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Uber and the Struggle over the Gig Economy

Uber has always maintained it’s a technology company, not a taxi company. But the UK Supreme Court has just ruled otherwise. This could have big implications for not only Uber’s business model, but the gig economy as a whole.

In a recent ruling by the UK Supreme Court, after a roughly five-year court battle, Uber has agreed to reclassify 70,000 of its drivers from independent contractors to employees. This means that the drivers will be entitled to certain working benefits that previously, as contractors, they were not. These include such things as holiday pay and a minimum wage.

This is a significant ruling for gig economy workers in the UK, though it is clearly not the end of the struggle. Uber has proposed that the clock starts clicking for their now employees only while an Uber ride is actually underway (i.e. a customer is actually being transported in the vehicle). According to the App Drivers & Couriers Union this is unacceptable and the calculation of working time should instead begin when the driver logs onto the app. The discussion is continuing, and the union hopes that it will raise issues for gig workers more broadly.

The UK is only one market that Uber is active in, but already there is interest in this ruling from other markets, in particular South Africa. With a similar legal system and classifications regarding what counts as work, it seems likely that South Africa will follow the UK’s ruling. It is much less clear what this might mean for other countries where the classification of workers varies.

It is also unclear what this will mean for Uber, which has yet to turn a profit. In 2020 the California based company reported a net loss of $6.77 billion, which is staggeringly already a 20% improvement on the breathtaking loss of $8.51 billion in 2019. The shrinking of their losses was mostly due to the rapid increase in deliveries, such as Uber Eats during the pandemic. Their mobility earnings were down 50% while delivery was up 130%, offsetting the loss of trips while people stayed home during 2020. As the pandemic drags on these trends appear likely to continue.

Personal comment:
The explosion of the gig economy, made possible by ubiquitous smart phones and apps that connect services with customers, is still in its infancy. Clearly this is not a settled part of the economy yet. It has taken years for this court case, raised in 2016 by two former Uber drivers to make it to this point, and even now it is not entirely settled. The gig economy is only part of the larger transformation of the economy into an increasingly digital environment.

One of the impacts of digitalization is the blurring of lines that have historically been much clearer. What does it mean to be ‘on the clock’ when we are continually connected, and therefore continually open to interruption or direction? This has been highlighted during the pandemic as people work from home.

The ruling from the UK Supreme Court pointed out that Uber’s drivers work was ‘tightly defined and controlled’ by Uber, and therefore should classify the relationship between driver and Uber as one of employment, not contracting. This may well be correct, but it does raise some interesting questions when it comes to the platform nature of Uber’s service, and therefore other platforms such as Foodora. Indeed, one might see a parallel between the fight over the gig economy and two other digital platform related fights: adtech, and social media. For example, there is a question about how a social media platform’s relation to content creators should be characterized. Is Facebook merely a platform that provides the space for independent content creators, or are they more like a publisher who selects content via algorithms? The scale and fluidity of the digitalization leads to new environments, new business opportunities, and new relationships between customers, workers, and service providers.

Written by Joshua Bronson,
RISE Mobility & Systems (Människa-autonomi)