Slaves to convenience: Are 'gig economy' firms just about old-fashioned exploitation of workers?
Food-delivery firm Deliveroo's revenue hit €166m last year and yet, like many others in the on-demand industry, it relies on rights-stripped 'contractors' to make its millions. They may be shining beacons in the age of convenience, but are 'gig economy' companies just about old-fashioned exploitation of workers, asks John Meagher
Published 02/10/2016 | 02:30
It is a midweek evening towards the end of September, and the rain is bucketing down on Dublin's south inner city. The normally vibrant Dawson Street is largely devoid of pedestrians, but a young man with a box on his back doesn't seem to mind. He is one of an estimated 400 riders who have helped to put the international food-delivery company Deliveroo on the map in Ireland. And he appears happy that the inclement conditions look set to stay for the night.
"Business has been really good tonight," he says, emerging from a restaurant with a new order. "People are staying in, and are maybe in the mood to treat themselves. You're also more likely to be tipped because they see you turning up at their door soaking wet and they feel sorry for you."
His mood is enhanced yet further because this particular order is for an apartment building near the Google HQ and he can cycle there in "six minutes flat". The more orders he gets on a typical three to four-hour shift, the more money he makes.
Later that night, when his shift is over, he's not quite as upbeat. "You caught me on a good night," he says over the phone. "There are times where you'd be twiddling your thumbs - orders would be slow to come in to you and you'd be looking at all this time that you were making yourself available to Deliveroo and you weren't being paid.
"We used to get paid a flat rate per hour, plus a euro for each delivery we did, but then they changed it to a situation where you only got paid per delivery. To be honest, I think I'm making more money on this new set-up than I was, but I hate the principle of it. I was going to walk away, but I like being out and about. I spend enough time studying and in college."
As with most Deliveroo riders - past and present - who agree to speak to Review, this DIT student does not want to give his name.
Another, a former rider - or 'delivery consultant', as Deliveroo like to refer to the couriers they use - has a blunt appraisal for the business models of many on-demand app firms like as Deliveroo.
"Yes, we're largely young people who are either in college or just out of it, but that doesn't mean we should be f***ed over when it comes to employment rights. No matter what way you look at it, we're employees in all but name and entitlements.
"All the talk is about how great it is to have flexible working hours, but we don't get paid if we have a fall off our bikes and can't work a shift the next day, for instance. You can't get sick when you're employed on this kind of model because if you do, there'll be no money coming in."
Deliveroo is part of what has become known as the 'gig economy'. Originally coined at the height of the recession in 2009, it refers to the freelance economy, in which workers support themselves with a variety of part-time jobs that do not provide traditional benefits such as sick leave or pensions. Rather than employ staff the conventional way, many of the new breed of start-ups use a workforce of self-employed contractors.
Deliveroo began life in London in 2013 and has become nothing short of a sensation. The idea is remarkably simple - provide a courier service to restaurants who normally don't offer food delivery. It was made possible because of technological advancements that allow customers to place orders in real time on their smartphones.
Founded by former investment banker Will Shu and ex-software developer Greg Orlowski, the company took in €166m in revenue in the 12 months up to July of this year.
Investors are queuing up for a piece of the action, and in August it secured a staggering $250m of funding from hedge fund Bridgepoint. One of its investors is an Irishman, Dylan Collins of Hoxton Ventures, who has, to date, pumped €22m into the venture.
It launched in Ireland in July 2015 and it has been reported that it has enjoyed 25pc month-on-month growth in that time. At present, it says it is partnering with 400 restaurants in Dublin, Cork, Limerick, Galway and Belfast.
"Riders engage with us as freelance contractors," says a Deliveroo Ireland spokesperson, "allowing them to work flexibly, often around other commitments, such as additional work, studies or family. As such, riders tell us that flexibility is the aspect of the work they value most.
"In Dublin city centre, riders work with us on a fee-per-delivery payment system designed to increase this flexibility even more. Through this system, riders log in and ride whenever they want and for as long as they choose. We share daily insight reports with all riders, highlighting when we expect to be the busiest - such as evenings and weekends - providing visibility of the best times to maximise fees in line with their availability."
Outside of Dublin, cyclists are paid €6.50 per hour, plus €1 per delivery - the very rate their city counterparts enjoyed until April. The company's decision to introduce a pay-per-delivery system was originally trialled in Brighton, but its introduction in London lead to a one-day strike from Deliveroo riders angered at what they thought to be an attempt to make them work below the minimum wage.
