The Uberization of the Workforce

For how long can we sustain the degradation of employees to freelancers?

If you ask me, the real innovation of Uber is not technological, but legal. What the company accomplished is the naturalization of transforming employees into freelancers and employers into clients. They got a lot of attention because taxi drivers are a very visible part of society, but it is hardly the only example.

Some people are legitimate freelancers who work for different clients and may achieve better financial outcomes or flexibility. However, drivers most likely do not have the same financial freedom that people at the top of the income ladder have. In between, there is an ever-growing number of companies that are hiring remote employees on similar terms than what Uber proposes.

This situation creates a substantial shift of power in favor of companies and the detriment of existing labor laws. Some countries impose restrictions in cases where freelancers work exclusively for a single customer. But if those customers are foreign corporations, it becomes increasingly hard to enforce any existing regulation. And, with regulation comes the risk of losing competitiveness.

The flexibility of remote work means that as soon as a country's employees become harder to deal with, companies will start hiring people in the country next-door. It is a chicken and egg problem, and in between, there are many employees whose benefits are washed away. There should be a sweet spot between flexibility that empowers innovation while protecting the well being of individuals and society as a whole.

I wonder if countries couldn't enforce regulations on local companies and not on people. A Dutch company will have to comply with all the local laws even if employees are hired remotely, including standard salaries, unemployment, etc. However, how that can be structured in a way that prevents scamming better welfare systems and taxes both companies and employees in a rational way.

If you want to know more, this is the note on which this reflection is based.