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The gig economy – a shameful failure of the neoliberal project

Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. He indicated that he would like to contribute occasionally and that provides some diversity of voice although the focus remains on advancing our understanding of Modern Monetary Theory (MMT) and its applications. It also helps me a bit and at present I have several major writing deadlines approaching as well as a full diary of presentations, meetings etc. Travel is also opening up a bit which means I can now honour several speaking commitments that have been on hold while we were in lockdown. Anyway, over to Scott …

The gig economy-a shameful failure of the neoliberal project

As the turbulent events of 2020 continue to roll on, more failures are exposed that should make more and more of us to question where we are at, and what we really want for our society.

Amongst the labour market crisis that characterised the COVID-19 economic slowdown we saw many people lose their jobs. Despite the Australian federal government’s much vaunted support packages designed to cushion to blow many people saw their work disappear altogether or at the very least saw their hours decrease. Many people saw their lives turned upside down despite the government’s rhetorical claims that – ‘We are all in this together’.

For a discussion of that see the blog post – Governments should be working for everyone, not just the fortunate few (November 24, 2020).

The government could have easily extended their COVID support measures to all workers, but instead chose to exclude many from access. We saw an increase in unemployment and underemployment, but we also witnessed a marked increase in the number of people seeking work in the gig economy and other forms of precarious work. For those who were unable to access any form of income support, gig work often appeared to be the only choice for many.

A recent – Report of the Inquiry into the Victorian On-Demand Workforce (published June 2020) – referred to these people as ‘low leveraged workers’:

Low-leveraged workers are prominent in platform work: these include workers who are low skilled, more likely to be young and/or from a migrant background. They are operating in a labour market where there is high competition for fewer entry level jobs.

Furthermore, it suggested that:

These are among the people who were most immediately impacted by the coronavirus (COVID-19) government interventions. Some are also more likely to be workers not eligible for the federal government’s ‘Job Keeper’ payments, because they are irregular casual workers or visa workers.

And pointed out that:

These workers are in a precarious position in the labour market, especially at times of heightened unemployment or under-employment. Platforms offer them valuable opportunities to earn income, but with minimal choice about their arrangements, and low-income security.

Some evidence of the recent rise in gig workers can be gleaned from the – August quarterly labour force – data from the Australian Bureau of Statistics (ABS).

Here the data tells us that while the number of employed people increased by 111,000 between July and August a 0.9 per cent increase, the – payroll jobs index – decreased by 1.2 per cent.

The ABS tell us that a significant proportion of this growth was accounted for by non-employees.

More specifically:

This growth in original employment can be attributed to an increase in the number of owner managers (self-employed people) without employees, most of whom working in an unincorporated enterprise (e.g. a sole trader), which increased by 50,200.

It may be true that some of the growth in self-employed workers might be accounted for by sub-contractors. But it is also extremely likely that the growth is accounted for by the growth in people forced into working in the gig economy, driving cars, delivering food, or hanging up pictures and other odd jobs.

The rise in non-employees becomes even clear when we consider the monthly changes in the employment index status of employment (see graph). Here the ABS states ( Source):

that changes in the number of employees and owner managers without employees were relatively similar between April and July. However, they diverged in August, with the number of owner managers without employees returning close to the level in March.

Now while the companies running these gig platforms as well as others would argue that these gig workers are living some kind of dream, we all know that gig work is not what it is cracked up to be. Low pay, insecure contracts, no protection, no holiday allowances, no sick pay. Sounds like a paradise, right?

So the government has proved once again that we are in this together, unless you don’t meet the characteristics they deem worthy of supporting, in which case you are on your own, consigned to low pay a and wondering if you will have enough money to pay for the most basic things in life. .

On top of the statistics about the growth in gig economy work, the UK Guardian article (November 24, 2020) – NSW government announces taskforce to investigate food delivery deaths – informed us that in the the last few weeks, on the back of people whizzing around delivering take away pizzas, burgers or Chinese food on average, one food delivery rider has died in Australia every 11 days since 27 September.

To see people, lose their life while trying to eke out a living, earning wages considerably below the minimum without the usual workplace protections is shameful.

These deaths have caused an increase in the calls for reform and change in relation to the gig economy, the processes supporting and most of all the way it treats its ‘workers’.

