IPSE: Reform the gig economy, but don’t regulate the self-employed out of existence
Andy Chamberlain, Deputy Director of Policy
| IPSE
IPSE respond to Frank Field MP's article on Deliveroo and the gig economy.
In Frank Field MP’s article for this website, he is right to say that the current employment classifications are out of step with modern working practices and need to be reformed. He is also right that it is deplorable that a small number of self-employed riders are earning an average of less than the national living wage – and do not have other opportunities for work. Self-employment should always be a choice.
However, in trying to improve conditions for people in this group, we must not worsen conditions for other, larger groups who are quite different from Deliveroo riders. Last week, for example, the Office of Tax Simplification published a report which noted that, in fact, platform workers tend to work in professional roles, earning decent money.
A Chartered Institute of Personnel and Development study quoted in the report also found that “platform workers are on the whole satisfied (51% saying they are satisfied and only 19% dissatisfied) with the level of income they receive. This is significantly higher than the level of satisfaction with pay reported by other workers/employees, where 36% are satisfied and 35% are dissatisfied.”
Some of the proposals in Field’s report and article would rock the boat to such a significant degree that it could result in many people in this satisfied majority being deprived of work opportunities.
One of Field’s key proposals for reforming the platform economy and self-employment is changing the law so that companies have to prove that people in their workforce are self-employed. This would, however, do serious damage to the principle behind the success of not just the platform economy, but all self-employment: flexibility.
Like the changes to IR35 tax law in the public sector, making businesses prove that people in their workforce are self-employed would impose a serious bureaucratic burden on them. And this is something that wouldn’t just harm the businesses: it would harm hundreds of thousands of legitimately self-employed freelancers and platform workers too, seriously reducing the number of opportunities available to them.
Despite the overwhelming media narrative, self-employment isn’t just gig economy workers: far from it. There are 4.8 million self-employed people in the UK, the majority working outside the gig economy: everyone from IT contractors to freelance graphic designers. They are one of the most dynamic and productive sectors of the UK economy. And so Field’s recommendation to impose burdensome bureaucracy across the sector would not only harm businesses and self-employed people: it could do quite serious damage to the wider economy.
The other major recommendation from Field is that Deliveroo should guarantee their riders the national living wage for every hour they are logged in and available for work. And it’s true, guaranteeing pay for riders seems an obvious way to improve conditions for the minority who are struggling. But this just isn’t a workable solution – for Deliveroo, other platform companies or the self-employed themselves.
Firstly, paying people for time when there is no work simply isn’t a viable business model for Deliveroo or any other platform economy company. By effectively making workers into employees, it would destroy the key advantage of engaging self-employed workers: flexibility. It would most likely lead to many fewer opportunities for self-employed people themselves.
Instead, IPSE would suggest putting more thought into the Taylor Review recommendation on “piece rates”. Looking at “piece work”, where individuals are paid per task rather than per hour, Taylor essentially recommends reforming the “fair rate” guidelines “to ensure those working in the gig economy are still able to enjoy maximum flexibility whilst also being able to earn the NMW”. This could easily be extended to make sure companies are paying their platform workers the equivalent of the national minimum wage for each task – instead of forcing them to pay the living wage on an hourly basis, even when there is no work.
Overall, Frank Field’s aim of “protecting vulnerable workers while preserving the flexibility that so many individuals have said they value” is admirable and absolutely right. To achieve it, however, and meet the needs of this hugely varied and fluid sector, more nuanced and workable policies may be needed.
