Sharing or scaring economy?

By January 28, 2016UK

By Neeraj Shah, Consultant, London

The ‘sharing economy’ juggernaut continues to gain steam.

Writing in the Sunday Telegraph, the Business Secretary Sajid Javid MP once again reiterated the Government’s desire to make the UK the world leader in disruptive technologies and his desire to lead the ‘fourth industrial revolution through UK innovation’.

The UK’s support for disruptive technologies and indeed the sharing economy is not new – back in September 2014, the Government commissioned Debbie Wosskow, the CEO of Love Home Swap, to review the potential of the sharing economy. Amongst other things, the review recommended the creation of a trade body to represent sharing economy platforms. Sharing Economy UK (SEUK) was born –– and their latest report makes for interesting reading. One of the report’s central recommendations is for official measures of UK productivity and economic growth to take into account the contribution of the sharing economy. SEUK’s report says that the lack of statistical information is “frustrating” not only due to the rapid growth of the sector but also because policies threaten to be made without sound evidence.

Certainly, sharing economy platforms are providing opportunities for UK citizens to supplement their existing income or by providing new opportunities in existing and traditional industries. Such platforms have also created a new generation of self-employed individuals and microbusinesses.

Such businesses and individuals, however, do not have the same access to employment rights and there is an increasing debate around what these should entail. Shadow Chancellor, John McDonnell has spoken of how “technological change…[is] tearing up the old work contract” and the lack of protections offered to those who are self-employed. In the US, Presidential candidate Hilary Clinton talked of the ‘gig economy’: “This on demand or so called ‘gig’ economy is creating exciting opportunities and unleashing innovation, but it’s also raising hard questions about workplace protections and what a good job will look like in the future”.

The sharing economy is undoubtedly providing opportunities but as yet has a few problems. First, the term is not well defined and is often used as a catch-all term to apply to any and all online platforms. Terms such as the ‘collaborative economy’ and ‘gig economy’ have also sometimes been used interchangeably with the sharing economy. Secondly, the question of employment protections will rear its head again and again unless there are substantial policy reforms or platforms take it upon themselves to do something about this.

In a recent Business, Innovation and Skills Committee session with one of the most well-known platforms (including Uber), the Committee Chair Iain Wright MP repeatedly asked whether sharing economy platforms represented a “race to the bottom” especially in terms of employment rights. This highlights another problem in the UK – whilst Ministers are generally aware of the sharing economy, most parliamentarians possess little knowledge on the topic and appear to be, perhaps understandably, unfamiliar and oblivious to these new disruptive technologies. Unless platforms can kick through this, it’s unclear whether policymakers will ever fully understand and embrace the sharing economy.