While we have learned that the New South Wales government has eventually decided to give more than a passing thought to the deaths of the five delivery riders, the likelihood of any real change is bleak.

Announcing the investigation, the strangely named ‘Minister for Better Regulation’ (is that a real ministerial position?) said:

We have moved to set up this joint taskforce, that will see SafeWork investigate each incident and make findings for any immediate improvements or compliance activity that can be implemented to better protect these workers … The taskforce will assess the safety measures currently implemented by each food delivery operator and advise on any improvements needed to prevent further incidents.

The sticking point will be that whatever findings are produced, gig workers are treated as independent contractors, and hence the onus will be on them not the companies they work for to improve things. In true neo-liberal fashion, the individuals will be the ones to carry the can.

So unless government’s are willing to undertake wholesale change, an unlikely scenario given that they have allowed these gig companies to flout traditional employer/employee arrangements in the first place, the precarious low paid lives of gig economy workers will continue to be part of the accumulated social wreckage that has come to characterise our society.

And even if change is introduced there will be significant pushback by the gig companies themselves. We have already seen examples where gig workers have questioned their status as independent contractors only to be told by the Australian Fair Work Ombudsmen , (AKA the workplace relations umpire) that:

The weight of evidence from our investigation establishes that the relationship between Uber Australia and the drivers is not an employment relationship… For such a relationship to exist, the courts have determined that there must be, at a minimum, an obligation for an employee to perform work when it is demanded by the employer… Our investigation found that Uber Australia drivers are not subject to any formal or operational obligation to perform work.

And if the example from the US is anything to go by, even if there is a change, the gig companies are able to use their financial might to defeat legislation to improve the rights of gig workers, including having them classified as employees rather than independent contractors.

We read in several media outlets that:

Unleashing more than $200m – 10 times the amount of the proposition’s opponents, like labor unions – the coalition of tech giants easily drowned out those fighting for the rights of workers.

And in Australia, we read in the recent Report of the Inquiry into the Victorian On-Demand Workforce that gig companies would be prepared to support a:

… scheme that covered, among other things, superannuation, but had concerns this might jeopardise their business model.

Moreover, according to a submission by Uber:

… everyone should have the ability to protect themselves and their loved ones when they’re injured at work, get sick, or when it’s time to retire. … There is more to do as a society to support independent workers … However, in many countries including Australia, existing employment law means platforms like Uber are constrained in providing additional support to those who use the App to find work. This is because offering benefits and training to our partners could compromise the self-employed status of the individual.

Reading between the lines, these companies are saying we are hamstrung by the employment laws that we managed to skirt in the first place, and if we are forced to change, all the benevolent deeds we do by providing all those people with the chance to earn a living and support their families will be lost because we won’t be able to keep operating.

How on earth have we gotten into this mess?

As I allude to in the title of this blog post, the gig economy is another example of the shameful failure of the neo-liberal project.

The gig economy’s link as a neo-liberal labour market showpiece is clear to see.

The Financial Times article (October 14, 2013) – The ‘sharing economy’ undermines workers’ rights told us that:

The sharing economy amplifies the worst excesses of the dominant economic model: it is neoliberalism on steroids.

The gig economy is portrayed as an opportunity for users to be their own bosses, have the freedom to work when they want and improve their work-life balance.

The websites of these gig economy platforms paint a picture of success for anyone willing to sign up (they call it partnering).

One particular platform tells anyone wanting to sign up about flexible work, competitive fees, choosing when to work.

Potential partners are told:

Work on your own schedule. Take deliveries for a few hours in the morning or the evening, or both – it’s up to you.

The words used in these web sites paint a feel-good picture where everyone is a winner (sound familiar? -we are all in this together). Even the testimonies of partners (workers) tries to evoke that win-win feeling:

I ride so I can earn money in a way that doesn’t feel like work-it just feels like going for a ride.

But this discourse is, as outlined in this blog post – The coronavirus crisis is just exposing the failure of neoliberalism (May 12, 2020) – part:

… of the sickening expressions that neoliberals use to try to make out that the changes in working arrangements have benefited workers.

So even though the gig economy erodes full-time work, introducing instead temporary, independent contractor roles that can be terminated if the gig ‘worker’ fails to earn enough stars through customer feedback, this is all overshadowed by a story wound up in the discourse of the individual getting to be successful, earning good money and being free to choose.

