Discontent among the ‘new proletariat’ of the gig economy
On the eve of Uber shares being traded on the New York Stock Exchange, thousands of the taxi app’s drivers in the US and Europe took to the streets to protest at what they view as exploitation by the company. Uber drivers are not employees, but self employed, and therefore not entitled to social benefits such as health insurance or a company pension; nor do they have job security, and can be suspended or let go after just a few bad reviews on the Uber app.
European drivers in particular object because social benefits are common there; US employees generally have fewer benefits and employment contracts are arbitrary, which means employers can more easily let go of their workers.
Uber has always had a contentious relationship with its drivers. The company’s founder, Travis Kalanick, had an acrimonious altercation with a driver that caused something of an internet sensation. A famously abrasive character, Kalanick eventually came to be viewed by most of the company’s major investors as a liability, and stepped down as chief executive in June 2017. His successor, Dara Khosrowshahi, is more diplomatic, but little seems to have changed in the economic relationship between the company and its drivers.
Uber is a poster child of the gig economy, which knows no job security and generally makes little provision for its workforce. Delivery drivers and logistics centers of internet behemoths such as Amazon and e-bay operate in the same way, and the “economy 4.0” with its robots and artificial intelligence will create many more such jobs. What does that mean for society?
The economy 4.0 is a revolution on the scale of 19th-century industrialization and early 20th-century electrification, but the pace of change is much accelerated compared with then.
The economy 4.0 is a revolution on the scale of 19th-century industrialization and early 20th-century electrification, but the pace of change is much accelerated compared with then. At a conference dedicated to the economy 4.0, Ayman Sejini, the Islamic Development Bank’s chief executive of the Islamic Corporation for the Development of the Private Sector, took the view that the brave new world of digitization and artificial intelligence would create a whole raft of new opportunities for employment. History suggests that Sejini is right. Industrialization and the age of computers created many new jobs and generally made life easier. However, we should not forget that all these transformations on an epic scale created both winners and losers, and the new age of robotics and artificial intelligence is already doing the same. These new, well paid jobs require education and the ability to either create or intelligently operate algorithms and the like. The engineer of the future is the computer expert. On the flipside there is what could be described as the new proletariat, the workforce manning distribution centers and delivery trucks or cars. It may only be a matter of time until they are replaced by robots and driverless vehicles.
The big question is how to generate social cohesion in such an economic dichotomy. Some scholars in Europe, such as Dr. Thomas Straubhaar, professor of international economics at the University of Hamburg, see huge opportunities in the economy 4.0. At the same time, he tries to address its societal pitfalls. He suggest a universal minimum wage for everyone, regardless of employment status, with taxes on high earners. Such thoughts may gain some traction in the socially minded democracies of Scandinavia, where the social contract between citizen and state has a high value. However, they are too extreme for countries such as the United States, which thrive on entrepreneurial spirit and individual responsibility, and where state involvement is anathema.
Whichever way we look at this issue, it is clear that countries and societies need to debate and address the monumental changes these developments pose to their organizational structures. As yet we have no clear-cut solutions to the effects of the economy 4.0 on society, but we should ready ourselves to find them. Failing to do so would undermine social stability — in which we should all have an interest.
• Cornelia Meyer is a business consultant, macro-economist and energy expert.