The UK landmark ruling, made Friday, could have profound impacts on the sharing economy. Uber drivers were found to be “employed” rather than “self-employed” and as such should be eligible for minimum wages, holiday pay and other benefits. Uber said it would appeal the decision because its business was a matching service between potential customers and lift providers.
But it begs the wider question. Are these new economy sharing businesses truly not employing those providing the services, and are workers truly self-employed? The resolution of this issue has profound consequences, not just for the estimated 40,000 Uber workers in the UK but where it has been suggested that more than 460,000 people are not really self-employed and more than £300m in taxes are foregone each year.
Many other sharing business exist, in the UK, and elsewhere, and the ever deeper migration to digital means we must expect to see more people being employed in the “gig” economy.
Last year Deloitte Access Economics reported the sharing economy contributes about A$504 million a year to the New South Wales economy, with about 45,000 people earning an income from the different platforms like Lyft and Uber for ride sharing, and Airbnb for accommodation.
We have to decide whether to fit the “gig” type business into the current work definitions, or whether there is a need for a new type of worker – one providing perhaps occasional services in the sharing economy.
One of the attractions of working in the sharing economy is the freedom and flexibility it offers, but incumbents argue this is an unfair advantage, and they should be working within existing employment frameworks, which are designed to protect workers, and those using the provided services.
We think this needs some careful thought. UK MPs last week launched an inquiry into pay and working conditions, including the issues of casual workers, agency, and the gig economy. The rules in Australia are no clearer.
Do we fight or embrace the innovation, or find some middle path. The stakes are high.
We said in an earlier post:
The sharing economy has the potential to disrupt current business models, whether its taxis, banking, accommodation or a range of other areas. It also has the potential to be stopped dead in its tracks, if incumbents, or regulation get to dictate too much too soon.
I suggest we should bias the regulatory framework to encourage new businesses to develop. Tender plants need carefully husbandry. Legislators must take the time to get the rules right, but with a bias towards facilitating disruption, not stopping it. In Australia, our track record on this is frankly poor, and incumbents often have such strong influence (at a market, and political level) that as a result new sharing economy businesses are likely to get crushed.
