IMAGE: Ian Carroll on Flickr (CC BY)

Gig economy versus exploitation economy

Enrique Dans
Jun 17, 2018 · 4 min read

Around 10 pm on a rainy Friday night toward the end of a particularly rainy May in Madrid, I left my office at IE Business School, collected my car from the garage and began my drive home from the center of the capital, passing by, as I always do, two restaurants, Goiko Grill and Tierra

… and then, I saw them. About seven or eight Glovo, Deliveroo and Uber Eats delivery guys, huddled in the rain outside the two restaurants with their bikes and scooters, waiting for their next job. They’re not allowed in the restaurants when they come to collect deliveries because there’s no room for them. Neither of the two restaurants in question have any shelter outside, and I have to say, the sight of those people, drenched as they waited in the rain, challenged many of my perceptions about the gig economy. Whether you’re wearing rain gear or not, waiting outside a restaurant or driving a bike under such conditions is an affront to human dignity. If you have no contract, are supposedly self-employed, with no health insurance, vacation pay, regulated breaks, sick leave or other social benefits, then the term sharing economy loses its entrepreneurial and disruptive sheen and has to be seen for what it is: exploitation.

Much has been written about the harsh working conditions of the people who work for these companies, but there is no better way to understand some aspects of the so-called gig economy than to see seven delivery guys waiting in the rain. And if you take the trouble to talk to the people who bring your burger or pizza and ask how many hours they’ve been working and how much they’re going to earn that night, you realize that the whole thing is a dystopia, an affront to human dignity.

Let’s put this in perspective: at the end of last year, Glovo raised a further $30 million in a second round of financing right after a first one of $5 million. Deliveroo recently raised $385 million, upping its value to $2 billion and in a supposed fit of generosity, distributed $13.5 million in shares to all its employees… except of course the delivery people without whom it couldn’t function, because they’re not considered employees. Over at Uber Eats, the fastest growing food distribution service in the United States, ahead of competitors such as Grubhub, Postmates, DoorDash or Caviar, conditions are pretty much the same, although at least the company provides its delivery teams in Europe with free insurance that protects them in case of illness or accidents.

What kind of economy are we creating here? What is the sense of business empires that exploit legal loopholes to employ so-called freelancers, part-timers, who are in fact working full time and who have absolutely no protection in the event of an accident or illness. What started out as jobs for people to do in their spare time to earn some extra cash and that had the advantage of being flexible, has instead taken many people back a century to the times when workers had no rights or representation.

In the UK, Pimplico Plumbers, the largest independent plumbing company in the UK, with revenues of more than 20 million pounds, has been sued by Gary Smith, a plumber who worked as, in theory, an “independent contractor” between August 2005 and April 2011. The outcome of the case, as befits a decision by the highest judicial body in the United Kingdom, could have important consequences: after several rounds of appeals, the Supreme Court has ruled that the company should have treated Smith as an employee entitled to paid vacations, and has backed his decision to sue the company under the laws of protection against discrimination, in a decision that could have numerous ramifications for other companies. The court said that Smith was not self-employed or an independent contractor, but was paid exclusively by and worked exclusively for, Pimlico Plumbers

At a certain point in every evolutionary process, we have to stand back and analyze what is going on. If you work for a company day in, day out, doing the same thing for the same amount of money each month, then you are employed by that company, and as such, your employer has responsibilities toward you. And even if you work part-time, on an occasional basis, you are still entitled to some compensation in the event of accident or injury while on the job, or at least, to ensure that you are not overworking yourself to death. Blockchain-based solutions, for instance, could be useful to bring a bit of traceability into a gig economy that seems to obviously need it.

There is a great deal to be said for flexibility, and it can certainly help economies function better. But there is no place for flexibility in a modern economy when it translates as exploitation. Furthermore, we already have laws that need to be applied to companies whose business models are clearly built on exploitation. Progress must be progress for everybody, regardless of whether it affects the bottom line. As I realized that rain night a couple of weeks ago, the line between the gig economy and exploitation is not that fine after all.

(En español, aquí)

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at since 2003)

Enrique Dans

Written by

Professor of Innovation at IE Business School and blogger at

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at since 2003)

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