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Time for a new social contract for the gig economy

The gig economy isn't going anywhere. It's time for Europe to embrace that fact.

Nicolas Colin

By Nicolas Colin

Europe has not been particularly welcoming of the gig economy and the tech companies that power it.

Uber has had to fight on many fronts across various European countries, including having its licence revoked twice in London, its prime European market. Deliveroo, despite being founded in Europe, hasn’t had it easier: in February its couriers were reclassified as employees in Paris. More recently, Barcelona-based Glovo has had to defend itself in Spanish courts and, in a setback for the delivery startup, Spain’s Supreme Court ruled that its riders are not self-employed.

Does it mean the gig economy has no place in Europe? Far from it. 

On the demand side, customers crave the convenience of meals delivered to their homes and offices, and taxi rides that are just a smartphone-screen tap away. On the supply side, workers appreciate the opportunity to work in a flexible manner, even if the pay isn’t great. 

And then there’s the pandemic, which is only accelerating the rise of the gig economy. Less shopping and more working from home means more households using gig-economy platforms more frequently. And they’re unlikely to go back: according to McKinsey, “approximately 35-55% of existing [European] consumers intend to continue using delivery more in the future”.

In other words, Europe can’t just stop the gig economy: it’s simply too hard to fight both convenience and opportunities at the same time. So since it can’t get rid of the whole thing, shouldn’t Europe try to build institutions to make the gig economy more sustainable and inclusive?

A new social contract

That would be consistent with what Europe stands for in these transitioning times. We Europeans like to think that tech companies meet their match here in our tough regulators, whether it’s the Mayor of Paris, Transport for London, Spanish courts, or the European Commission. But Europe is far from being the only place where the gig economy faces regulatory obstacles. Even in California, the cradle of the current technological revolution, Uber and Lyft are battling for their survival by advocating the repeal of AB5, a law that forces them to reclassify workers as employees. 

“There are simply more people here who think that embracing technology is about enacting new rules rather than building new companies.”

Yet Europe does have one thing going for it, since there are simply more people here who think that embracing technology is about enacting new rules rather than building new companies. In that spirit, many European officials are ready to draft new legislation and build new institutions that provide for higher earnings and better benefits.

And if we in Europe are really so concerned with improving things on these fronts, shouldn’t we be using the gig economy as a testbed to invent a new social contract rather than vainly trying to make it fit into the obsolete categories of the past?

There are several reasons why this approach makes sense. First, those who study history know that every technological revolution brings about new social contracts — and that the nations that fail to design one that fits their local context end up lagging behind from an economic development perspective. (It’s better to be the US accelerating its growth with the New Deal than Argentina, which was once just as wealthy a country but then failed to build the necessary political and social institutions.)

“We simply can’t make Europe the most entrepreneurial continent in the world if we’re not ready to build new institutions to empower everyone.”

We simply can’t make Europe the most entrepreneurial continent in the world, the stated goal of the European Commission, if we’re not ready to build new institutions to empower everyone.

Second, we know that there’s not one social contract that meets everyone’s needs. In the 20th century, institutions such as labour law, collective bargaining, and the welfare state were shaped according to the needs of a minority of the workforce: those who worked on assembly lines, starting with the car industry. Yet having a social contract tailored for factory workers contributed to lifting up (almost) everyone else. The better conditions provided to those workers incited other employees to raise the bar for themselves as well, including in services.

It’s still not clear if the gig economy is today’s equivalent of those assembly lines. On the other hand, it’s 100% certain that sectors such as retail, hospitality, delivery and home services (all the industries in which the gig economy thrives) are the largest pool of future jobs in a world where almost everything else (factory work, office work, information work) could soon be automated — and in any case will be much less labour-intensive.

In addition, the challenges facing these workers are representative of the economy in the Entrepreneurial Age: having to make a living in dense and expensive cities; enjoying flexibility on a daily basis, yet also having ups and downs in revenue; using tech-driven platforms to better match demand and deliver a higher-value-add service to customers.

New century, new risks

It’s not that hard to figure out what that new social contract would look like. Basically, it would cover workers against the new risks of the day, like the impossibility of affording housing in urban areas when your revenue stream is derived from gig platforms (good luck reassuring a landlord with that!). It would provide access to capital when and where you need it, which wouldn’t necessarily be to buy a car (a thing of the past), but instead to learn new skills when it’s time to move on in your life. And it would help workers organise so that they defend their interests themselves, but with a different approach from that which was embraced in the coal mines of the 19th century or the car factories of the 20th.

“Isn’t it time Europe embraces it as the new social frontier and starts working on this brand new social contract?”

We’re not lacking frameworks designed to help policymakers on that front — from Hilary Cottam’s work on Welfare 5.0 to Matthew Taylor and his vision of “good work” to Chris Yiu and the new progressive agenda he’s been crafting at the Tony Blair Institute to my own work documented in my book Hedge. What we’re lacking is the widespread realisation that it is indeed possible, and the political will to act on it. 

Instead of fighting tooth and nail trying to stop the growth of the gig economy, isn’t it time Europe embraces it as the new social frontier and starts working on this brand new social contract?

Nicolas Colin works for investor The Family. He writes a regular column for Sifted.