Business and finance consultant Nils Elmark takes us back in time to explore the best way to create sustainable relations between a new age of freelancers and modern powerful companies.
In 1910, at the beginning of the modern industrial age, thousands of women in Cradley Heath in the West Midlands worked as chain makers in dirty and steamy workshops often looking after home and children at the same time. They were unorganised and did not earn much more than a penny a day. But they needed the money badly, so much that some merchants claimed they could buy the newly hand-hammered chains for less than the price of the coal and iron.
The previous year, the liberal government had raised the minimum wage to two and a half pence but the big industrial companies refused to pay the new rate and in the spring of 1910 the women chain makers went on strike. It lasted 10 weeks and was lead by the famous Mary Macarthur.
The striking chain makers from Cradley Heath had the people behind them; they won and got their twopence-ha’penny as the last employer eventually signed the agreement with the new National Federation of Women Workers – the first union for women.
In September 2015, at the beginning of the modern digital economy, drivers working for the car-hailing company Uber caravanned into downtown Dallas and parked their cars in front of the company’s office demanding to talk to the management. The drivers were furious after they had been informed by an e-mail that Uber had decided to lower their rates, which they claimed now barely covered their expenses to petrol and wear and tear. The drivers stayed in front of the Uber office for three days until they were released from their contract.
The demonstration in Dallas was just one of many similar protests by Uber-drivers who were unorganised and dissatisfied with working for a company that sets rates and rules and refuses to negotiate their terms. But in December last year, the City Council of Seattle as the first city in the US granted the drivers permission to organise and form a unions and 230.000 drivers in California sued Uber for treating them as independent contractors and not employees who should be reimbursed for expenses and tips. The lawsuit was settled in April this year and Uber got off lightly when they promised to pay the drivers a compensation of 100 million dollars and allowed them to solicit tips from customers in the future – but kept them classified as contract workers instead of formal employees.
There are more than a hundred years between the home working chain makers in Black County in England and the million freelance Uber drivers across the world but the challenge is the same; it’s about creating sustainable relations between a new age of freelancers and modern powerful companies. People working for Uber, Airbnb and similar companies in the gig-economy are the chain makers of the 21st century. The world of work is returning to structures we have not seen for a very long time and it’s not a coincidence that it happens now. As in 1910 we are about to move into a new age with new structures and new rules and the English industrialists of the previous century are about to be replaced by Silicon Valley technologists.
In the UK 15 % of the working force are now self-employed; that is 4.6 million people – twice as many as 30 years ago – and the number is expected to grow to 5 million by 2018. According to an Intuit report 40 per cent of the US workforce will be freelancers by 2020. Two out of three new jobs in the UK over the recent years are down to self-employment and nothing indicates that this trend will weaken.
Unfortunately, being freelance or self-employed does not automatically lead to increased income. On the contrary, since 2008 the average income for self-employed people in the UK has dropped from £15.000 to a shocking £10.400 a year according to the Office for National Statistics and 83 per cent of the freelancers now earn below the average of employed people.
And if you ask self-employed people most will tell you that competition out there is fierce and that there are apparently more entrepreneurs than work. Take the ride-hailing companies. In California alone there are probably about 300.000 people driving for Uber and Lyft and in San Francisco the established taxi companies have lost two third of their passengers. The market is not booming – competition is! And recently, Google, Ford and Uber formed a lobbying group for self-driving cars. Soon the jobs of home-working Uber-drivers will be on the line.
The economist Guy Standing has named the new growing class of the gig-economy: “The Precariat”. They live a precarious existence, lacking the predictability, job security, material and psychological welfare that we created in the 20th century welfare society. We are now facing a time when a growing number of people like nomads will have go from one gig to the next, never knowing where the money will come from.
This is not necessarily a bad thing – it gives society an enormous flexibility and creates an opportunity for renaissance individuals to shape their own existence. We just have to prepare for it and maybe start all over again forming a new modern society. We have to create new strategies for organising our labour markets – maybe “market” is even an obsolete term – we have find ways of providing financial and social support to the risk takers and give them a voice.
About Nils Elmark
Nils Elmark is founder of the business and finance consultancies Incepcion and BankingLab.london. He is a futurist who helps companies create better and braver dreams. Nils has written three books on his old Remington typewriter and is a great motorcycle enthusiast.
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