And, around the same time, couriers protested outside the offices of a new venture, UberEats, and chanted, "We are people, not Uber's tools!"
For some, the unrest in London was the first time that on-demand apps suffered overwhelmingly negative publicity. Up to that point, Uber, Just Eat, Deliveroo et al were more often seen as shining beacons of this age of ultimate convenience. Want a quick solution to mounting laundry? Just ZipJet it. How about a cleaner for your home? Get on the Hassle app pronto.
"These companies are not doing anything new," says Michael Taft of the Unite trade union. "They're taking existing industries and delivering them in what they see as a more efficient way, but it's the person on the bottom of the rung that's getting squeezed most."
Taft says on-demand companies are "creating a process of bogus self-employment", where staff are not hired as employees, but rather sub-contractors with virtually no rights. "They're expected to work for these companies but don't get sick leave or holiday pay or any of the social protection benefits," he says. "It's all about reducing costs for the employer, and what it's also doing is driving down working conditions to the point where we're returning to 'piecework' employment and zero-hour contracts."
He points out that last year his union took a successful case against the construction giant JJ Rhatigan on the grounds that bricklayers working on a building site in Dublin were essentially making just €5 per hour due to the subcontracting system they were working in. The court recommended that the firm pay €100,000, to be divided among the 14 striking workers.
"Unfortunately, subcontracting is rife in the construction sector at the moment," he says, "and there's far more at stake than just poor pay. Workers often don't know when they're going to get shifts. Sometimes, their contracts aren't worth the paper they're written on."
It's a view echoed by Joe O'Regan of the Independent Workers Union. "Low-paid contract workers are some of the most vulnerable people in our society," he says. "And they tend to be the very people who aren't unionised. The nature of their works means that they're isolated from other people doing the same kind of role."
O'Regan points out that it's not just the on-demand app companies that are pioneering such labour practices. "Sub-contracting out roles that would have been filled by staff members in the past has, worryingly, become very common."
It was the IWU's British counterpart that helped organise the Deliveroo strike in August, and much of its concern was centred around productivity pressures that riders felt under thanks to the 'algorithmic management' tools employed by firms at the vanguard of the gig economy.
Deliveroo's algorithm monitors riders' shift activities and sends them personalised 'service level assessments' on such detail as average time to accept orders, to travel to the restaurant, to the customer and so on. Riders typically have 30 seconds to accept an order, or risk being unassigned. Deliveroo believe such a response time is necessary to fulfil their stated objective of ensuring customers have their food within half an hour of placing an order.
Uber drivers are also subject to algorithmic control. They choose when they work, but once they log on to the app, they have less than 20 seconds to respond to 'trip requests' routed to them. They are not told the customer's destination until they have picked them up (similarly, Deliveroo riders don't know the location they have to deliver to until they collect food at the restaurant).
Uber drivers who miss three requests in a row are logged out automatically for two minutes, and the failure to accept is logged and sent to them in weekly reports.
For many, Uber epitomises the gig economy. Originally a tiny San Franciscan start-up, it moved into the big time in 2011 during downtime at the Web Summit in Dublin, when co-founder Travis Kalanick convinced investor Shervin Pishevar that Uber could be a behemoth following a meeting at Bruxelles pub. It was an encounter that led to a $38m investment and today the firm is valued at $50bn, and has more than one million drivers on its books worldwide.
It has transformed the short-hop travel industry globally - but not in Ireland, as would-be drivers here have to be holders of taxi licences - but Uber has found itself fighting employment-relations cases around the globe. In the UK, court cases have been taken against the company on the grounds that it has 'deactivated' the employment of drivers who fall below a certain customer rating (out of five).
In one case, an email was read out to court which illustrated the Big Brother-like hold these algorithms can have on de facto employees. "We will continue to monitor your rating every 50 trips and will email you if we see your rating for your past 50 trips falls below 4.6."
While such personalised data might feel like a very modern concept, it has its roots in a practice that was popularised in blue-collar America in the early 20th Century. Frederick Taylor was an industrialist who made his fortune in the steel industry.
Frustrated about inefficiencies he saw on the factory floor, he devised a system in which every labour task was evaluated and the optimum time for its completion was worked out. "This task," he wrote in 1911, "specifies not only what is to be done but how it is to be done and the exact time allowed for doing it."
Workers were subsequently timed and those who consistently failed to work as efficiently as Taylor's 'Scientific Management' timings had dictated risked losing their jobs. Unsurprisingly, productivity in his factories shot up immediately and they were soon adopted throughout the US.
