The gig economy is a modern twist on an age old world of work dilemma

Published on Wages & Income

A visit to the impressive remains of Housesteads Roman Fort on Hadrian’s Wall is always a good idea, not just for the views but also for some incredibly well preserved latrines. On display are stone bases above a trench, on which would have sat wooden boards for soldiers to perch on.

As well as offering a reminder of what the Romans did for us they also show that plumbing is nothing new and neither, for that matter, are plumbers. That is the underrated lesson from a high profile Court of Appeal judgement last Friday in favour of Gary Smith who had been dismissed by Pimlico Plumbers.

The Court upheld an Employment Tribunal decision that Mr Smith be recognised as a worker, with associated employment rights, rather than a self-employed contractor.

This is the latest in a line of cases, disputes and debates about the changing nature of work and the extent to which the UK’s employment law, tax system and welfare state are keeping up. But too often these discussions are dominated by names like Uber, Deliveroo, Hermes — by the ‘gig economy’ of app enabled work and the degree to which those engaged in it are being exploited or empowered. The Pimlico Plumbers case is a crucial reminder that these debates stretch well beyond the gig economy and to what we want the world of work in 21st Century Britain to look like – whether it involves an app or not.

Here’s an example. Thousands of column inches have been given over to whether Uber drivers are self-employed or not. The associated court case will rumble on for years, with the company and campaigners both exaggerating how distinctive the economic substance of Uber really is. But of course this misses the point that almost everyone driving private hire vehicles across the country is currently self-employed whether they are doing business via an app or something as neolithic as a telephone. The real issue is whether you’re content with that situation or not.

There is a similar confusion in the debate on Hermes, a company that uses self-employed contractors to deliver packages. The focus is on the use of technology, but the substance of the work and the trend towards self-employed couriers is what really matters. There is a further lesson in the fact that one in five of the self-employed work not in the gig economy but in a sector even older than plumbing: construction.

Of course changing technology makes grey lines in employment law even greyer, not least by allowing some companies to exercise significantly more control of those doing work for them than was previously possible. But in the end these technologies are not changing the fundamentals of the economic activity undertaken or the questions we should be asking. What rights do we believe people doing that work should be entitled to? Are we are prepared to accept some people trading those rights off for greater flexibility?

The favour the arrival of the gig economy has done us, beyond cheaper taxis and more takeaway food, is to put dry issues of employment status up in lights through association with something significantly sexier. That is one reason we now have a government review looking at the issue, which is welcome because a debate about self-employment is an important one for the UK to be having.

Self-employment accounts for 45 per cent of the growth in employment since 2008 and now stands at five million people. We have to decide whether it’s okay for an ever growing part of our workforce to be without the safety net that we deem employers owe their employees, from holiday pay to maternity leave. Despite all the rhetoric of self-employment being the inevitable partner of new technology, the truth is the UK is the only G7 country to have seen a significant rise in self-employment this century.

This matters for productivity and living standards. Self-employed workers typically earn £250 a week compared to £400 for employees. The chancellor has warned about the public finance impact. An employer pays 13.8 per cent National Insurance contributions on employees’ wages but nothing if the same work is done by someone self-employed.

This debate is one we need, from taxes to employment rights and clarity about how far companies can go in controlling the self-employed via new technology, but crucially it is about old forms of work as well as new. At the moment the heavy lifting is being left to the courts, who can enforce our existing rules and cope as best they can with the grey areas new technology throws up. But in the end it is for politicians to decide what kind of country we want to live in — for plumbers and Uber drivers alike.

This article was originally published in the Financial Times.