This discourse is all part of the ‘apparatus of justification’ -the corporate press, spin doctors, lobbyists and think tanks-that helps maintain the neo-liberal project, even in the face of intense questioning such as happened during the current crisis.

The quote from the gig companies above is all part of this spin. Creating a story line that the gig companies are the heroes in the neo-liberal labour market helping all those who want to be independent or who have found themselves out of work.

British author George Monbiot in his book ‘How did we get into this mess’, tells us:

This apparatus of justification, or infrastructure of persuasion, and the justifying narrative it generates allow the rich to seize much of our common wealth, to trample the rights of workers and treat the planet as their dustbin.

And governments have fallen in lock step behind the ideology ensuring that policy and programs continue to maintain the social wreckage associated with precarious workers in the gig economy as well as the broader inequalities that characterised Australian society.

While on the one hand politicians rehearse statements about dealing with forgotten Australians, ‘being in this together’ and closing the gap, they continue to be enamoured with the neo-liberal ideology that has led us to where we are now.

The gig companies create the myth of supporting people with opportunities and the government enables them.

Conclusion

The plight of precarious workers has been amplified by the COVID economic slowdown and made worse by the Federal Government’s decision to exclude some workers from any form of income support.

For many, work in the gig economy has become a necessary to try to survive.

What we don’t need is worthless statements about taskforces which will be likely to be simply hijacked by those with the most to gain.

We do need the government to commit to supporting all Australians who are unable to find work and wipe out practices that enable companies to short circuit traditional employer / employee relationships.

The government needs to immediately extend its job keeper program so that everyone is eligible and ensure that support is maintained for as long as necessary. They have proved they can put their ideology aside during the COVID slowdown and spend to support those in trouble. This should become the new normal, not the exception during a crisis.

For those that are unfortunate to find themselves out of work, the government should also immediately introduce a job guarantee which would set all the minimum wages and non-wage benefits and therefore allow a viable alternative to the precarious jobs that many are forced to take just to survive.

That is enough for today!

(c) Copyright 2020 William Mitchell. All Rights Reserved.

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    This Post Has 8 Comments
    1. “To see people, lose their life while trying to eke out a living, earning wages considerably below the minimum without the usual workplace protections is shameful.”

      It surely is. And it is just as bad or worse in the US, although I’m not sure about the literally losing their life part of it. But definitely true as far as these corporations spending millions in order to keep their workers classified as some kind of subcontractors rather than employees who would benefit from what labor standards legislation we have actually managed to enact.

      But there is something that does appeal to some people about this ‘gig’ type of job- we need to recognize that. There is a certain freedom about it that is a benefit. I’ve spent about 30 years as a self-employed contractor which in some ways is similar to these gig jobs. But also dissimilar in that I am not working for the same corporation for any length of time. Parts of it are very good. Part of it is not. I might do it differently if I could do it again.

    2. Great article. In the Australian case both main parties or sides of politics the LNP and the ALP are totally wedded to the Neoliberal framework. In our two party preferential system either LNP or the ALP will form government. What hope is there for the working men and women of Australia for a better future? The current government LNP are doubling down on the “flexible work” policies to get the economy going apparently, so it requires more flexibility from workers to save jobs and grow the economy! Honest question, does this path we are on politically the Neoliberal project, ultimately end up in a corporate type of feudalism of masters and slaves?

    3. There is a talent economy where there is more work than people that want it, and a gig economy where there are more people than work.

      The Job Guarantee turns the gig economy into a talent economy.

    4. Dear Prof. Baum,

      Although I share your analysis, I believe it is unduly weakened by a commonly shared misconception.

      Let me pinpoint where I believe your conclusion is affected by that misconception:

      “It may be true that some of the growth in self-employed workers might be accounted for by sub-contractors. But it is also extremely likely that the growth is accounted for by the growth in people forced into working in the gig economy, driving cars, delivering food, or hanging up pictures and other odd jobs.”

      The number of subcontractors does not merely suggest an increase in the size of the workforce affected by the gig economy. It all but definitely proves it.

      The misconception is that the gig economy reduces itself to people working for apps-based platforms like Uber, Deliveroo, and such. Perhaps that’s because these platforms are new.

