Why Deliveroo Fails Its Riders – And The Rest Of Us Too

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A warning, or was it a threat, yesterday from one Dan Warne.  Mr Warne is a high-up in Deliveroo and was being entertained by the House of Commons Business Select Committee . He opined that giving rights to the company’s “workers” would add a quid to the cost of each meal delivered.

This seems to me to be a fairly classic illustration of swimming against the tide. Deliveroo is one of these new–wave net-based platforms that connect customers with service providers.  Typically the “last mile” – from food outlet to customer – is set up on a no-employee basis to minimise costs to customers and profits to owners. But latest results showed an interesting picture; 611% revenue growth (to nearly £130m world-wide) but losses of just about the same level (again, a sharp increase from £30m a year earlier). Having  said that,  at the end of 2016, the company still had $160m  left of  the $472m investment it had raised.

But precarious forms of employment have, rightly, been taking something of bashing lately.  Unflattering Australian research  showed how the Deliveroo employment model systematically depresses pay, and there  was a  2016 strike by Deliveroo riders in London.

Late last year, the GMB won a landmark case against Uber to establish that though their drivers may not be employees, they are workers – a specific legal definition which gives a basic floor of rights.

Then Matthew Taylor delivered his report on Good Work.  The virtues/shortcomings of his work have been widely discussed, but it is incontrovertible that the Deliveroo model is not one that garners many credits on the Taylor scale of decent or sensible corporate conduct.

Then last month, as if to prove the Uber ruling wasn’t a flash in the pan, Addison Lee were also on the wrong end of a judicial ruling

Ok, ok – that’s the argument about treating workers’ decently wrapped up.  But before the chants of “you would say that wouldn’t you” rise from your throats, let me give you three more reasons why Mr Warne’s “one pound” quip is wrong:

  • If you are ordering a take-away, chances are you are not absolutely on the bones of your backside. Demand is not going to collapse for the sake of an extra pound on a meal. Remember how even as late as 1995, ago the National Minimum Wage was going to be a jobs killer?  Now it’s thought to be such a good idea, the Conservatives expanded its remit to include a National Living Wage.
  • Insecure employment models are also unstable – that’s perhaps why they are also described as precarious. Taking a punt of always being able to find the required volume of labour offers no guarantees of a successful search. And then the quality of service suffers with predictable reputational and commercial consequences.
  • Paying workers properly benefits everyone – put money in people’s pockets and they will spend it – first on essentials but then on things they want, be that takeaway food or anything else. And in-work poverty is endemic, which creates huge political energy for change.

There is a serious and unavoidable challenge for all of us in making net-based business platforms work for everyone.  That’s why whatever the disappointment many have about his report, the debate Matthew Taylor is pursuing (today at the self-same Parliamentary Committee) is so important. So too are things like the Co-Worker initiative in the US (and we do need to work out how to establish something similar here). Because, as the IWGB union and others have insisted,  workers in the precarious economy cannot always wait for or rely on the efforts of others to have decent standards of work.

And there is surely a prize waiting for companies who manage to reconcile efficient, high quality service with proper working conditions. What they might lose in short-term maximum profit (or more likely these days, selling on the business), will be a gain in longer term viability.

Even if such strategic planning is less common than it used to be, the train of appropriate regulation of this economic space has left the station and gathering speed.  Mr Warne and his colleagues either need to buy a ticket or get left behind.

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