Social Justice and Democracy

The gig-economy: Uber good or Uber bad?

May 12, 2015

If you’ve used the Uber app for a cheap ride, bought or sold products on Kijiji, rented room on Airbnb, donated to a campaign through Indiegogo, or used Handy for help around the house, you’ve taken part in a rapidly emerging trend: the gig-economy.

The gig-economy has generated USD $15 billion in revenues for transportation, retail, accommodation, service, and financial markets. It is projected to grow to USD $335 billion by 2025. Uber, a popular transportation company, which operates in over 50 countries, is now gaining popularity in Canada and is worth USD $40 billion with investors such as Google and Goldman-Sachs. 

Consumers believe Uber gives them choice between regulated taxi cab companies and other forms of transportation. Drivers for Uber see opportunities for flexible and independent jobs.

Sounds good: cheaper and more readily available transportation with a no-fuss app on your phone and flexible work for drivers.

But there is a caveat.  And this is why the labour movement is involved.  Beyond the obvious concerns for public safety and accessibility, it’s also part of a much broader debate around rising precarious employment and how to protect labour standards under new trends of non-standard working conditions, the growth of the service sector, and technological change. 

A recent report by CIBC found that employment quality in Canada continues to suffer, reaching a record low. The gig-economy is based on a business model where unregulated companies can generate profits, while shifting costs and risks onto self-employed, low-wage workers. This, in turn, lowers wages and standards in the regulated economy, while threatening retirement security.

As sectors are increasingly deregulated, workers and unions are pushing back in defence of labour protections and public safety

In the U.S., workers have filed class actions against emerging companies on the grounds that they should be classified as employees and entitled to ensuing benefits and protections.  In California, Teamsters launched the California App-based Drivers Association in order to unionize Uber drivers. Whereas, global unions, such as the International Transportation Workers’ Federation (ITF) and the International Trade Union Confederation (ITUC), took a strong stand against Uber, motivating UN Women to retreat from a new global partnership with Uber.

Municipalities and regulators have been all over the map with their response to Uber. Some are allowing the companies to operate while they study new rules, others are imposing fines on Uber drivers, while some countries have banned Uber altogether. 

Others argue that regulators should not be turning away from the sharing economy, but instead should re-examine taxi regulations in order to allow for greater flexibility, competition, and innovation. Uber itself has called for regulation of the industry as it currently falls in a “grey zone” that may ultimately put their operations at risk. 

Most current regulatory structures were not designed for the digital world and are ill-suited for this new economic model. It also opens the door to the type of de-regulation and self-regulation that have allowed some corporations to grow more powerful than governments—putting public health, safety, and the environment at risk. 

Beyond the question of public safety, we must decide whether this employment trend truly provides flexible new opportunities, or whether it’s yet another business model that contributes to the rise of precarious work by preying on a vulnerable workforce in a weak economy.

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