      But among people working for older and less noticed industries, like security officers, cleaners and drivers for logistics companies (like Australia Post) — to mention only those I know personally — there are independent subcontractors galore, sharing pretty much every single descriptive criterion you provided above:

      They are self-employed, owner-managers with no employees.
      They are low-leveraged workers (generally “low skilled” and “more likely to be young and/or from a migrant background”).
      They have no job security.
      Neither are they paid any leave nor superannuation.

      For an example: a person can get a security licence in a matter of a few weeks after paying for a course whose only purpose is to tick boxes, and where the instructors commonly give you the answers to the questions in their tests (normally, the instruction includes a first aids course that would cause hilarity if it were not potentially catastrophic). The most time-consuming step, in fact, is to get the police clearance. Once you have that, you get an ABS number and you are ready to go work on a quarantine hotel.

      It only gets a bit more “specialized” — slightly better pay and working conditions — if you are an armed security guard (those servicing ATMs and collecting/delivering cash from/to retail shops and banks), because you need a gun and heavy vehicle drivers licence.

      So, my advice, for what’s worth, is not to exclude these older categories when dealing with the gig economy.

      Sheers.

    5. “So unless governments are willing to undertake wholesale change, an unlikely scenario given that they have allowed these gig companies to flout traditional employer/employee arrangements in the first place, the precarious low paid lives of gig economy workers will continue to be part of the accumulated social wreckage that has come to characterise our society.” Prompted by Covid and its consequences already here and yet to come, many, including much of the influential Davos elite, are beginning to rethink OPENLY the entire neoliberal enterprise and to acknowledge that it has left not only social and economic but also environmental wreckage in its wake. Has there ever been a more propitious time for MMT to influence public policy, even if its name may have to be elided for now as “socialism” must avoid being directly referenced in the U.S.? Indeed, MMT is already exerting this influence as governments pour fiat money, albeit in insufficient and often poorly targeted manners, into short-term relief programs. When these ad hoc measures prove inadequate, as they surely will, to keep roofs over the heads and food on the tables of millions of precarious workers soon to be joined by millions of formerly secure workers made precarious, proposals like the JG will become necessary public policies to stave off economic catastrophe and massive civil unrest. The Davos elite intuits this, and their most recent rhetoric comes close IMHO to an implicit appeal to governments to regulate things so as to allow corporations to serve the interests of humanity and the environment instead of merely pursuing short-term profit as current regulations require. Neoliberal governments, of course, will not make such moves without widespread, intense, and persistent public pressure. Thus, in a recent essay about aspects of one proposed “Great Reset” (easily found via web search for “The Great Pretext”), Diana Johnstone notes that “(t)here is a potential movement out there,” one focused on what should or should not be included in the socioeconomic reset Covid makes unavoidable. Clearly, MMT should play a central role in the content of such a movement, because it alone has a grasp of the full scope of currency-sovereign governmental agency, the appropriate limitations of that agency, and a shovel-ready universal employment program based upon both. So I wonder…can we, at this crisis moment, draw upon the wisdom of MMT, advocate that it be put to use, without using the three letters or the words for which they stand? Sad it is to ask this question, but shrewd it might also be.

    6. The “all in this together” message was tempered from the very start by Frydenberg‘s “need to draw the line somewhere” message. In this case “all” merely refers to the government’s electoral majority.

    7. Neil, another good thing about a Job Guarantee is that maybe we could expect that people would be more willing to take a few chances as far as deciding what they want to do, knowing there is a JG to fall back on. Or people on the JG might do other productive things on the side and turn that into something very useful for society if it works out. It is easier to take risks if you know you won’t be destitute if you fail.

    8. “The gig economy – a shameful failure of the neoliberal project”
      Only if you believe that the neoliberal counterrevolution to the post war economic order was for the best of all in society. The post war economic order was delivering close to full employment in its true sense, delivered the growth broadly.

      But if it was to benefit the few that want to control the economic order of society it was a tremendous success.

      I believe the goal of the neoliberal counterrevolution was the latter. And the result was way beyond what those who instigated it could have dreamed of.

      Why do supposedly progressive economists continue to imply that the neoliberal project was something good for all of us but has failed?

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