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Employment

What is the gig economy and why is it controversial?

The gig economy is touted by some as key to workers’ freedom, but many of those workers say it’s eroding their rights. This is what you need to know about the work model

Gig economy work is frequently placed under the spotlight as workers demand improvements to their working conditions.

Drivers working for Deliveroo, Uber and Amazon are all part of the gig economy. These jobs are supposed to allow more freedom for both the company and the worker – in theory, a person only has to work when they like – but are well-documented as eroding employee rights and contributing to UK poverty.

Insecure work is currently at record levels, with the number of people on zero-hours contracts – and no guarantee of employment or earnings – at an all-time high of more than one million. Charity St Mungo’s warned in September 2020 that the rise of “transient work” – such as temporary and zero-hour contracts, agency work and self-employment – was pushing some to the brink of homelessness. 

As a result, more and more gig economy workers are uniting against the companies built on their labour. 

Here is what you need to know about the so-called gig economy and what it means for workers in practice.

What is the gig economy?

Gig economy workers tend to be on zero-hour contracts or short-term, freelance contracts rather than permanent jobs with a set number of hours. They are otherwise known as independent contractors.

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The name comes from them earning money for each task, or “gig” they complete – like a delivery or a car journey – rather than hourly or daily for the time they have worked. Many people in the gig economy work for more than one company at the same time.

That means they often technically set their own hours, but it can also result in them receiving no hours or shifts.

The number of people working in the gig economy doubled between 2016 and 2019, according to Trades Union Congress research, totalling 4.7 million. Experts think that number could have risen further during the pandemic, with previous research demonstrating that recessions push people into precarious self-employed work when there is a lack of other jobs.

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Which companies use workers in the gig economy?

Deliveroo, Uber and Pimlico Plumbers are well known for using workers in the gig economy to carry out their business.

People working for Addison Lee taxis, Amazon, DPD and Ocado are in the gig economy too.

But many of these companies have faced strike action and legal challenges from workers who want more protection.

Are gig economy workers employees?

There has been much debate and even legal action around the employment status of workers in the gig economy. 

Many workers say they should count as employees, meaning they would be entitled to things like sick pay, the national living wage, redundancy pay and paid holidays, while employers tend to say they should not.

In February, Uber was overruled in a Supreme Court battle over the protection of its drivers and told it must classify people as “workers” rather than self-employed contractors.

That meant the drivers became entitled to rights such as the national living wage and sick pay.

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The six justices said Uber would have to consider its drivers to be workers between the time they log on to the app and log off. Previously, drivers were only considered to be working when driving a passenger. 

A similar ruling was made against Pimlico Plumbers in 2018 when justices said a tradesman was entitled to basic employee protections.

How much are these workers paid?

A quarter of people working in the gig economy were earning less than minimum wage (since rebranded as the national living wage) in 2018, according to NatCen Social Research analysis.

The same year, a government report showed nearly 90 per cent of gig economy workers were paid less than £10,000 per year.

That hardship is likely to have continued into the Covid-19 crisis, with Citizens Advice warning gig economy workers were facing higher levels of pandemic poverty compared to the rest of the working population. Some were found to be earning as little as £2 an hour.

What do the workers think?

Many people in the gig economy have taken strike action against the companies they earn money through. 

As recently as this month, Deliveroo riders took to the streets across the UK to demonstrate against low pay and poor conditions.

They were making the case to the delivery company that they should be recognised as employees and given basic rights such as sick pay.

Camden rider Rich Mason, 32, told The Big Issue it was a “really important time” for people facing hardship.

“The money, the insecurity and the lack of sick pay and protections have been around for years,” he told The Big Issue.

“All the riders out there realise we are never going to get more attention than we have got right now. All eyes are on us and the message is the same as it has been for years: we need proper pay.”

As well as improving pay, riders went on strike to demand greater safety measures to report harassment or abuse received on the job, a transparent termination process, and to be classed as dependent contractors.

Deliveroo responded to the strike organised by the Independent Workers Union of Great Britain by stating that the action only amounted to a small proportion of its 50,000 UK riders, and that the majority valued the “total flexibility” of their work and the ability to “earn over £13 an hour”.

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