Insight
Driving uncertainty: Labour rights in the gig economy by Zach Meyers, 10 August 2021
The European Commission should treat competition policy as a tool to improve the rights of ‘gig economy’ workers – not a hindrance to that goal. Europeans are increasingly taking up jobs in the ‘gig economy’ – the task-based work facilitated by digital platforms like Uber, Bolt and Just Eat – despite frequent reports of poor worker conditions, including low pay and opaque platform rules. The European Commission is considering how best to protect gig economy workers, including possible exemptions from competition law to allow platform workers to collectively bargain even if they are not employees. Some of the Commission’s proposals are laudable – but it should see competition law as a tool, not a hindrance, to improving workers’ rights. Why ‘gig economy’ platforms lead to poor worker conditions The gig economy has some benefits for consumers and workers. Online platforms disrupted services such as taxis and hotels which were often inefficient, expensive, or protected from competition by regulation. In these markets, the gig economy has reduced prices and improved consumer choice. This disruption often created greater demand among consumers – and more work opportunities. However, many gig economy platforms operate in ‘multi-sided markets’. These are markets where a platform makes it easier and cheaper for different groups to connect to each other: such as customers, workers and – for food-delivery services – restaurants. These platforms must attract users from all sides of the market to grow. They often do so by subsidising several sides of the market – for example, ridehailing platforms offer large incentives for drivers and artificially low fares for customers. Intense competition between competing platforms has led to investors funding very large subsidies. The largest gig economy platform in Europe, Uber, sometimes pays drivers more for a trip than it collects from the consumer. The top four food-delivery services in the US run at a loss. In 2020, Deliveroo, a large food-delivery service in Europe, almost became insolvent. Investors have tolerated losses because they expect these markets will eventually have only one or two big players. Investors believe that consolidation is inevitable due to ‘network effects’: platforms with the most customers attract the most workers, which reduces passenger waiting times, attracting even more customers. A trend towards concentration is already evident in Europe: about 50 per cent of earnings in CER INSIGHT: Driving uncertainty: Labour rights in the gig economy 10 August 2021
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