Europe could see the decline of its concert economy

At its debut on the stock market, the British food delivery company Deliveroo saw its share price by 30% while questions materialized about workers’ rights for its riders.

In the days following the listing, the company revised its share price, as some investors chose to avoid IPOs in connection with these concerns.

Deliveroo is just one example of a larger “giant economy” that is under increased control. In recent weeks, the industry has been shaken by a series of court rulings and regulations in Europe that could ultimately support the business model.

Uber’s loss to the UK Supreme Court last month forced the company to reclassify 70,000 British drivers as workers, offering them a minimum wage, paid holiday time and pension plans.

In Spain, legislators have introduced a series of measures that would recategorize gig workers as employees with formal contracts and benefits.

Meanwhile, the European Commission, the EU’s executive arm, is scrapping plans for a kind of regional reform of concert economy workers, their status and rights.

James Farrar, of the App Drivers and Couriers Union, who took the case against Uber in the UK, said there was “early triumphism”, but that this was just the beginning of a turning point in workers’ rights in the giant’s economy.

“We’re still at the bottom stage here and we’re not there yet,” he told CNBC.

“I think what was really significant about the Supreme Court ruling was that it opened up space for other claims across the concert economy to be successful.”

Other companies are preparing for change in some form, whether instigated by regulation or of their own free will.

Just Eat Takeaway, the largest food delivery company in Europe, is moving its Just Eat delivery motorcyclists into employment contracts. Prior to the merger of the companies, the pilots of the original company called Takeaway.com had such contracts.

“As part of this model, couriers are entitled to an hourly wage, are paid above the minimum wage, insured with employment and social insurance, in accordance with local law,” a spokesman said, adding that couriers are paid offers equipment such as bicycles.

In the case of Spain, market operators such as Glovo are waiting to see exactly how the legislation will turn out and how to respond.

Co-founder Sacha Michaud is not a fan of the path that Spanish parliamentarians have followed.

“It’s a pretty strict regulation, probably the strictest (in Europe), so it’s a pretty radical position in the sense that it allows very little flexibility, which is one of the things we obviously adhere to, and riders demand this as well, “Michaud told CNBC.

Michaud said Glovo would “obviously adapt to the regulations” when it comes into force, but said the company is more in favor of a middle ground between employee flexibility and the provision of benefits and security, while avoiding the label of employment.

He added that surveys of Glovo motorcyclists have shown that most people prefer a flexible model instead of stricter ones. He said this helps many riders who could work for concert platforms between their studios or other jobs.

“It should be social rights, yes, and let’s see how we can maintain flexible working conditions in this regard. It doesn’t have to be black or white.”

This middle ground reaches proposal 22 in California, passed in November last year and supported by Uber and Lyft.

It’s an approach that Uber would like to replicate in Europe. In February, Executive Director Dara Khosrowshahi published a paper calling on the European Commission to follow the mixed model, such as the one in California.

Changes to the regulatory status for workers will introduce a number of new costs. This will be in front of the mind and for smaller start-ups in space.

John Ryan, of the Gigable start-up in the UK, which connects restaurants and other companies with independent professionals, said consumers could end up feeling the burden of rising prices.

“But I think people are comfortable enough with rising prices if they know they’re going to drivers or if there’s public support for this move, but that remains to be seen,” Ryan said.

He added that the flexible model may work for some workers and others will prefer traditional employment.

“We will see how difficult it is for people to engage in obligations.”

Contracts and worker status are just a front in this battle, according to ADCU’s Farrar.

His organization also pursues initiatives regarding drivers’ access to data held by companies and what he calls “algorithmic control”.

“We see an arms race in the supervision of workers in the concert economy and that leads to problems,” he said.

ADCU is supporting two London drivers in a case they are taking in the Netherlands against the Indian company Ola. Drivers are looking for access to data held by the company, in accordance with the general rules of the EU GDPR, which they say have been denied.

Farrar said that technology like AI to monitor driver performance and determine how much work they get is a red flag. The group also calls for Uber to stop using facial recognition to check drivers.

Discussion of regulations, including at EU level, focuses heavily on employment status, Farrar said, but that the debate will need to become more nuanced on algorithms.

“I think it’s overlooked so far, but we will definitely put the issue,” he said.

“Regulators and policy makers are often the latter, rather than the latter.”