Europe’s gig economy largely emerged in the slipstream of the US, where a slew of post-2008 economic conditions – low-interest rates, a massive appetite among venture capital (VC) investors for tech start-ups, and a large pool of underemployed workers – combined to bring digital labor platforms like Uber to life.
The story of how Uber barged its way into Europe, brushing aside labor, welfare, and tax laws, was exposed last year in the ‘Uber Files’. Hundreds of thousands of documents released by whistleblower Mark MacGann, who was Uber’s chief lobbyist in Europe from 2013 to 2017, showed that many politicians were easily seduced by Uber’s promises. The company used a ‘kill-switch’ and other dirty tactics to resist the few regulators who did attempt to get in its way. “Sometimes we have problems because, well, we’re just f****** illegal,” Nairi Hourdajian, the company’s head of communications, said at the time.
Uber remains the largest digital labor platform operating in Europe today, but it is accompanied by a number of European companies that have emerged as significant players in the ride-hailing and food delivery sectors. Just Eat Takeaway, a Dutch firm, is the biggest food delivery platform on the continent, while Bolt, an Estonian mobility platform, is a significant rival to Uber in ride-hail. However, nowhere in Europe has the San Francisco company been able to develop the monopoly position that its ‘growth-before-profits’ strategy had aimed for.
From ‘Growth-before-Profits’ to ‘Pathways to Profitability’
In the new economic conditions of high inflation and rising interest rates, VC investors are no longer willing to continue to pump billions into a company that has never turned a profit. In the words of Uber CEO Dara Khosrowshahi, “we need to show them the money”. In this new reality, the search for profitability is prioritized over the drive for market domination.
Uber has ramped up the rate of exploitation as a consequence, squeezing drivers and riders through an algorithmically-determined payment system known as ‘dynamic pricing’. Dynamic pricing de-links pay from distance traveled, with fees instead determined by a variety of data inputs unknown to the worker, including their personal data history. Professor Veena Dubal has described dynamic pricing as “algorithmic wage discrimination”.
Across the gig economy, platforms have followed Uber in tightening the screws on their riders and drivers in pursuit of ‘pathways to profitability’. For instance, Wolt, a Finnish-founded delivery platform that was bought by US firm DoorDash at the end of 2021, has rolled out dynamic pricing in almost every European country it operates in. Each time, Wolt has been met with resistance from riders, many of whom have seen their pay drop by more than 20% before accounting for inflation. Strikes, some of which have been among the biggest and most long-lasting in Europe’s gig economy so far, have taken place in at least eight European countries.
Just Eat Takeaway has responded to the inflation crisis by abandoning what it had previously claimed to be its more ‘ethical’ labor model. In 2020, the company announced plans to employ its riders directly across Europe, stating that “providing more couriers with employment contracts, hourly wages, and social security is the right thing to do”. While most of these workers were employed through sub-contractors known for shady management practices, employment contracts did provide many with a modicum of stability. But in March, Just Eat announced that it was sacking over 1,700 of its employed riders in the UK and returning to a self-employed model, claiming the “competitive disadvantage” of hiring workers while Uber Eats and Deliveroo continued to use “independent contractors” was too much to bear.
A similar logic was used by Uber Eats in Spain in August 2022, when announcing that it would start to hire riders on an independent contractor basis again, after responding to the Spanish Government’s ‘Riders Law’ – the first law in Europe to require food delivery platforms to employ their riders – one year earlier by hiring its riders via sub-contractors. Uber Eats’ main Spanish rival, Glovo, has flat-out refused to accept the Riders Law despite fines for false self-employment now reaching above Euro 200 million and counting. Platforms are not letting laws get in the way of their race-to-the-bottom on labor standards.
For any food delivery platform seeking to maximize revenue, the logic of the self-employed model is irrefutable: they can flood the streets with an over-supply of riders at no additional cost, reducing waiting times, and increasing competition between riders for work
For any food delivery platform seeking to maximize revenue, the logic of the self-employed model is irrefutable: they can flood the streets with an over-supply of riders at no additional cost, reducing waiting times (which do not have to be paid for), and increasing competition between riders for work, which pushes riders to accept more deliveries at rock-bottom rates. Also, in major European urban centers like Paris and Madrid, the majority of riders are thought to be undocumented workers, who often can only access an account by renting it from an account holder, sometimes at a cost of 50% of all earnings. Platforms are drawing on the most precarious sections of the European workforce, which are most vulnerable to hyper-exploitation via fake self-employment and undocumented work, to drive higher margins.
