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Jim Stanford: Even business should be concerned about the spread of gig work

Current employment practices by digital platforms are unfair to workers, taxpayers and other businesses, writes Jim Stanford
Digital platforms offer valuable services and could provide decent jobs, writes the author

So-called ‘gig’ work, in which workers are directed by a smart phone app and compensated for each task they complete (not each hour they work), has grown dramatically in Canada in recent years.

The business model first came to prominence in passenger transportation (through firms like Uber or Lyft). But it’s spread quickly into other industries – including courier services, food and package delivery, technology services, design, teaching and tutoring, home repair and maintenance, and human and caring services (like aged care, home care and child care).

Studies indicate that hundreds of thousands of Canadian workers now work – to varying degrees – through digital platforms.

Despite its high-tech image, the core business model of platform work is not new. While smart phones are a new technology, of course, employment practices in the gig economy are actually centuries old. 

Even during the Industrial Revolution, employers used similar strategies to reduce labour costs and avoid the risk of permanent employment arrangements – through labour hire, putting-out and gangmaster arrangements. Those practices fell out of favour in the 20th century as the labour market became more stable and regulated. Now, they are making a comeback.

By calling their workers “contractors,” platforms avoid normal employment expenses and responsibilities (like minimum wage, CPP and EI premiums, WorkSafe obligations and more). They also shift to workers the risks of fluctuations in business conditions.

If there isn’t enough consumer demand, gig workers just wait, unpaid, for a job to come through the app. That’s free for the platforms. And it creates a permanent buffer of extra capacity, in case consumer demand increases.

Around the world, digital platforms are being challenged (through the courts, collective bargaining and legislative change) to reform their employment practices and provide improved security and protection to their workers.

In B.C., the loophole through which platforms engage labour without the normal costs and responsibilities faced by other employers is also under the microscope. The NDP promised in the last election to develop new protections for gig workers. After a public consultation, culminating in a What We Heard report, the government is now developing proposed reforms.

To this end, I recently co-sponsored an open letter signed by over 60 economists, labour lawyers and other policy experts in B.C., encouraging the government to implement stronger protections for platform workers. The letter was co-published by the Centre for Future Work and the B.C. office of the Canadian Centre for Policy Alternatives.

Core principles which the letter’s signatories believe should guide future regulations for ride-share and delivery platforms include:

  • a clear test to evaluate whether workers on a platform are genuinely independent businesses or contractors, or are in effect employees;
  • platform workers who are not genuinely independent businesses should receive full coverage under minimum wage, WorkSafe and other normal employment standards;
  • any business entity that engages workers (including platforms) must accept legal responsibility and liability for the health and safety of its workers;
  • provincial payroll-based programs (like WorkSafe and the employer health tax) must apply equally and fairly to platforms and their workers;
  • the government should confirm that platform workers have full rights to organize unions and collectively bargain.

Current employment practices by digital platforms are unfair to affected workers. But they should also concern all B.C. residents and taxpayers, including other businesses. By avoiding the normal costs of WorkSafe and employer health taxes, these platforms shift a fiscal burden onto other taxpayers – including employers who follow the traditional rules.

Gig workers injured on the job, but denied WorkSafe coverage, must have their health costs covered by the rest of us (through medicare) instead of by their employer (through their WorkSafe premiums). Meanwhile, conventional employers are placed at a competitive disadvantage against other firms who are given a free pass on normal employer obligations.

Digital platforms offer valuable services to consumers and could provide decent jobs for those providing those services. But the current practices of the platforms – shirking normal employment obligations and standards – imposes unacceptable costs and risks on platform workers, other businesses and the broader public.

B.C. has a unique opportunity to set a high standard for sustainable, responsible platform work. We urge the provincial government to do so.

Jim Stanford is the economist and director of the Centre for Future Work, based in Vancouver.