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Gigs and Umbrellas

We look at some changes that have led to new forms of work, and ask whether these are truly new and better than traditional kinds of employment.

Being your own boss, as a self-employed sole trader, may sound like a good idea. You can to some extent decide on your own hours, and are not subject to a boss or manager who lays down the law about how you do your work. But, like so much under capitalism, the reality does not match the image.

Officially, a self-employed person runs their own business and sells goods or services for a profit. You can hire other workers, you provide your own equipment, and (according to gov.uk) you ‘can decide how, where and when you do your work’. You have to register as self-employed, keep proper records and complete a self-assessment tax return each year. You will have to cope with insurance and business rates and provide for your pension. You have to worry about business plans and cash flow. Moreover, you will not get sick pay or holiday pay, and income can vary and be unpredictable. Self-employment is clearly not all plain sailing, with lots of administrative matters to take care of as well as being sure you actually make enough money from your work.

There are nearly five million self-employed in the UK, an increase of 45 percent since 2002; part-time self-employment has grown much faster than full-time. The self-employed work in many areas, from plumbers and electricians to accountants. As another example, many hairdressers rent the use of a chair in a salon, rather than being employed by the salon. But, while the number of self-employed is going up, their earnings have been going down. One claim is that average wages for such workers are less than they were twenty years ago, at £240 a week. BBC Online (20 October) looked at some examples. One man who has his own cleaning business was earning far less than previously but said he had a much better work–life balance. A session singer said payments had changed very little over the last couple of decades but, with changes in music-buying habits, his income from sales was now virtually non-existent. The rise in numbers is partly the result of workers who have lost their jobs trying to set up in business on their own. But it is also due to people being classified as self-employed when that description is not really applicable to them.

At the end of October, minicab drivers for the firm Uber won a case at an employment tribunal, which ruled that they should be classed as workers employed by the company, rather than as self-employed, and so should receive holiday pay and the ‘national living wage’. Uber put passengers in touch with drivers via a Smartphone app, and claimed to work for the drivers, enabling them to increase their ‘business’. But in fact Uber recruited and controlled the drivers, set their fares and ran a disciplinary procedure. The tribunal judges described the company as using ‘twisted language’ to describe their relationship with its workers. Uber took 20 percent commission from its forty thousand British drivers, and is a massive international company operating in over sixty countries, with income last year of $1.5bn. This was clearly not self-employment at all but a bogus set-up which made the company big profits, intensified the exploitation of the drivers and worsened their working conditions.

It has been estimated that well over 400,000 of the five million mentioned earlier are wrongly classed as self-employed. It is impossible to know the correct figure, but it is clear that Uber are not the only company that gets away with calling employees self-employed. The courier company Hermes has been alleged to be another example, as has Deliveroo. Even the Financial Secretary to the Treasury has stated that ‘Employment status in the UK is determined by the reality of the working relationship and not simply by the terms of any contract’ (theregister.co.uk, 27 October). In fact this is part of a wider phenomenon, sometimes known as the gig economy (based on the idea of musicians performing and getting paid for individual performances, rather than working regular hours). A gig economy is ‘an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements’ (WhatIs.com). Freelance work has been common for years, especially in areas such as journalism and translating, and the majority of freelance workers are women. The Internet has increasingly made it possible for people to work from almost anywhere, so that the worker’s location and that of the company employing them can be miles or even continents apart. Many more people now work from home or from coffee houses, which can be very atomising in terms of having no face-to-face contact with fellow workers.

Another new development in this area is so-called umbrella companies, which operate as intermediaries between temporary workers (often called contractors) and the agencies that provide work. About a third of supply teachers, for instance, have had to join such a company. Supposedly this makes it easier for teachers who work in different schools, and even for different agencies, in the course of a week, as they have only one organisation to deal with from an administrative and payroll point of view. But many workers in such a situation have found themselves worse off financially, since the umbrella company takes a cut from their earnings, and it can take some time to get paid. This is not technically self-employment, and is in reality little different (if at all) from working directly for an agency or school.

The Communist Manifesto noted how fairly prestigious occupations such as doctor, lawyer and scientist had under capitalism been converted into wage labourers. Maybe the nature of employment is currently changing further. Rather than the masses of workers employed for years or decades in mine, mill, factory, shop and office, there is now much more short-term and temporary work with a sequence of employers, where someone can work for one company for a week or a month but then for a quite different company, undertaking different projects for which continued employment with one employer would simply not be appropriate. Many computer programmers and other IT specialists work this way, for instance. It all shows how zero-hours contracts are by no means the only way in which capitalism is making workers even more insecure.

One defence of self-employed status is that it involves workers owning the means of production. But owning a laptop or a van and a few tools does not make anyone independent of the market system or the overarching control of the capitalist class. The gig economy, umbrella companies, ostensible self-employment: none of these alters the subordinate status of the workers they apply to or represent anything other than a merely formal break with wage labour.

PAUL BENNETT