Platforms and the ongoing fight over self-employment

The other day on PMQ, Philip Hammond announced a reversal of the Conservative plan to raise the National Insurance contributions for the self-employed. The papers last week interviewed a number of people whom it might have affected; some took it less as a blow to their income – rather contributing to their feeling that there is a general lack of government support for self-employed and small businesses (The I Paper, 09-03-2017). In spite of the prevailing rhetoric that the self-employed, the entrepreneurs, and the small businesses are the “engine of the economy”, these people feel that the government isn’t in their corner, so to speak.  I have some sympathy with that, especially since I am partly self-employed myself. On the other hand, I’d say that this is by no means restricted to our present government. Back in 2008, for instance, New Labour cut the 10% band of income tax – something that hit the lowest group of earners in the country, doubling their tax from one year to the next with insufficient safety nets in place to help those it hurt.

The people who work on online platforms are, in theory at least, meant to be classified as self-employed.   Indeed, Jeremy Corbyn’s responses to Hammond invoked the unethical (mis)categorising of workers as self-employed by businesses, referring partly to the zero-hour contract phenomenon, but doubtless also to the ongoing dogfight between workers and online labour platforms like Uber, Deliveroo, and Taskrabbit. The conversation about self-employed vs. employee is becoming increasingly litigious, with a number of cases already underway (and in some cases, won) surrounding worker rights and the question of whether the people who work on platforms could be counted as self employed contractors, or even small, independent businesses.

Whichever way you look at it, though, and no matter how straightforward it might have seemed at the beginning, the classification of Uber drivers as small businesses is pretty ludicrous. It’s too much to believe that they are all individual entrepreneurs driving around the city. For a start, their behaviour is strictly managed by the program – to the extent of effectively enforcing exclusivity by only allowing drivers to qualify for the best rates by being logged on for 50 minutes out of every hour, meaning that they can’t in practice drive for anyone else in that time. The app punishes drivers for rejecting calls (too many and you get suspended for half an hour), and sets the rates automatically.

So if it walks like a duck, and quacks like a duck…  Odds are it’s an unforgiving, Fordist-model duck.*  Furthermore, Uber’s leaders can argue that the system is not meant to support people who are driving full time, and indeed the company is quick to point out that the numbers of people who are driving part time vastly outnumber those who are driving full time. Sure – but the ones who are driving full time are the ones who make a large portion of the money for Uber, and should be protected in the same way as people who work for other companies full time.

This tight behavioural management isn’t restricted to Uber; Taskrabbit’s automated systems now takes more control than it has before of how Taskers and customers connect with each other. Labour platforms have started to use the data that they gather about transactions now not just for predicting customer behaviour, but to optimise the way that they control and direct their workers. A recent study by the CIPD revealed that only 38% of people who work for the gig economy feel like their own boss, and no wonder; they do have a boss. It’s just not one that breathes.

It’s a question as to whether online platform organisations foresaw where this was all going.  Depending on how you look at it, platforms exploited this legal loophole, or just provided the (incredibly useful and efficient) facilitating technology without really thinking through what it would mean for full-time workers.  My money is on the latter; app design tends to be iterative, which means that each update changes the software slightly, and the organisation changes its behaviour based on short-term, measureable results.  So it’s quite possible that no one thought far enough ahead at the beginning to say “Hey, so, what happens if people start thinking of this as a full time job?”  More likely, the focus was on the technology, “Hey, we made it easier for people to make money.  And, you know.  Us.”  And now it’s too late to turn back; too much money has been spent, too many people have signed up, and the business model is completely reliant on low operating costs.

The platform organisation’s dilemma

Nick Srnicek in his book Platform Capitalism describes the “lean platform”, where almost all the operating costs of the platform are outsourced. The business model depends on spending as little as possible on resources – which means that management costs are automated by the platform; the resources used by the workers are provided by the workers themselves. (And you would think that with revenues exceeding $5bn, Uber would be profitable by now, but this year alone the loss has already been astronomical.) Will this improve, do we think, when (and it looks like it’s a when, not an if) their workers are reclassified as employees?

There are several crucial questions.

1. At which point does a platform cease to be simply a provider of the technology for people to use, and start functioning as an employer? What features of the platform are the key switches that move it from one state to the other?

2. Who gets to decide whether a platform organisation is an employer or just a facilitator / provider of the technology?

3. If it is decided that a platform is an employer, how can a company that has started out by operating as a lean platform absorb the costs of suddenly having to guarantee hours and rates of pay for their newly recategorised employees? And what happens to the gig economy if platforms collapse? Srnicek suggests that the model of the online labour platform will disappear, forced to shift into product platfoms; others suggest a move to cooperativism.

I’d be pleased to hear any ideas about the future of the online gig economy and labour platforms if their self-employed workers are reclassified.

* Unforgiving Fordist Duck should have been the title of the post, but I, er, chickened out.