It is time for Labour to lead the debate on the digitalised economy
Labour, and the liberal left more widely, have been dealt a series of hammer blows. Crushing election defeats in 2010 and 2015 illustrated a lack of trust in centre-left economics. The Brexit vote and Donald Trump’s victory suggest voters are turning against elements of a wider liberal consensus that has existed for a generation. What many see as the sacred cows of Western democracy – tolerance, diversity, equality and internationalism – are now being challenged by an angry and populist right.
How did we get here? In simple terms, we fell behind. As social democrats we failed to see the challenges that were ahead, underestimating just how many people would feel left behind by the modern world and would, perhaps mistakenly, consider modernisation and globalisation to be choices rather than certainties of life. We lacked a positive response to public concerns and now – politically at least – we are the ones struggling to ‘get ahead’.
But charging towards us from over the horizon is another political giant. Some call it the ‘second machine age’, others prefer the ‘fourth industrial revolution’. Whatever you name it, it is here, it is moving fast, and it presents a real opportunity for Labour to ‘get back in front’ of politics.
Technology is changing the way we work, socialise and consume in ways unimaginable to older generations. Driverless cars – once the preserve of science fiction – could soon be the new reality, while advances in machine learning, artificial intelligence and automation are shifting Britain towards a more digitalised economy. This shift should bring clear benefits to businesses and consumers, with increased efficiency and productivity leading to higher quality at lower prices. For workers the picture is more mixed. While machines should take on more monotonous work, workers may suffer from job insecurity and squeezed wages.
As with globalisation, slamming on the brakes – or reversing back into a previous era – is neither desirable nor achievable. We cannot afford to be dewy-eyed. Yet neither can we mirror a centre-right ideology that expects families to fend for themselves in the jungle of a changing market. Instead Labour should press home the importance of maximising opportunities and minimising risks for as many people as possible.
Technology’s immediate and visible challenges to politicians stem from the so-called ‘gig’ economy. ‘Uberfication’ is spreading rapidly, with mobile-based on-demand services – or ‘apps’ – now offered in sectors ranging from hairdressing to DIY, from transport to take-away food. As a result, self-employment in the United Kingdom is increasing rapidly – up by 120,000 people year on year to 4.8 million – with much of the rise attributable to flexible workers paid for piecemeal tasks.
Recent employment cases involving the likes of Uber and Deliveroo demonstrate both the legal and moral complexities of a model where employers appear to stretch the definition of self-employment to reduce their responsibilities. While self-employment offers welcome flexibility to some individuals, there is a real risk that in certain professions it will become a necessity rather than a choice, and that the gig economy will simply mask underemployment and insecure work. There were recent concerns, for instance, that Deliveroo couriers were neither earning the minimum wage, nor had access to employment tribunals.
Promisingly, significant progress in this area is being made. Following the GMB-backed campaign, two Uber drivers recently won an employment tribunal ruling asserting that they did not hold enough autonomy over decisions at work to be considered self-employed. Uber is set to challenge the decision through the courts but, if upheld, the ruling could be crucial for millions of workers across the economy over the coming decades. The Labour party should now consider calling for a tightening of legislation around such definitions. As well as protecting workers, such a change would help remedy recent Citizens Advice findings that suggest 460,000 people could be falsely categorised as self-employed at a cost of £314m a year in lost tax and employer national insurance contributions. The government has already taken a step forward, commissioning a review by the RSA’s Matthew Taylor into workers’ rights and practices, specifically focusing on new business models. Labour should be watching these developments, plus the parallel threat of Brexit to workers’ rights, very carefully.
Legal changes are, of course, not the only solutions. Labour should also encourage new, more focused trade unions that speak to the challenges of the ‘gig’ economy. The California App Based Drivers Association is an example of how this could work in practice. The association represents owners and drivers from companies including Uber, Lyft and Sidecar, and is currently lobbying Uber for the option for users to leave tips to supplement incomes. Closer to home, the Independent Workers’ Union of Great Britain is seeking to represent Deliveroo riders in Camden. As market structures change, Labour needs to help reframe collective bargaining to foster solidarity for today’s challenges.
Labour should also ponder the risks of discrimination emerging from the gig economy. Take Airbnb: while hotel and BnB businesses must abide by strict anti-discrimination laws, this is far less easy to police in a model allowing hosts to cherry pick guests for a private property. Research published in 2014 by Benjamin Edelman and Michael Luca of Harvard Business School illustrated how racial discrimination could occur from both sides – by would-be guests choosing a host, and by hosts choosing their guest. The SMF has a report due out this month looking at how experience has developed and what, if anything, can be done.
This is a tricky issue for Airbnb, given that interaction between guest and hosts is a real selling point, but media coverage has now led to a reaction. The company has recently committed to encouraging Instant Booking – a feature where hosts waive the right to refuse requests from potential guests – and to downplaying the prominence of names and pictures on their website, albeit stopping short of removing these altogether.
These debates will rumble on and intensify. Labour needs to be leading the discussion by doing what it does best – reading the future and applying the party’s values to the modern world.
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