Wednesday, 10 August 2016

The “Sharing” Economy is based on a Fissured Workplace

Paul Sweeney: Uber and Airbnb are not the Sharing Economy. Instead, they represent a rapid increase in the “Fissured Workplace”. 

This “sharing” is large businesses shedding their employees and sourcing labour through "a complex network" of external entities, creating intermediaries between the workers and profiting from that work.

The fissured workplace is developing between a ruthless breed of capitalists, a shrinking elite of core workers, and the rest. 

The last quarter century’s massive outsourcing and off-shoring of manufacturing jobs from the developed world had an upside. That was the growth of services which brought higher valued added jobs which replaced manufacturing, although fewer jobs and for the educated.  

But with less well paid jobs, with the productivity gains going to capital and with financialisation, labour’s share of national income continues to fall.

Parasitical sharing platforms

These ‘sharing platforms’ are parasitical.  They produce nothing new, disrupt existing producers, and skim a fat margin off the people forced to compete with each other on depressed pay and conditions for early investors.

Today many service jobs are now also being outsourced too. On top of this, the American Association for the Advancements of Science recently warns that the rapid strides in artificial intelligence and robotics threatens the developed world with the prospect of mass unemployment. McKinsey have made an estimate of how many jobs can be automated using existing technology by sector in the US here and here.

As if these labour market trends were not scary enough, the growth of the so-called “sharing economy” – such as Uber, AirBnB, and the internet itself – are already leading to greater job insecurity.  

Six impacts of disruptive technology 

The main firms, such as Uber and Airbnb using disruptive technology have six major impacts, five of which are very negative. 
  • First, they are boosting job insecurity, creating a fissured workforce of key core workers and a new precariat, which they call “partners”, “co-workers” and other insulting terms. 
  • Secondly they are undermining labour unions and workers’ ability to organise and thus share in productivity growth. 
  • Thirdly this inequality is leading to reduced aggregate demand in the world economy, which is reducing growth.
  • Fourthly, these corporations do not like to pay tax and use their intangible goods and services to easily avoid it in the globalised economy. 
  • Fifthly, this erosion of the tax base, by large profitable corporations, the most able to pay it, is undermining the state itself and its sovereignty. The latter effect can be seen in the populist backlash on Brixit, Trump, the rise of the European right and the almost hung parliament here. 
  • The sixth and only positive impact is cheaper goods/services for those who can afford to be consumers.
New tech is boosting job insecurity 

Some of these firms are in treating many of their core workers very well, while simultaneously treating others less well - preferring to hire them on short-term contracts. For example, Google employs 2,800 staff in Dublin with a further 2,200 (44%) on contracts. Uber employs few but has many “partners”. Airbnb is displacing regular employment in the hotel sector.

A recent TASC report demonstrated that flexibility is being forced on employees in many sectors of the Irish economy. 

Increasingly, many firms, including some of the biggest like Walmart, rely on welfare subsidies to top up their deliberately poorly paid employees, so that fat dividends to capital owners can be maintained. 

While there has been some shift in the US with the demand for a living wage – “The Fight for $15” - the main trend is down for wages and labour’s share of national income, over 30 plus years. There is no sign that this is being reversed. 

This is a David versus Goliath battle because globalisation has greatly weakened labour’s countervailing power to capital while unions have been deliberately undermined by law in many countries, especially the US and UK due to the power of lobbyists for corporations. 

While unions provided some method of transferring some of the gains from capital to labour to employees, and were thus effective in countering the owners of capital for a century, it has fallen to the state to take up this role. 

But the state is singularly failing in this role, bending over in reducing labour regulations, (though not in Ireland in recent legislation) and engaging in tax wars in counterproductive attempts to lure investment, under pressure from corporate lobbyists, and an increasingly concentrated media, watched by an angry but impotent electorate. 

It is no wonder Trump and Farage have been so popular with workers and unemployed when mainstream parties seem to bow to corporate power so easily. 

This fissured employment trend with the decline in labour’s share in national income is one of the big issues facing society. Most governments are not even tuned into it. 

In the next blog, I will cast a more detailed eye over Uber, the world’s most valuable start-up and Airbnb, the third most valuable one. 

Paul Sweeney, is Chair TASC’s Economists’ Network.

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