Opinion Pieces

Unions fail to deliver for workers in new economy

Big unions are continuing their war on business and workers. This week, the Transport Workers’ Union (TWU) is claiming that Deliveroo is engaging in sham contracting and underpaying its workers. A former Deliveroo driver is working with the TWU, alleging that he was paid about $10.50 an hour. However, according to company figures, Deliveroo riders earn $22 an hour on average, above Australia’s minimum wage.

The TWU has misrepresented and skewed the situation to suit their antibusiness, anti-worker agenda. It is claiming the food delivery company is stealing from its workers through underpayment and denying them rights. Deliveroo engages its riders as independent contractors. It does this in order to meet the demands of the drivers who constantly tell them that they want flexibility and freedom above all else. That would not be possible if riders were employees of the company.

This is supported by the majority of Deliveroo drivers. Seventy eight per cent responded in a survey that the main reason they work for Deliveroo is for flexibility. The flexibility of the contracting arrangements means that riders can choose when and how they work. The former driver suing Deliveroo certainly benefited from this flexibility.

The driver was only a rider for 10 months, working 28 hours in total over this period, which is an average of 1.75 hours a week. This contrasts to the average Deliveroo rider who works 15 hours a week. Flexible work is creating jobs that might not otherwise exist. Research from Capital Economics reveals that Deliveroo added 8000 additional jobs to the restaurant sector and the  economy as a whole.

This is not the only case which has come to light in previous years. In 2017, the Fair Work Ombudsman launched an investigation into the employment practices of Uber. It found that the level of freedom granted to Uber drivers meant they should be classified as contractors, not employees. Sandra Parker, the Fair Work Ombudsman said that “Uber Australia does not require drivers to perform work at particular times, and this was a key factor in our assessment that the commercial arrangement between the company and the drivers does not amount to an employment relationship”.

In the UK, another big union also went against Deliveroo. This case failed. The judge found that Deliveroo and those who choose to ride with the company are not in an employee-employer relationship because of the way the riders work and the freedoms given to riders. Amending legislation or contracts to force companies such as Deliveroo to employ riders would have a wide range of effects on business, consumers and the broader economy. It would remove the flexible work opportunities available to people who can participate in the workforce while having study commitments, caring responsibilities or in a career transition. It would take away the opportunities for restaurants to broaden their reach to new customers.

US studies estimate that the cost of recategorising gig workers as employees instead of contractors would increase costs by 30 per cent or more. This could make these jobs unviable. Either that or the cost could inevitably find its way to consumers. Instead of supporting rigid, traditional employment structures, unions should embrace the opportunities of the digital age.

Many Australians want the flexibility that Deliveroo offers. Just because these people aren’t union members, they shouldn’t have their jobs abolished. Once again, big unions show us that their main focus isn’t workers, it’s themselves.

Andrew Bragg
Liberal Senator for New South Wales

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