Europe can see the decline in its gig economy

In its debut on the stock market, British food delivery firm Deliveroo saw its share price tank around 30% as questions about workers’ rights for its riders.

In the days before the listing, the company revised its share price as some investors preferred to avoid the IPO over this concern.

Deliveroo is just one example of a wider ‘gig economy’ that is coming under increasing scrutiny. In recent weeks, the industry has been teased by a number of court rulings and regulatory movements in Europe that could eventually increase the business model.

Uber’s loss in the British Supreme Court last month forced the company to reclassify 70,000 of its UK executives as workers, giving them a minimum wage, paid holiday pay and pension plans.

In Spain, lawmakers have introduced a series of measures to recategorize gig workers as employees with formal contracts and benefits.

The European Commission, the EU’s executive, is constantly working out plans for a kind of local reform on gig economy workers, their status and their rights.

James Farrar of the App Drivers and Couriers Union, which addressed the case against Uber in the UK, said there was an “early triumphalism” but that it was only the beginning of a shift in workers’ rights. for the economy.

“We’re still reaching the bottom line here and are not there yet,” he told CNBC.

“I think what was really important about the Supreme Court ruling is that it leaves room for other claims in the gig economy to succeed.”

Other companies are preparing themselves to change in some way, whether driven by regulations or in advance of their own free will.

Just Eat Takeaway, Europe’s largest online food delivery company, is moving its Just Eat delivery riders to service contracts. Prior to the merger, the executives of the original firm called Takeaway.com were on such contracts.

“As part of this model, couriers are entitled to an hourly wage, they are paid above the minimum wage, provided with service insurance and social security, in accordance with local legislation,” a spokesman said, adding that couriers provide equipment such as bicycles . .

In the case of Spain, market operators like Glovo are waiting to see exactly how the legislation will expand and how to respond.

Co-founder Sacha Michaud is not a supporter of the path taken by Spanish lawmakers.

“It’s quite a strict regulation, probably the strictest (in Europe), so it’s a radical position in the sense that it allows very little flexibility, which is one of the things we naturally like, and the riders ask for it. as well, ”Michaud told CNBC.

Michaud said Glovo would “obviously adapt to the regulation” when it came into force, but said the company was more in favor of a middle ground between worker flexibility and benefits and security, while not avoiding the employment mark .

He added that surveys of Glovo riders have made most prefer a flexible model rather than stricter work. He said it helps many riders who work for gig platforms in between their studies or others.

“It has to be social rights, yes, and see how we can maintain flexible working conditions accordingly. It doesn’t have to be black or white.”

This middle ground was Prop Prop 22 in California, passed last November and supported by Uber and Lyft.

This is an approach that Uber would like to repeat in Europe. In February, CEO Dara Khosrowshahi published an article urging the European Commission to follow the mixed model, such as that of California.

Changes in the regulatory status for workers will entail new costs. It will also put smaller start-ups in the space first.

John Ryan of Gigable, based in the UK, which connects restaurants and other businesses with freelancers, said consumers could eventually feel the worst with price increases.

“But I think people are comfortable enough with raising prices if they know it’s going to the drivers or there’s public support for the move, but it has yet to be seen,” Ryan said.

He added that the flexible model may work for some workers and that others prefer traditional employment.

“We will see how difficult it is for people to commit to the commitments.”

Contracts and worker status are just one front in this struggle, according to the ADCU’s Farrar.

His organization is also working on initiatives regarding access for managers to data that companies own about it and what he calls ‘algorithmic control’.

“We’re seeing an arms race in the work economy in the gig economy and that’s leading to problems,” he said.

The ADCU is supporting two drivers from London in a case they are taking in the Netherlands against the Indian ola company Ola. The managers are seeking access to data held by the company about them, in accordance with the EU’s comprehensive GDPR rules, which they say have been denied.

Farrar said technology like AI to monitor a driver’s performance and determine how much work they’re getting is a red flag. The group also appeals to Uber to stop using face recognition to verify drivers.

The discussion around regulations, including those at EU level, is strongly focused on employment status, Farrar said, but that the debate needs to be more nuanced on algorithms.

“I think it’s been overlooked everywhere so far, but we’ll definitely discuss it,” he said.

“Regulators and policymakers often catch up on it rather than on top of it.”