouraging phenomena of the last few years. Parts of the business community, including the online business world, are increasingly persuaded that they need to take responsibility for ameliorating the social conditions they are creating, partly as a matter of conviction and partly because reputation is good business. Nor is the impulse confined to plcs. A new online taxi service, TappCar, was launched in Canada earlier this year as the responsible challenger to Uber. You can call up, confident the driver will have appropriate insurance, a pension and employment rights – and it only costs 5% more. Juno is following suit in the US. Consumers can encourage fairness, too, if they choose.
The Rowntree Foundation is on to something. But although it wants balanced economic growth that works for all, this is the least thought-through part of the report. The drivers of the gig economy are not to be wished away by exhortation and self-selecting volunteer companies: Uber, Amazon and the rest are here to stay.
The gig economy can only get stronger: the economic pressures to act speedily and flexibly in the digital age are unrelenting. To act as a countervailing force, there needs to be a stronger ownership and governance system that part frames, part persuades, part obliges and part incentivises all firms to be fairer and more innovative employers and assures everyone they are all acting under the same rules. (Declaration: I am on the steering group of theBig Innovation Centre Purposeful Company Taskforce, which has such an aim.)
But the most glaring omission of all is not one case history citing an innovative trade union response nor one recommendation about how gig workers could win greater bargaining heft.
Unions could, for example, develop into fully fledged worker co-operatives hiring out workers to gig employers and providing benefits as members of the co-operative. There could be a reform of collective bargaining. There could be a wave of apps in which gig workers band together, share information and even act together. That the report could identify no such initiatives, nor think of any of its own, is a telling indictment.
In thinking of this type the British liberal left is not on the playing field. Governments can certainly act and do better along the lines advocated by the foundation’s report. But they need to be driven by sympathetic public opinion, itself shaped by innovative social institutions experimenting with practical ways of delivering fairness.
Reshaping the gig economy cannot only come from on high – there has to be some innovation from within business and broader society. There are some welcome stirrings, but without a reshaped system, along with more energy and leadership to capitalise on the change of mood, expect little to change.