What no one knows yet is whether food delivery has a business model that can work lawfully, i.e., if the riders were employed – court verdicts across Europe have found that they should be – and the undocumented riders had citizenship, would app-based food delivery be a viable business? Even with the current hyper-exploitative model, none of the big platforms are able to turn a profit. One Catalan study found that profitability is reduced by “up to 30%” if riders are employed, while a drop in the commission charged from restaurants from 30% to 20% would require a doubling of orders from 8,000 to 16,000 to “overcome operating expenses”. Digital labor platforms are “f****** illegal” for a reason.
EU Platform Work Directive
It’s in this context that all of the big platforms, except Just Eat Takeaway, are furiously mobilizing against a strong ‘presumption of employment’ in the European Union’s Platform Work Directive. In February, the European Parliament resisted a platform lobbying onslaught to pass a proposal for the Directive which would make it very difficult for the platforms to find legal loopholes in the presumption of employment. Elisabetta Gualmini, the Italian MEP who was responsible for drawing up the text which the European Parliament passed, said she had “never seen such efforts to condition and influence the activity of decision-makers”.
What no one knows yet is whether food delivery has a business model that can work lawfully, i.e., if the riders were employed and the undocumented riders had citizenship, would app-based food delivery be a viable business?
However, the platform lobbyists are not defeated yet. The European Council – which is made up of the member states in the EU – now must agree on its own proposal, before negotiations take place between the Council, the Parliament, and the European Commission to agree on a common text. The Council is divided, but given that the balance of forces are weighted more towards pro-platform lobby states, the proposal it ends up with will almost certainly be weaker than the Commission’s initial proposal in December 2021.
The European Commission proposal was recently put to the test in Belgium, where a platform work law closely based on the text of the Commission came into force in January this year. The law has so far been a complete failure, with every digital labor platform in Belgium – which is well over 100 – claiming they do not meet the employment criteria stipulated in the law. The Belgian Government’s labor ministry has shown no appetite to try to apply the law regardless of what these platforms claim, and so it is currently a dud: platform workers in Belgium continue to be denied employment rights like in most other European countries.
The Belgian flop has increased fears that a weak EU Directive could not only fail to achieve employment status for platform workers, it could establish a legislative framework which platforms can then use to block attempts by unions to use the courts to challenge fake self-employment (as many have already done successfully). If this is to be the grim conclusion to the Directive saga, it will be a law that is worse than useless.
Unions: Recognition or Class Struggle?
Legislation can, at best, provide a helping hand in establishing more beneficial legal and regulatory conditions for workers, but ultimately it will be the growth of strong trade unions in the platform economy that will be decisive to any shift in the power dynamics of the gig economy. In that respect, the divide which is emerging in European trade unionism over the gig economy is worthy of attention.
On the one hand, unions such as GMB in the UK and UBT-FGTB in Belgium have signed recognition agreements which commit Uber and Deliveroo to little but get their foot in the door as unions that the platforms will do business with. On the other hand, a plethora of grassroots unions and workers’ collectives across the continent, as well as some established unions, seek to build from the base through strikes and protests.
It is perhaps early-days to assess the effectiveness of GMB and UBT-FGTB’s strategies, but while it is clear that the platforms derive credibility out of these agreements – which have been used by Uber and Deliveroo to deflect criticism as unfounded and oppose legislation as unnecessary – it is less clear what workers gain. It has been almost two years since GMB’s Uber agreement was signed, and in that time the ‘take rate’ – the commission Uber takes per trip – has increased markedly. And there is no evidence that the recognition agreement has led to an influx of Uber drivers joining the GMB.
Legislation can, at best, provide a helping hand in establishing more beneficial legal and regulatory conditions for workers, but ultimately it will be the growth of strong trade unions in the platform economy that will be decisive to any shift in the power dynamics of the gig economy.
The grassroots organizing model has had varying levels of success across Europe, but at least this approach is based on the more reliable foundations of the self-activity of platform workers themselves. In Greece, E-Food couriers won a major victory through strike action, reversing a decision by bosses to fire all of the riders and re-hire them on a self-employed basis. The strike secured permanent contracts, when previously E-Food employed the riders on a short-term basis. In Berlin, wildcat strikes at Gorillas led to the establishment of a Works Council, which became an organizing hub for the broader movement of riders in the city.
Worker organizing has a long way to go in the platform economy, not least in female-dominated care and cleaning platforms, which have grown significantly in recent years but remain almost completely unorganized and are invisible in the public debate. But as platforms desperately seek profitability, a combination of legislative change, regulatory enforcement, and union power will all be required to defend and improve working conditions in Europe’s platform economy.