9 May 2022

It’s not just workers who suffer from unclear employment rules – gig economy startups do too

By Dom Hallas

In the past few weeks, there has been a lot of coverage of the Government’s plans to drop the Employment Bill from the Queens Speech.

Commentary is written one of two ways. People on the left asking ‘How can workers be left in the cold like this, especially after what happened with P&O?’. And people firmly in the comfortable centre, asking what this means for mostly white-collar workers who want a bit more flexibility to work from home.

There’s nothing inherently wrong with either of these positions. Post-pandemic, the traditional 9-5 Monday to Friday is undergoing an enforced ‘vibe-shift’. Ministers may not like it, but things are happening in the employment market whether they sit on their hands or not.

But the hot takes are still missing something: the voice of business. That’s a shame, because the truth is most businesses would quite like some direction too. That’s particularly true of gig economy startups, many of whom have been at the forefront of this changing world of employment.

It’s in that context that we at Coadec are today publishing a new paper on what gig economy startups need from the Government: the key take-away is that these growing companies need more clarity from employment rules.

Over the past decade since Uber, Deliveroo & Airbnb burst onto the scene, the gig economy has exploded. You can define it different ways depending on the products and services being offered. Renting a holiday flat isn’t the same as buying a pizza. But it’s now in our lives in a very real way. Over the past few years, waves of gig economy startups have radically expanded people’s options, with platforms bringing more competition and choice to everything from private cheffing to accounting, from physical therapy to childcare.

The value both to those using these services and providing them is obvious. By making it seamless to find, vet and connect with customers, platforms are enabling people to earn extra income and work around other commitments like education. Here gig platforms enable people to earn in ways it would be impossible to do if their only option was traditional employment, with its reciprocal obligations and set hours.

For people who want to break into a competitive industry it’s a great way to build up skills and experience, for new parents it could be a lifeline to ensuring their skills don’t slip, for people who want to make their passion pay occasionally it radically decreases the cost in time and resources to do so.

The data we’ve gathered suggests this flexibility and optionality is here to stay. Indeed, some 42% of 18-24 year olds we surveyed said that: ‘If I could make my current job flexible like a gig economy job I would’.

The market is demanding change, but our legal framework is in the way. Gig economy startups, like all startups, believe having the best product gives them the competitive edge. They want to differentiate themselves. This could mean offering the option of specialised insurance, training or counselling to attract more, better people to deliver their service. But the employment and welfare models designed by Beveridge to slay the ‘five giants’ won’t help Britain’s gig economy startups become tech giants.

The current rules put these startups in a straitjacket. Perversely, offering better terms to the people delivering your goods or services might mean you end up in court. As a gig economy business, you can’t offer more help without the risk of tipping into employment categories that will take away your ability to be flexible. That would not only ruin many of their business models, but for the companies who managed to restructure and survive, platform earners who used them would in many cases be forced onto zero-hours contracts.

So the businesses rumble on, like the workers, grateful for the flexibility but wanting more. This is something that government can and should provide.

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Dom Hallas is executive director of Coadec.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.