EU consumers will have to pay higher prices to cover better rights for gig workers but the increases will not kill the industry’s business model, a senior Brussels official has predicted.
Nicolas Schmit, the EU’s commissioner for jobs and social rights, said there is a cost that “has to be paid” in an ongoing effort designed to force groups like Uber and Deliveroo to provide more worker rights.
The European Parliament, member states and the European Commission are debating a directive that, if passed as drafted, will force ride-sharing and delivery companies to offer more social protections to workers on their platforms.
EU officials estimate that prices for services such as Uber might increase by 40 per cent as a result. The deliberations are set to enter their last phase by the end of November, according to two people with direct knowledge of the process.
Mr Schmit said he was confident consumers would accept higher prices if it meant better conditions for gig workers.
“In an economy, you have consumers and producers of services. Our economy cannot just function on the basis of the advantage of the consumer,” he said. “It has to take into account the interest of the provider of the service. There has to be a balance.”
Mr Schmit said, “There’s a strong market for these kinds of services and people are ready to bear the cost. There’s this idea you can correct the low price by a tip. This is not normal. If there’s a cost, it has to be paid.”
His comments were partly a response to a warning by Anabel Díaz, head of Uber’s mobility division in Europe, that the directive would force the ride-hailing service to shut down in hundreds of cities across the EU if prices rose by up to 40 per cent.
The commissioner rejected the argument, saying there was “no question that by better protecting the workers, we will kill a model. No. We will adjust a model”.
He said Uber’s suggestion reminded him of 19th-century economic history when child labour was being abolished. “It was the argument, we have to shut down a lot of economic activities which was obviously not the case. This is scaremongering used by platforms to threaten legislators.
“If Uber, or somebody else, thinks that they cannot adapt their model to that, then that’s their problem. I would be astonished if this threat is really real.”
Mr Schmit pointed to a series of court cases around Europe as evidence that a new directive by Brussels was needed to give businesses clarity. After a UK court ruling in 2021, Uber drivers are now designated as “workers” – meaning they are entitled to holidays and sick leave.
However, earlier this week, Britain’s supreme court ruled that Deliveroo riders cannot be recognised as workers in an employee relationship or represented by trade unions for collective bargaining, in a landmark decision for the gig economy.
“There is no clarity,” said Mr Schmit. “This directive introduces clarity on the issue of the status of platform workers. It doesn’t mean that all platform workers have to be workers or employees. Platform workers can remain self-employed, but real self-employed and not bogus self-employed.” – Copyright The Financial Times Limited 2023
