Is the tide turning against the gig economy?

January 18, 2018
The international tide is turning as people realise that workers’ rights do actually matter. A protest against Deliveroo in London last year.

Anyone who had the pleasure of hearing Jon Faine’s dismemberment of the gig economy, as represented by the hapless Brent Thomas, Head of Public Policy at Airbnb ANZ, on ABC Radio last year will never forget it.  

It was excruciating. You could hear the air going out of poor old Brent when Faine pressed him on how much tax Airbnb actually pays in Australia, and pressed him and pressed him. 

The answer of course is none. Airbnb off-shore all its earnings to Ireland — and its 12.5% corporate tax rate compared with Australia’s 30%. Not that Thomas was prepared to admit that on air. He talked about how much the customers loved Airbnb, like all the gig spinners do, as though that was all that ever mattered.  

The interview was not only significant because it exposed the $31 billion company as “a parasite”, as Faine put it, using the infrastructure and services paid for by Australian taxpayers to develop its business and “tipping in” next to nothing in return. It also served as further evidence of a turning tide in the attitude of the public to these “new economy” charlatans.

Senate inquiry

The evidence that has already been accumulated is significant. The Senate’s Education and Employment Reference Committee investigation was brutal in its criticism of services like Uber, Airtasker and Deliveroo, accusing them of ripping off workers and deliberately undermining laws to protect employees.

Its report, Corporate Avoidance of the Fair Work Act 2009, released in September, investigated how the Fair Work Act — the main law that governs how employees and employers interact in Australia — was being applied in the on-demand or gig economy.  

The report delved into the Fair Work Commission and Ombudsman, collective bargaining and enterprise agreements, labour hire and wage theft, with an entire chapter looking at the “gig economy”, and services such as ride-sharing and food delivery apps.

It dismantled the arguments put by Uber, Airtasker, Deliveroo, as well as the emerging spin-off companies looking to cash in on the exploitation free-for-all, which treats workers as independent contractors instead of employees. This means workers are not covered by essential workplace protections such as insurance, superannuation, sick or holiday leave, minimum hours or even basic rates of pay.

The gig economy operators made submissions selling the virtues of flexibility and choice. But the committee did not buy it.

My favourite quote among many observations made by the Senate Committee is from Chapter 8: “Gig Economy: Hyper Flexibility or Sham Contracting?”. The Committee said: “Gig companies have not invented a new way of working — they have exploited a cloak of innovation and progress to reintroduce archaic and outdated labour practices. The gig economy is normalising labour conditions it took generations of political struggle to stamp out in this country: precarious circumstances in which a person may not know where their next few dollars are coming from: insecure, unprotected, sporadic work.”

There it is. The con exposed.

Tide turning against gig economy

In the past few months, London’s transport agency has stripped Uber of its licence over a lack of corporate responsibility. The European Commission has backed a proposal for tougher protections for people working in the flexible economy.

The international tide is turning as people realise that workers’ rights do actually matter, and an army of gig economy automatons is good for no one.

On the back of the Senate report, the Fair Work Ombudsman has announced it is inquiring into Uber and Deliveroo and their sham contracting arrangements.

The non-Murdoch mainstream media (ABC and Fairfax) have sniffed the breeze and decided the gig economy has a growing stench about it. Now, instead of lauding Uber for its “disruption” they are focused on the rip offs.

The Age, Sydney Morning Herald and the ABC have all run stories in recent months highlighting the individual and economy wide disadvantages of the app-enabled wealth transfer — the foregone superannuation; the dangers involved, especially for rideshare drivers and couriers; the financial risks worn by individuals; the lack of training; the lost taxation; the lack of any career path; the exploitation of young, migrant, usually female workers and so on. The whole sham is being picked apart.  

But the gig economy does have some supporters left. In the camp of denialists are the operators themselves of course, and their investors, as well as other vested interests, such as the people getting their homes cleaned for $5 an hour. They do not want any disruption to the benefits they are getting from all this disruption.

It is human nature that some people will choose personal self-interest over everything else; people for whom personal expense and convenience are the only determinants of the merits of an enterprise.

Government support

Then there is the federal government. The gig economy works in very well with its anti-worker, anti-union agenda. It suits the government to promote the gig economy even though the new economy model hinders its own broader economic objectives of higher wages and increased taxation revenues.

The government, it seems, hates unionised workers more than it needs the foregone revenue. Despite the fact that all these non-superannuated workers will, in retirement, ultimately represent a drag on the federal government’s bottom line, it is embracing the “Uberisation” of the workforce. It is too ideologically attractive for the anti-union, neoliberal, trickle-downers to resist.

After all, revenue generating opportunities come and go but structural economic shifts that reduce workers’ rights and keep the underclass in their place do not come along that often.

In a move that shows that the government could not be more out of step with the national, much less the international mood, it has decided to launch what has been dubbed an “Uber for the Dole” scheme.

On the day the rest of the country was watching the announcement that the majority had voted Yes for marriage equality, social services minister Christian Porter was promoting businesses that are the champions of inequality. He revealed a $1.4 million pilot program to get young, unskilled jobseekers into the gig economy.

Rather than channelling money into reviving the TAFE sector, which everyone other than the government knows needs to be seriously reinvigorated if Australia is to meet the skills’ demands of the growing economy, the government thinks Uber is the answer.

Porter said the program was about “placing young unemployed Australians into viable employment positions in the gig economy as a means of breaking cycles of welfare dependency”. He also suggested it “will act as a stepping stone for further ongoing employment opportunities”.

Yes, really, the government’s solution to the emerging skills crisis is to “help” young Australians by pushing them into no-skill, no-training, no-protections work at potentially sub-minimum wage rates.

That’s not a stepping stone, it’s a millstone, chained firmly around the necks of young people already struggling with a housing affordability crisis and higher education debts.

As disheartening as Porter’s approach is, it will likely to be mercifully short-lived, if it starts at all. The government is teetering on a knife edge and only its most ardent supporters could envisage it lasting more than a few months into the new year.

It is the nature of the gig economy to promote division and thrive on inequality and desperation. It is the ultimate in “I’m alright Jack” economics and just as the poor old Airbnb guy found out on Jon Faine’s show, Australians generally reject that attitude.

It is amusing, if a little depressing, to think that the catalyst for the ABC Airbnb interview was a decision by the Mornington Shire to introduce new laws aimed at protecting residents from the relentless intrusion of Airbnb “party houses” along the popular holiday coast, south of Melbourne. It seems the very well-to-do folks of Sorrento and Portsea are fed up with all the riff-raff from the suburbs coming onto their Peninsula, hence the new local regulations.

But don’t they overwhelmingly support the government and its deregulatory, free market policies? Isn’t that just the market at work? I thought red tape was the devil? Oh, sweet irony.

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