Taylor's legacy lives on in some of the world's most profitable companies. Amazon warehouse workers use handheld devices that give them step-by-step instructions on where to walk and what to pick from the shelves when they get there, all the while measuring their 'pick rate' in real time.
"Algorithms are providing a degree of control and oversight that even the most hardened Taylorists could never have dreamt of," Jeremias Prassl, Oxford University law professor, told the Financial Times last month.
While on-demand apps might be leading the way, it's clear that an algorithmic approach is on the way to the high street, too, especially now that the technology is getting smarter all the time. One Silicon Valley start-up, Percolata, has built a complex algorithm which monitors each employee's 'shopper yield' or, in plain-speak, which staff members generate most sales. It's being used by a number of retailers in the US, and those employees who do best are rewarded with extra shifts.
All-powerful apps aren't just having an effect on workers on the group: they can also disrupt traditional industries, as taxi drivers found out in cities like London and Paris once Uber took hold.
"The task-based apps are really hurting businesses like mine," says the owner of a small Dublin cleaning company. "When Hassle came along, we lost customers virtually overnight. They're offering a service for an hourly rate we just can't sustain - it's a race to the bottom, really. How low can you go? And they've made it so user-friendly too -a cleaner is just a tap of your phone away."
Hassle - billed by some as 'Uber for cleaners' - charges customers €13.90 per hour for the services of its 'trusted cleaners' and its independent contractors receive €11 per hour.
The company was founded by Irish woman Jules Coleman in 2011 and she became a multimillionaire just four years later when it was sold to a German rival for €32m.
Impressive as Coleman's success is, it's in the ha'penny place when viewed alongside that of another Irish entrepreneur, Oisin Hanrahan. The Dubliner also saw a gap in the market for house-cleaning services and DIY, and his Handy app has been a big hit in the US, where he has been based since his days at the Harvard Business School. The company is now valued at $500m.
Hanrahan had originally cut his teeth as a property developer in Eastern Europe while still at Trinity College Dublin.
Twenty-year-old Offaly native Tom Pywell is also studying at Trinity and he believes a Computer Science degree will hold a myriad of possibilities for his future. He has an entrepreneurial spirit, having co-founded LaunchBox - a "crowdfunding platform for up-and-coming musicians" - and he is also getting to see, hands-on, just how the Deliveroo model works.
"I've cycled for Deliveroo for almost a year," he says, "and I really like it. I'd cover about 50km in a three-hour shift and I've worked out that I average €14.80, including tips, per hour. That's more money than I've got in other part-time jobs I've done."
He knows it's a casual job that will help sustain his college years, not a career. But others who have worn the Deliveroo box on their back believe this casualisation of work is just the start.
"My parents' generation took it for granted that they could get secure, pensionable jobs if they wanted," says the young rider who Review first met on a rainy Dawson Street.
"But while, of course, there are still jobs like that to be had, there are far less of them. That's very obvious now. You might work your butt off in college, but you could still be facing unpaid internships and then a lifetime of one short-term contract after the next.
"We're told we're the lucky generation who can set our own hours and enjoy all this flexibility.
"I just hope my peers realise that there's a hell of a price to pay for that."
Appy to be of service
The daddy of the lot, this ride-hailing app and its keenly priced fares have had a seismic effect on the taxi industry in several countries. Estimated to be worth $50bn, it has more than one million drivers across the globe. A food delivery offshoot, UberEats, was launched in the UK this summer.
Its USP is couriering food from restaurants who don't normally offer a delivery service. It's enjoyed phenomenal growth in its three years in operation, and has 20,000 self-employed riders in 12 countries. Roughly 400 couriers currently service the Irish operation.
Co-founded by Irish entrepreneur Jules Coleman (below), the so-called 'Uber for cleaners' was bought by a German rival for €32m last year. It offers a house-cleaning service starting at €13.90 - a price many of its smaller, more traditional competitors struggle to match.
Ever dreamed of a service that enables you to outsource errands and small jobs to a team of 'helpers' who come and do them for you? This app might just be what you're looking for - and the company says it takes great care in conducting background checks on prospective helpers.
If washing, drying and ironing your clothes is too onerous a task, this German-founded app can come to your rescue. Linking in with a network of laundrettes and dry cleaners, your dirty garments are laundered and pressed and returned to you within 48 hours.
An Irish-owned app for on-demand groceries. You can order goods from a selection of local stores and have them delivered by what the firm dubs 'a personal shopper' in one hour. It is, Buymie claims, "convenience as it should be".