Gig Economy Crackdowns Are Off to a Bad Start in Spain
(Bloomberg) -- Europe’s first law to turn delivery riders into employees is facing widespread pushback from the couriers and the companies that use them, showing how difficult it will be to change the business model.
The Spanish legislation followed a Supreme Court ruling last year and came into force this week. On Monday, Spain’s biggest labor union, CCOO, filed a complaint against the country’s largest online food delivery platform, Glovo, accusing it of defying the spirit of the law by keeping the majority of its drivers and riders as casual workers instead of giving them staff contracts.
The company had around 12,000 riders in March, according to its website. It said it plans to hire 2,000 of them as staff by the end of the year and more in the following months.
For the other riders, Glovo has updated its employment model to provide “the flexibility, autonomy and independence valued by the majority of our fleet,” it said in an emailed statement.
In its ruling last year, the Supreme Court said riders should be employed because, no matter how much flexibility and independence they are given, it’s the companies that own the brand and the technology and provide the clients.
“Glovo said they’ve changed two or three functions in the app and that now workers can be self-employed -- it’s simply absurd,” said Daniel Gutierrez, a former courier who founded the labor association Riders x Derechos.
Several riders interviewed by Bloomberg in the capital Madrid this week said the new law has been a disappointment.
Javier Alejandro and Jason Padilla, who were waiting for work outside a McDonald’s in Madrid, said they left Uber Eats after it contacted its riders over plans to shift them onto fixed-hour contracts via employment agencies to comply with the new law.
“When the contracts started, everything went downhill,” said Alejandro.
He and Padilla wanted to remain free agents so they could choose their working hours and days off. So the two went off to work for Glovo. There they encountered another problem -- Glovo’s new algorithm favors its new contract staff when it allocates jobs, so there’s less work for those who aren’t full employees.
That could lead to a race to the bottom on price, where the remaining freelancers will underbid each other in an attempt to secure dwindling orders. Gutierrez said his collective has tried to set a minimum delivery price, but he fears it won’t hold.
The Spanish law is the latest challenge to a gig economy reliant on casual labor that can come with few of the rights associated with full employment, although recent court challenges have forced the industry to make some concessions.
Just Eat Takeaway.com NV’s Spanish business was already using couriers employed by subcontractors and is now negotiating a collective agreement with the country’s main unions, the company said by e-mail.
Labor organizer Gutierrez estimates that around half of Spain’s couriers work by borrowing accounts registered to other people, making it harder to coax them to join the official workforce.
A Spaniard who has the right to work in Spain might open three accounts -- one with Uber, one with Glovo and one with Just Eat -- and rent out the other two to migrants who lack a work permit.
The migrants can give a quarter to a fifth of their earnings to the Spaniard and in return they avoid paying self-employment taxes and national insurance. “Due to their irregular situation, they will never complain or go on strike,” said Gutierrez. It also means they’re less likely to seek a formal employment contract.
Only a quarter of Spain’s couriers have been given fixed contracts so far, according to the Professional Association of Autonomous Riders. Many of them are with employment agencies, not the delivery platforms themselves.
“The quality of the subcontract leaves a lot to be desired,” said Hector Merino, the president of Asoriders, another collective. This week he received an offer of work that involved giving one third of his tips to an agency.
“We went from being falsely self-employed to being very precariously employed,” he said.
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