The Uberization of the Workforce

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The real innovation of Uber is not technological, but legal. By considering their employees as freelancers, they are overriding decades of progress in terms of labor laws. However, depending on whether you sit at the top of the income ladder or at the bottom, the effects of this uberization are exactly the opposite. And people with heavier decision making power can tilt the balance the wrong way.

Working with a fixed number of hours per day does not suit all modern lifestyles. Imagine if you are student, perhaps you have less available time during exam periods, but a lot of time during holidays. Imagine a job that does not ask you to be available a minimum number of hours, you just sign on/off as you see fit. Complete freedom, unlimited holidays, no questions asked. Also, no responsibility, no potential to grow.

However, very few people are careless students. The majority of the population are grown ups, with families to take care, or with external responsibilities, such as debt. The same job that gives you freedom while you are a student, is the job that will not pay you while you are sick and can't work. Won't pay you if you need to spend time caring for someone. Won't pay if you take holidays.

And this is what I meant by being at opposite sides of the income ladder. If you are a consultant and have enough clients, you can probably add a mark up to your fee to account for holidays, perhaps you can even afford paying an insurance in case of sickness. You can build up a nice retirement plan as well. Perhaps you can even hire a part-time student to answer the phone while you sail in the Caribbean.

If you, however, are a taxi driver and have as a sole client a company that organizes your rides, I think the difference is clear. Don't forget that you have no say on how much you will earn, nor how you will get paid. Since you are an entrepreneur , probably there is not even a legal minimum wage for your activity. Probably there isn't even an insurance if you die while working 1

What Uber helped make visible, is not an exclusive reality. Many companies that are remote-first hire employees as freelancers. In many cases the complaints are less, because software developers get paid relatively well, and are much simpler to exchange than drivers. They belong to the top of the ladder. But as more and more people enter the global remote workforce , salaries will keep dropping.

Some countries have explicit policies regarding being a freelancer with only one customer that employs you full-time. However, if the client is based on a different country little can the authorities do once you are fired or not paid while on sick leave. You don't need to be Google-big to be able to hire remotely.

The reality is that companies, big and small, have regained a lot of control regarding labor regulations. Basecamp is a vocal defendant of what they believe are good practices. While their business is thriving is easy to do what you preach. The temptation to lower salaries, fire people, is just a click of a button away when the times require it.

And, in a global economy , regulations are a chicken and egg problem. If one country imposes a stronger set of rules for remote workers, companies will simply hire in the country next-door. This phenomenon was already present with industries that seek cheap production centers, such as textile in south-east Asia, or manufacturing and dirty industries in China.

For others, the access to better trained employees, better financial landscapes, wealthier consumers, made them being more regionally limited. It is a well-known story that Philips had to open an office in Amsterdam because it couldn't recruit non-technical employees (lawyers, accountants, etc.) in Eindhoven, where their headquarters are located.

The uberization of the workforce is an ongoing process. I do not believe that we should let the decision sit alone based on the interests of corporations. Governments must strengthen the ways in which they protect their citizens attaining a balance between flexibility, responsibility, and general welfare. Where the sweetspot lies is hard to tell, and probably will depend on individual national idiosyncrasies and realities.



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Aquiles Carattino
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