Why Workers have nothing to lose in the Sharing Economy

November 17th, 2016
by The People Who Share

By Clare Kandola


The debate about workers in the Sharing Economy is hotting up. As the sector moves into the mainstream with opportunities for entrepreneurs and workers alike (and money to be made), issues of tax, regulation and protection are rearing their head in the media and the courts. The industry has been debating this for some time, although the focus has tended to rest with entrepreneurs (stimulating innovation and growth) and protecting consumers (from our early kitemark work of ShareTrade, through to the recently launched TrustSeal). 

Yet workers have received limited attention in this process of industry shakedown, perhaps because they have been participants with high satisfaction: 99% of workers in the Sharing Economy claim to be happy working this way. As the sector scales and more people find themselves relying on Sharing Economy companies for their main income, however, issues of protection, rights and taxation become more pressing. In recent months, Deliveroo has faced a backlash from its workers about planned changes to remuneration that would see workers without a guaranteed payment for their time and relying purely on delivery fees (albeit increased delivery fees). In recent weeks, Uber lost its case in the British high courts with the result that it can no longer claim all drivers are self-employed and be relieve itself of any employment obligation to them. We expect to see more of these cases. 

For many, working within the Sharing Economy offers flexibility, a way to balance different jobs and earning opportunities, a route to topping up income or entering the market. For many on the margins of society, looking to enter the workplace, the Sharing Economy has offered opportunity previously unavailable to them. Certainly, for mothers returning to work, the Sharing Economy has provided a much needed chance to generate income in a way that is flexible and doesn't discriminate on the basis of simply having children. And for those wanting to capitalise on under-utilised resources (the purest form of Sharing Economy transaction), any income is supplementary and a reward for offering their spare room/car/availability to take delivery of a package. These people don't need onerous tax implications, or formal contracts of employment, they need the ability to dip in and out of a system that has transformed individuals’ ability to co-operate and transact within their community.

What is clear is that a 'one size fits all' solution to regulating, taxing and protecting workers won't work (excuse the pun) and that establishing mechanisms that ensure opportunity without exploitation will need to be flexible, proportionate and relevant to the worker's status and needs. A new way, a Third Way if you like, is required to reflect that working relationships are changing, not to replace existing definitions but to supplement and update them. 

The UK government does currently provide definition of 'worker' as someone who is contracted to a company but not fully employed, affording some of the protections of an employee (such as holiday pay and the minimum wage) but without the full rights and on the basis of self-employed tax status. Whilst this goes some way to identify and clarify this new way of working, it offers no nuance in terms of how these workers are contracted or for how long. Nor does it address issues of simplifying taxation, although as an example of progressive approaches to taxation look at Estonia where a simple, digital tax return is generated directly between Uber and the Estonian tax authorities relieving drivers of onerous paperwork. 

Champions of workers right, such as Jason Moyer-Lee of The Independent Workers Union, feel that the issue is not one of creating a new system but of enforcing the regulation that is currently in place, and doing so with the support and weight of a traditional workers union. Some in the industry have expressed concern at this approach as the sector begins to reach scale based on innovation and entrepreneurship (along with flexibility in terms of those working to support growth) and fear that a rigid approach to enforcing regulation could stifle the very nature of the sector itself. 

It is clear, however, that whilst this new way of working does offer choice to many, it could also contribute to the increasingly precarious working environment of some. There are now 7m people in zero hours or temporary contracts and the TUC has shown that real wages in the UK have decreased by over 10% since 2008 (matched only by Greece and against gains in other European countries). Most of these issues originate from the mainstream economy, the Sports Direct workers that have hit the headlines for example, but the potential for abuse to spread within the Sharing Economy undoubtedly exists. And this is why it is important that in tandem to ensuring adequate protection for (and modern approaches to) these very 21st century working practices, we take stock of what can be lost or gained through a heavy handed or kneejerk approach. 

And so perhaps we should turn to the Sharing Economy itself to provide the guidance, nuance and proportion to balance protecting those whose toil drives sector growth against the very platforms and businesses whose services are the bedrock of the Sharing Economy. We at The People Who Share believe that is by ensuring that all the participants in the sector come together to establish mechanisms and tools to support and protect in equal measure, we can adapt existing structures to reflect our changing world. 

The People Who Share are hosting an event on the Sharing Economy and the Future of Work, to explore the issue of workers within the Sharing Economy, on 23rd November at 6:30pm at We Work Moorgate. To register, simply click here and join the debate. You can’t afford not to.