Figure 1. Representation of the growth of the UK gig economy in recent years and a prediction of the growth in 2022.
Firstly, it is important to grasp an understanding of what a gig economy incorporates, to be able to analyse the new law and judge the approach that was taken by Parliament.
UNDERSTANDING THE GIG ECONOMY
A gig economy is a free market system in which large numbers of people work in temporary positions or as independent contractors for short-term commitments. The term "gig" is a slang word for a job that lasts a specified period. Uber and Airbnb act as great examples of firms in the gig economy as they offer cheaper and more effective services.On the employee's side of the equation, lower-income and less-educated workers rely on gig work for their entire livelihood, often because they have trouble finding other job options, so the gig economy can be viewed as a reflection of this tendency on a large scale.
On the employer’s side of the equation, economic reasons are the driving factor behind the development of a gig economy. Employers prefer to hire part-time or seasonal employees, instead of full-time ones, to help them during busy times. During the ongoing coronavirus pandemic, the gig economy had experienced significant increases as confinement has forced many people to seek other options to satisfy their needs. People that lost their jobs because of the pandemic, turned to part-time and contract work for income.
Figure 2. Top reasons of people that choose to work in the gig economy.
BENEFITS AND CRITISCISMS OF THE GIG ECONOMY
The gig economy saves business resources like benefits, office space, and training. Ideally, the model is powered by independent workers selecting jobs that they are interested in, rather than being forced into one.
In effect, workers in a gig economy are more like entrepreneurs than traditional workers. While this may mean greater freedom of choice for the individual worker, it also means that there is no security of a steady job and no guarantee of regular pay and benefits, including a retirement account. As a result, people suffer tax complications and out-of-pocket equipment expenses.
There is a blurred line between those who voluntarily work as contractors and those who are being taken advantage of by an employer. Some employers classify them as a contractor to avoid paying fair wages and benefits.
WHAT IS THIS LAW AND WHAT DOES IT PROPOSE?
The gig economy is coming under scrutiny around the globe over labour rights issues. A controversial law regulating the profession of delivery workers, known as the Rider Law, was ratified by Spain's cabinet on 11 May 2021. It requires online delivery platforms operating in the country to classify their couriers as employees, rather than independent contractors within a time limit of 90 days.
Spain is the first country to enact a legislation that establishes a clear legal framework concerning the relationship between delivery platforms and their workforce. The new law also requires the companies to provide labour unions with details about their digital processes which includes how company algorithms and artificial intelligence (AI) systems assign jobs, as well as how they judge worker performance and conditions.
The law is meant to ensure the protection of the delivery workers by securing better earnings during low-demand hours and their listing as salary workers so that they can enjoy all the relevant protections.Yolanda Díaz, Spain’s Minister for Labour said the new law is part of “a modernisation of the labor market” in Spain which aims at bringing new technological developments in the legal system and thus assuring that workers’ rights are upheld. She argued that the law on the public communication of the digital processes helps prevent “algorithmic punishments” to workers.
Figure 3. A Glovo employee holding up a sign demanding his rights, during a protest.
NEGOTIATIONS INTO THE PASSING OF THIS LAW
Until now, gig workers had to pay social security fees from their own pockets if they wanted to receive benefits like unemployment subsidies and a public pension.Riders of food-delivery platforms across Spain have repeatedly advocated for their working conditions, taking legal action to demand recognition as salaried staff, something that would grant them benefits such as paid holidays and sick leave.
In September 2020, the Supreme Court in Spain ruled against Barcelona-based food delivery app, Glovo, and declared that the relationship between a rider and Glovo is one of employment and that riders cannot be considered as self-employed. The interesting aspect of this case is that the Spanish courts changed its previous criteria after ruling in September 2019 that Glovo Riders were self-employed.
Glovo Riders are considered employees because the fee for each service is fixed by Glovo and the riders cannot negotiate it. The riders are unable to decide the price that clients should pay for the service, and Glovo benefits from the result of the rider’s work. While the Department of Employment Affairs and Social Protection says that they intend to analyse this area, the reality of matters is that that Department is terrified of doing anything which could upset multinationals and this is why there are significant numbers of individuals who have no employment rights.
