Wednesday, 9 November 2016

The Deliveroo Riders Should Get On Their Bikes With This One....

I published the following article on the Adam Smith Institute blog yesterday - but there is more to add at the bottom:

In the wake of the recent tribunal which declared that Uber drivers should be classed as employees with rights to the minimum wage, holiday pay and so forth, we read today that something similar is happening with Deliveroo, as riders seek to unionise and gain similar workers' rights as Uber.

Deliveroo is a company that provides a delivery service on behalf of thousands of restaurants across the country, and it classes its riders as self-employed "independent contractors", on a pay rate of £3.75 per delivery.

It is true that under such conditions they lack some of the regular workers' rights many of us have, such as paid holiday and the right to the minimum wage, but it's incredibly short-sighted to assume that that means there is a problem needing fixing - after all, by equal measure, Deliveroo contractors also enjoy some working benefits most of us do not; namely, the flexibility to work the hours that best suit them, and as little and as often as they wish.

Rather like how the decision made against Uber was so drastically wrong, the same will apply here, because there is an abject failure to understand that in a dynamical and diverse market, a 'one size fits all' imposition frequently harms little niche elements that are doing perfectly well as they are.

The ability of Uber and Deliveroo workers to be classified as flexible, autonomous independent contractors ostensibly running their own businesses as available drivers and riders will be, for many, a much more beneficial set-up (ditto numerous others on zero hour contracts) than the myopic imposition of terms and conditions that would no longer favour their flexible working patterns.

When left alone, firms like Uber and Deliveroo are beneficial to the economy (for employer and consumer) precisely because they involve conditions that those who favour them will take advantage of, and those that do not, won't. Even under the new terms of £4.25 per ‘drop’, most Deliveroo cyclists are earning significantly above the minimum wage as the average worker makes two deliveries per hour, equating to £8.50/hour.

It's hardly rocket science; people who want to earn the minimum wage and have holiday pay and less flexible working arrangement will not be Uber drivers or Deliveroo riders. On the other hand, people who want to be self-employed contractors under the flexible conditions offered by Uber and Deliveroo will. That is the very nature of a free market.

Not only is this far from rocket science, there is even a quote in the article from one of the riders that with closer examination would provide him with the answer he ought to be looking for. The Deliveroo rider laments that "We don't get an hourly fee, so that means at times when there aren't that many deliveries and it is not that busy, we can be waiting for up to an hour for a delivery without getting paid a penny." - which really ought to give the game away.

If only this young man could see that the problem with his campaign is heavily hinted at with the words he utters - for if there are times when it is not that busy, and riders can be waiting for up to an hour for a delivery without getting paid a penny, it's not exactly going to help out the situation by forcing Deliveroo to shell out a state-mandated £7.20 an hour to all its riders, is it? All it will do is skew the market value of the Deliveroo rider operations and harm all the people who benefit from riding for Deliveroo under the present conditions. 
And then, we learn that Labour Shadow Cabinet MP Clive Lewis uttered this little gem - and I mention it only because this is the man who is currently the bookmakers' favourite to be the next Labour leader:

"They need to ask themselves if they have a sustainable business model if they have to exploit their workers like this in order to be viable"

Oh dear, this is infuriating. Who the heck is Clive Lewis to tell them whether their business model is sustainable, or to declare that workers freely involved in a contract are 'exploited'? He's so short-sighted and/or so arrogant that he cannot even entertain the notion that, actually, society is full of people in roles that suit their needs well. That is why the vast majority of Uber drivers - the people the likes of Clive Lewis are deciding on their behalf are 'exploited' - are unhappy about the ruling.

And as is usually the case, what this opposition model overlooks is all the hidden costs - because it never factors in all the would-be Deliveroo riders who won't now work if this ruling goes ahead. An individual – an actual person with a mind and a will – wants to be a Deliveroo rider and is willing to offer his or her services to make some money under the conditions they favour. No one forces this mutually beneficial transaction, but that it happens shows that both agents are better off.

Yet socialists like Clive Lewis are so averse to people having their say in how they conduct their business that they want to wilfully prevent a sub-section of society from enjoying similar benefits, yet sell the idea as though they are trying to help them.

Of course it's true that some Deliveroo riders would go along with Clive Lewis, but their motives are highly dodgy - it's because they think a state intervention can help them earn more than the marginal value of their labour. Alas, it's a nice trick if you can pull it off, particularly if you don't care about the people providing the means by which this arrangement benefits both parties, or about the many intangible losers who don't show up on the radar but who've had an opportunity denied them.