In NI as UK generally, atypical working/gig economy grows. The Taylor Review attempts to promote equity but could involve some large tax (NICs) increases on employers
Matthew Taylor published his Review “Good Work” on Tuesday- his study had been commissioned by the May Government last Autumn following the Conservative “U-turn” on a possible increase in National Insurance Contributions by the self-employed.
The Taylor Review is of great interest given recent trends in the labour market- we have seen the development of a “no man’s land” between “employment” and “self-employment” as traditionally understood. Since 2008 the number of Zero Hours Contract workers and agency workers in the UK has increased by 45% (Resolution Foundation July 2017, Work in Brexit Britain. Here in Northern Ireland, according to the Ulster University Economic Policy Centre’s recent Outlook since 2012 part-time employment has been growing at a faster pace than full-time (8% part-time growth compared to 6% full-time) and the part-time self-employed have grown by 12,000 compared to a growth of only 5,000 amongst the full-time self-employed.
All this may be indicative of the so-called “gig economy” . Just over one million people may now work in that sector across the UK. Although, as the Resolution Foundation pointed out last week, the growth in atypical employment in the UK and Northern Ireland is probably a broader phenomenon than the gig economy.
Some of this growth does reflect a desire by workers and/or businesses for greater flexibility in terms of the number of hours worked (the Taylor Review quoted some survey evidence suggesting that two-thirds/three-quarters of those working in the gig economy were reasonably satisfied with their working conditions).
At the same time, some of the growth in atypical employment probably represents “precarious” employment and is something which some people have been constrained to accept. Taylor was concerned to promote greater equity across categories of employment and to attempt to promote more security or career progression for those in atypical employment.
The Taylor Review therefore recommends a much clearer definition of status for those working for “platforms” (e.g. the gig economy businesses like Uber and Deliveroo) as “dependent contractors”, a gradual move away from “cash payments” and clear application of the National Minimum Wage to piece work in the gig economy.
The single most controversial recommendation is likely to be the suggestion that businesses which use “dependent contractors” should start to pay employers National Insurance Contributions for those workers.
From the point of view of promoting equity, the Taylor Review will probably be applauded. The practical problem will be the extent to which it implies higher costs to businesses which in turn might lead to reduced ability to employ workers. This difficult trade off will be especially challenging for the Northern Ireland economy given that we have generally lower levels of wages and productivity