After several delays and many tense discussions, labour unions and business associations came to an agreement, led by Yolanda Díaz that the Supreme Court’s ruling in September should be turned into law.
Figure 4. A Glovo courier making his delivery rounds..
THE DOWNSIDES OF THE NEW LAW
The royal decree passed by the center-left ruling coalition immediately affects over 30,000 couriers. The decree is the result of an agreement with the country´s main labour unions and industry associations, although smaller groups representing the interests of the food delivery platforms claim they have been sidelined in the negotiations.
APS, which groups on-demand service providers like Deliveroo, Stuart, Glovo and Uber Eats - the main players in the food delivery market - condemned the government's move.
The Unión General de Trabajadores (UGT), a major Spanish labour union that participated in the negotiations, says the new law is too soft on the industry. Companies have three months to comply with the law, which the UGT believes is a very long period as they claim that platforms will take advantage of the time to slim down their courier fleets before the deadline.
Figure 5. Some of the largest food delivery firms.
Rider X Derechos [1] believes the law is too narrow since it only applies to couriers and not other gig workers — a wider scope was pushed off the table during negotiations.
Another courier collective, the Asociación Autónoma de Riders, opposes the law because it believes platforms will cut them loose in order to keep smaller payrolls. The union forwarded an official letter to EU Commissioner for Jobs and Social Rights, Nicolas Schmit, asking him to intervene and stop the regulation from coming into force. However, the Commission has little power to intervene in national labour law.
THE EFFECT OF THE NEW LAW ON BUSINESSES
The change could have far-reaching effects on Spanish businesses as it is at odds with a business model that depends on a vast fleet of "flexible" couriers. Uber Eats and Deliveroo warned the Spanish government that the law would lead to less work for couriers and “restrict the areas where platforms can operate” which essentially spells an end to Spain's gig economy.
The Association of Service Platforms (APA) said that the rule on disclosing algorithms will “undoubtedly” harm the digital economy in Spain as it is an attack on the freedom to do business and [on] intellectual property rights. While Spain claims to be a start-up nation, this is the first law in Europe that forces a technological company to disclose its algorithms. It will also hurt the Spanish restaurant industry that increasingly relies on delivery solutions to make ends meet. It is estimated that restaurants would lose €250 million in additional revenue.
Figure 6. Protesters carry a banner with the message: "Stop Rider law, I am a self-employed worker" outside Congress.
THE EFFECT OF THE NEW LAW ON DELIVERY RIDERS
Although the legislation is set to give food-delivery riders more security, it has been rejected by the Delivery Workers United movement on the grounds that it will lead to job losses. Carlos Gutiérrez from the labour union CCOO, welcomed the law saying that It goes in the right direction because it strengthens the working relationship between couriers and forces businesses to offer transparency on the new ways of managing workforces, like the use of algorithms”. However, he further mentioned that the text is not as ambitious, and it could have gone further by regulating the different work realities that occur on these digital platforms.
Industry Research suggests that over 75 per cent of the 30,000 platform couriers in Spain would lose their source of income, whereas app-based food delivery businesses claim that the law threatens a 700-million-euro industry in Spain. This led many in different cities to the streets because they say that self-employment benefits them. But not all food delivery platforms are opposed to the law. Just Eat Takeaway, the parent company of Just Eat, celebrated the new regulation, claiming that it builds the necessary legal security guaranteeing the rights of delivery workers by giving them a work contract so that all operators in the sector carry out their activity under the same rules.
Uber, which operates the Uber Eats service, said that it is “fully committed to raising the standard of work and is committed to giving independent workers more benefits while letting them keep their freedom and control”.
According to the US News and World Report, courier associations and labor experts anticipate further court battles. However, for now, most delivery companies have already started preparing for the change. Just Eat, the Spanish branch of Takeaway, has already hired some of its workers. Other companies, including Glovo, have instead hired couriers through temporary employment agencies
“Just as workers shouldn't fear advances in technology, companies shouldn't fear labour rights."
[1] A collective, at the state level, that fights for labour rights and decent living conditions for home delivery workers.
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