| In this newsletter, we have been seeking to draw attention to the question of whether app-based food delivery is really an economically viable industry, especially if the riders have the rights of any other employees and thus are paid accordingly. In Spain at least, the signs are not good. The newspaper El Confidencial has found that, from the customer's perspective, food delivery suddenly does not look as attractive now as it was at the height of the pandemic, when "they brought your food home in 15 or 20 minutes, at the same price as in the restaurant or even less by adding promotions". Now, ordering from Uber Eats usually takes 45-60 minutes, at a price 10-20% above the restaurant cost. Cold food at inflated prices. What's changed? In three words: the Rider's Law.
"Employing the 'riders' has blown up their cost model," El Confidencial find. "The numbers don't add up like they used to: if they have to hire delivery men, they can no longer afford to have so many on staff. With fewer riders and the number of orders increasing, waiting times skyrocket, complaints increase, orders fall and prices rise to maintain revenue." Meanwhile, Glovo, which has ignored the Rider's Law and continues to hire 80% of its riders as independent contractors, goes on just as before: flooding the streets with an over-supply of riders to keep delivery times as short as possible.
"They enjoy a clear competitive advantage thanks to being in breach of the law," a former director of a food delivery platform in Spain, speaking anonymously, told the newspaper.
The result is that Glovo's market share continues to expand at the expense of its rivals, an advantage which may outweigh the sizeable fines that the company is set to receive from the Labour Inspectorate for breach of the law. One source told El Confidencial that if this dynamic continues, Uber Eats may exit the Spanish market within a year. But even at Glovo, there is good reason to believe the numbers don't add up. Its parent company, Delivery Hero, is facing a major crisis of confidence among its investors, with the latest stinging criticism coming from HSBC on Monday [14 February]. The bank's report states that it "can't understand why Delivery Hero felt the need to acquire Glovo", saying the New Year's Eve purchase "looks more like a bailout" as Glovo "loses €330 million". The report goes to accuse Delivery Hero's management of "an obsession with growth" and says the Glovo deal has pushed the German multinational "uncomfortably close to a liquidity crunch", and thus it may have to "seek refinancing". Based on this analysis, the bank downgraded its recommendation for Delivery Hero from "buy" to "hold". Delivery Hero's share price has fallen 60% in six months. The pandemic created the conditions for a booming food delivery industry, and investors bought into the idea that this growth would out-last covid-19, pumping in billions in venture capital. . But if the unit economics only works with a hyper-exploitative gig model that is increasingly threatened by regulation, the highly competitive food and grocery delivery sector we see in front of us today in cities across Europe may be a mirage.
Ben Wray, Gig Economy Project co-ordinator |
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Gig Economy news round-up |
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- BELGIAN GOVERNMENT AGREES PLATFORM WORK LAW: A deal has been agreed for a platform work law in Belgium which will set criteria for determining their employment status. Belgian Prime Minister Alexander De Croo said the agreement, the details of which are yet to be released, "is fully in line" with the EU Commission's platform work directive, which once passed is not expected to become law in member-states until 2025. Like the Directive, gig workers will be considered employees if enough criteria has been met, with platforms having the ability to challenge employment status in court. Labour Minister Pierre-Yves Dermagne said: "We don't want to hurt this sector, but we want to supervise it and put an end to certain grey areas." Read more here.
- ITF UNION SIGNS MEMORANDUM OF UNDERSTANDING WITH UBER: The International Transport Workers Federation, which represents 700 affiliate unions in 150 countries, has signed a Memorandum of Understanding with US ridehail giant Uber. A part of the MoU, Uber will host regular meetings with the ITF and its affiliates on improving working conditions and trade union representation. Stephen Cotton, ITF secretary, said the social dialogue will be "the first time that meaningful conversations with a platform company on key issues for workers take place on a global level". The ITF added that it will continue to campaign for "recognition of platform workers as employees" and "an end to their misclassification".
- DUTCH CITIES BAN 'DARK STORES': Amsterdam and Rotterdam have introduced one-year freezes on any new 'dark stores', while four other Dutch cities are looking to introduce regulations which would prevent dark stores being established in certain areas of the city. Dark stores are small warehouses, often in former shop-fronts, which prepare food and other items for super-fast grocery delivery companies like Gorillas and Getir. The move comes after locals have complained about the noise, traffic problems and the build up of waiting riders blocking the sidewalk. 31 dark stores have been identified in Amsterdam, and 13 in Rotterdam. The vote on the one-year freeze in the Dutch capital was taken in secret to prevent platforms from quickly signing new leases. Read more here.
- LONDON UBER DRIVERS "SLEEPING IN THEIR CARS": An Uber driver in London has said he knows many of his colleagues are sleeping in their cars to try to make enough money to survive. One year after the UK Supreme Court found that Uber drivers are employees, Nader Awaad, chair of the United Private Hire Drivers branch of the IWGB union, said that drivers are living on "poverty wages", as fuel price rises massively outweigh fare price increases. Uber accepted that drivers are employees and should have minimum wage, holiday pay and pensions, but did not accept the court's ruling that they should be paid for the whole time they are logged-in to the app, and thus continue to be paid per ride. Awaad said that the lack of pay for waiting time, and the fact that Uber has introduced fixed price fares, means Uber drivers are struggling to make any money. Read more here.
- ELITÉ TAXI TAKE AIM AT FREE NOW FOR CELEBRATING NEW EU COMMISSION GUIDANCE: The Elité Taxi Association, which organises taxi drivers in Barcelona, has written a letter to Free Now, a German firm which provides app services to many taxi drivers in Barcelona, criticising the company's celebration of new EU Commission guidance which Elité say is a grave threat to the taxi industry. The guidance was issued on 4 February and is not a binding legislative text, but informs governments that the taxi sector must be regulated by national governments, not regional or municipal ones, and encourage them to do away with "cumbersome" regulations such as vehicle license quotas, and to regulate private hire platforms and taxi services in an integrated way. Elia Ferrer Travé, Free Now's Senior Director of Government Relations and Public Policies, wrote on LinkedIn that the guidance was "a great milestone in the history of the European on-demand and private hire taxi sector." Elité Taxi said they had been criticised for describing Free Now as "a wolf in sheep's clothing who share Uber's goal of liberalising the taxi industry", but that Travé's latest remarks proves they were correct. Read more here.
- 'GABRIEL'S CAMPAIGN' LAUNCHED FOR DRIVER SAFETY: A year after a private hire driver was brutally murdered, the United Private Hire Drivers branch of the IWGB union have launched a campaign in his memory for driver safety. Gabriel Bringye was stabbed to death on 17 February 2021 while on a job for Bolt. The campaign says that a year later, Bolt has "done very little to implement adequate safety for drivers". Gabriel's campaign is putting six demands to Bolt to address the problem, including introducing a properly staffed complaints system for drivers to provide them with support while on the job. To read more and support the campaign, click here.
Have we missed important news on the gig economy in Europe this week? E-mail Ben at [email protected] to help us improve our news round-up. |
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