Government Interference Will Destroy Gig Economy

As part of our recent business trip to Dublin, Ireland, we spent a few days in the UK. A ‘few’ was enough. One would have been better.

None would have been best.

To say that the country is slipping briskly into 1970s-style socialism would be an understatement.

A report in yesterday’s Financial Times provides more evidence:

Britain should extend the minimum wage to self-employed workers who do not control their rate of pay, such as many of those in the gig economy, as well as traditional sectors such as hairdressing, according to a think-tank.

This follows on from the decision in a UK employment tribunal last year that ruled in favour of Uber drivers. From the Independent:

Uber drivers are entitled to receive the National Minimum Wage and holiday pay because they are workers, not self-employed, a London employment tribunal has ruled.

Regardless of the merits, it seems to us that Uber drivers are turkeys who have just voted for Christmas.

One of the supposed benefits of the so-called ‘gig economy’ is that people get to choose their own hours. Also, the free market appeal of the ‘gig economy’ is that it’s free of the shackles and regulations of government. A comparison being Uber versus the taxi industry.

However, it seems that when those who embrace the idea of the ‘gig economy’ actually start working in the ‘gig economy’, they don’t like it. They want government interference and regulations, because they think it will help them.

The reality is likely to be the opposite. Once governments and bureaucrats get their claws in, there’s no letting go. Soon enough, any competitive and pricing advantage held by the ‘gig economy’ businesses erodes.

Ultimately, with no price differential, there is less incentive to use the previously lower-cost ‘gig economy’ service. That likely means less demand for Uber, which means fewer drivers.

The big disrupter is no more. Government wins. The free market loses. Drivers lose.

The turkeys vote for Christmas. They always do.


Kris Sayce,
Publisher, Markets & Money

Editor’s note: This content originally appeared in Port Phillip Insider.

Kris Sayce, dubbed the ‘Jeremy Clarkson of Australian finance’, began as a London finance broker specialising in small-cap stock analysis on London’s Alternative Investment Market (AIM). Kris then spent several years at one of Australia's leading wealth management firms. A fully accredited advisor in shares, options, warrants and foreign-exchange investments, Kris was instrumental in helping to establish the Australian version of the Markets and Money e-newsletter in 2005. He is the Publisher, Investment Director and Editor in Chief of Australia's most outspoken financial news service, Markets & Money.

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