CIPD Voice: Issue 11


Findings from the Taylor Review

The Taylor Review, published on July 11, set out some modest but for the most part sensible proposals which will provide some incremental improvements for some of those suffering from one-sided flexibility in the gig economy. Although this sounds like damming with faint praise, it is better to go for some reforms that are likely to be introduced than more ambitious and sweeping measures that generate as many dis-benefits for some as they do benefits for others.

Taylor was painting on a much wider canvas than the gig economy, looking at a wide variety of non-standard employment forms and considering the much bigger question of how to promote quality of work for all. But it is the gig economy that tends to dominate the public debate and which is most likely to be the subject of new legislation and change in existing regulation and practice over the coming year.

Just to be clear, what Taylor means by the gig economy is the same as the CIPD definition: the gig economy is labour services delivered through digital platforms. It does not include renting property or raising capital for new projects. Yet, in many ways, the public focus on the gig economy represents a chasm between hype and reality, with the gig economy supplanting zero hours contracts as the symbol of everything people think is going wrong with the labour market.

The reality is that the gig economy today is very small and most of the work is marginal and low value. The CIPD recently estimated it represented 4 per cent of all those in work, but this included all those who had done any activity over a 12-month period. This is a common definition amongst surveys of the gig economy as otherwise it would be impossible to achieve a big enough sample. The official employment statistics, however, take a snapshot of activity a week or so either side of the survey and on the same basis the number in the gig economy would be very small indeed (probably less than 1 per cent, if evidence from the US is any guide).

But could that change? Some gig economy companies have set out ambitious growth targets and some commentators have projected big increases in gig economy work. The recent CIPD survey on the gig economy found that a significant share of people in work said they were thinking about engaging in the gig economy. We should be careful about taking these sorts of responses at face value, as it is easy to express an interest in a survey and quite another to translate that interest into action. But nonetheless there are good grounds to think the gig economy will continue to grow. How fast will depend on what factors might either enable or inhibit future growth. We review some of the more important below.

Regulation

Effective enforcement is as likely to be as important as any changes introduced by the Taylor Review. Gig economy employment, as currently defined, might shrink if significant numbers of self-employed gig workers became workers or employees, with an unknown impact on platform business models. More generally, there is a view amongst a majority of gig economy workers themselves that platform growth to date has been based on avoiding regulations that apply to more conventional firms.

New technology

Technology has obviously been the key driver of the gig economy so far, and further advances are likely to widen out the number of services that can be delivered through the digital platforms. However, technological advance may reduce the number of low value tasks that can be done online but which are now hard to computerise. Looking much further ahead, driverless cars and drones may also reduce demand for some gig economy taxi and courier services.

Market demand

The gig economy is focused on services for which there is a growing demand and there appears to be an increasing consumer and business willingness to access such services online. It is very unlikely that the UK would impose direct restrictions as adopted in some European cities, but the notion that some platforms are skirting regulatory controls might strengthen calls in the future to ensure a more level playing field. It is also possible that conventional businesses in direct competition with platform-based services will come up with an effective response.

Business models

We have already suggested some business models might be unhinged if large numbers of gig economy workers achieved worker or employee status. However, this may tell us more about the potential weakness of the underlying concept. According to critics, some hugely over-valued private companies have proved better at expansion and the enrichment of their founders than proving they can deliver a sustainable profit for their investors. Only time will tell if these criticisms are justified.

Voice

Improving worker voice could be an important mechanism to address what Taylor calls “one sided flexibility” through the ability to influence issues of reward, conditions, and relationships with platform providers. The CIPD survey found that, overall, gig economy workers want more from their providers. Some will see this as a threat, or at least a constraint on growth which some think relies too much on minimising costs and responsibilities. But it could also be an important opportunity for platform providers to raise standards, reward those who want to deal fairly with and invest in the gig economy workforce, and deal with the public concerns about the way they operate which, otherwise, is likely to prompt further interventions.

Taylor was surprisingly weak on how to improve the voice of workers in the gig economy. Yet in December 2016 the “Frankfurt Paper on Platform based Work” inspired by IG Metal but supported by several European and American trade unions set out some specific demands but also concluded with the aspiration to make the gig economy a source of good work. We believe that information technology, shaped wisely, holds great promise for expanding access to good work. We look forward to working with workers, clients, worker organizations, researchers, journalists, platform operators, and other stakeholders to deliver that promise.

The German Crowd-Sourcing Association has already indicated some support for these principles and has adopted its own code of conduct for platform providers. We could do worse than adopt a similar constructive approach in the UK.


Ian Brinkley

Ian Brinkley, Acting Chief Economist

Ian Brinkley has been acting Chief Economist since July 2016. He was previously director of socio-economic programmes at the Work Foundation and held the positions of head of the economic and social affairs department and chief economist at the TUC between 1996 and 2006.

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