Following the recent UK Supreme Court judgement on Uber’s employment model and the global legal and regulatory pressures on the broader platform business model, this policy brief explores the implications of these developments for work and productivity in the UK economy.
The recent UK Supreme Court judgement on Uber’s employment model has reignited questions about work in the broader ‘gig economy’. The Court’s recent judgment that Uber drivers are ‘workers’, and therefore within the scope of employment law, applies far beyond the drivers who had brought the specific case. The accumulation of similar precedents in courts around the world means that legal and regulatory pressures on the broader platform business model will continue. This has been underlined by the high-profile reluctance of some major institutional investors to take part in the Deliveroo stock-market listing, citing concern about the viability of the model.
This policy brief explores the implications of these developments for work and productivity in the UK economy. While some of the issues raised by the judgment are specific to digital platforms, the broad policy questions raised by the recent cases speak to the whole contingent segment of the labour force in the UK and elsewhere. The digital platforms grab the headlines, but, as we set out here, a significant proportion of the working population is affected by the same issues – not just couriers and drivers, but others ranging from hairdressers and gym instructors to people working in hospitality or construction.
We begin by describing the specifics of the digital platform business model, before turning to the immediate implications of the Uber judgement and other recent legal precedents. We then set out the evidence on the large extent of contingent modes of work in the UK, bringing together a range of data sources. The labour market statistics do not make it easy to understand the scale of contingent work, but the evidence we gather here suggests it amounts to about a quarter of the adult working population.
We then turn to a discussion of the policy implications. The existence of a large contingent workforce shouldering much of the risk of the business model has adverse implications for skills and productivity, for the tax base, the adequacy of pensions, and for the framework of social provision and infrastructure. The contingent model provides employers with the flexibility to adjust their labour input but at the cost of an erosion of the tax base and inadequate incentives for the development of skills. It has locked the UK into a low-productivity mode of work.
The policy agenda is not simply about the extension of existing rights: existing legislation needs stronger enforcement. Individual groups of workers should not be required to go to through costly court proceedings for issues that have now been affirmed by a series of judgments. Furthermore, we suggest that rethinking the framework of social provision for this segment of the workforce could better combine labour market flexibility with higher productivity and worker well-being.