Gig Economy against Stagnation

Most of those that have tried to reach their destination with a ride hailing company, like UBER, have found the service convenient and inexpensive.

However, many in the business world are worried that the drivers of these companies, since they are considered independent “contractors”, have fewer rights than other workers. Nevertheless, it is this flexibility of the employment arrangement between the drivers and the intermediary companies that leads to better prices.

Recent technological advancements have led to more flexible working relationships. The traditional employment relationship of the worker with the employer, characterized by long-term and permanent employment, is transformed to a piecework relationship, per project or per time period. The term used to describe this new environment is “gig economy”.

The labor market, driven by rapid technological development, is transforming and tends to become ever more flexible.

Most economists would say that this is desirable, since market flexibility is a factor that can, in itself, lead to economic growth. Over the past few decades thousands of economists of the liberal school attempted to substantiate this view, however the governments that dared to implement it in practice were extremely few.

Now that this much-desired flexibility in employment relationships is finally coming, as a result of technological advancement and not as a result of painful structural changes, it is ultimately treated with caution.

UBER’s rapid growth has been tarnished by court disputes over the working conditions of drivers. In a few days the company will face another challenge in English Courts. A group of drivers claims that the company refuses to grant access to information such as the drivers’ working hours and rating.

In order to present a friendlier profile, UBER in collaboration with AXA created insurance plans for its drivers in Europe, covering illness, accidents, maternity and paternity benefits. Furthermore, it offers the option to earn an online degree from the University of Arizona, with the company covering the cost. Lyft, the first company of this kind that listed its shares in the stock market a few days ago on March 18, promotes as its central slogan … “we are focusing on providing our drivers with the best possible education!”.  Lyft offers to its drivers education, career advice and rewards the drivers that have completed more than 10,000 rides with a cash bonus. Another incentive to make them feel as members of the company and not just contractors is offering some restricted stock exclusively to them!

However, the benefits of a flexible labor market are now apparent to everyone.

From a study on Uber drivers in London it emerged that they earn approximately 12 pounds per hour, an amount quite higher than average, while also having the advantage of a very flexible working schedule. They state that they are very satisfied with their quality of life, something directly related to the flexibility of the working schedule that this employment arrangement offers.

Simultaneously, the consumers enjoy better services at lower prices.

Until now we were used to extremely slow changes towards a free market economy given the fact that they always had to face established interests and the populist governments willing to support them.

What excuse will be used to halt them, now that the free market economy is almost imposed by technological advancement?