Cakeonomics Event: The Gig Economy Debate

PCES recently had our third ‘Cakeonomics’ event on the gig economy. Speaking were Jack Hunter (from the Institute for Public Policy Research) and Sam Dumitru (from the Adam Smith Institute), two people one would expect to have very different views about the merits and drawbacks of the gig economy.

Dumitru – who used to be a student here at Manchester – argued that the gig economy has brought immense benefits to both consumers and workers. He cautioned against only considering the well-being of workers, which would ignore the lower prices, better matching of demand and supply and increased convenience brought by companies such as Uber and Airbnb. He further argued that although these companies have perhaps not been competing on a level playing field, this was largely due to over-regulation of existing industry, particularly hotels, and so deregulating them would make competition work more effectively.

He did, however, acknowledge that there have been some issues with increased insecurity of workers in the gig economy, and reduced worker’s rights. In response, he cited surveys showing that most Uber drivers are happy with their flexible contracts; he also argued that for many of them, the gig economy was better than the alternative.

Hunter’s overarching point was that governments have proven under-prepared to deal with the changes that have occurred in the labour market. Gig economy workers are not really ’employees’ in the traditional sense that, say, factory workers might have been and so the company is less invested in their development. Although there are benefits to this flexibility, the state needs to adapt to alleviate the corresponding lack of security while retaining these benefits, and ensure training & development prospects for gig economy workers.

There was a degree of agreement between the two on this point, which just goes to show the benefits of debate between two people who seem to be on different sides of the issue. The discussion raised interesting questions about how to address the problems created by the gig economy while harnessing its benefits. Should we regulate Uber more, or deregulate other cab firms? Should the government directly assist gig economy workers, or should that burden fall on the companies themselves?

As always, any comments – both from those who attended and those who didn’t attended – are welcome!

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