Uber drivers could be out of pocket in the short run, says IEA expert
17 March 2021
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Responding to the news that Uber will now pay drivers a minimum wage, holiday pay and pensions, Professor Len Shackleton, Editorial and Research Fellow at free market think tank the Institute of Economic Affairs, said:
“Uber has, as expected, accepted the Supreme Court judgment and is offering the benefits to which worker status entitles drivers. This will be costly to the company, and fares may ultimately rise by about 30 per cent.
“Although they will be entitled to sick pay and holiday pay, drivers may well end up out of pocket in the short run. The entitlement to National Minimum Wage hourly rates is an illusory benefit, as most were earning more than this anyway.
“Despite Uber’s claims to the contrary, drivers may end up paying higher tax and national insurance if the tax authorities query their self-employment status. The pension scheme possibility may seem attractive, but analysts have argued that those on low pay gain very little from auto-enrolment as management charges are disproportionate to the small amounts invested.
“If prices rise, the number of hires may recover from lockdown levels more slowly, which also could leave drivers worse off. Many may end up doing more work for less regulated and cheaper minicab firms.
“More generally, a signal is sent out that innovative employment possibilities must increasingly be shackled with regulations and higher costs. This is a worrying message at a time when we face the biggest employment challenge in decades.”
ENDS
Notes to editors
For media enquiries, please contact Emily Carver on 07715 942 731 or ecarver@iea.org.uk.
IEA spokespeople are available for further comment and interview.
For more about Uber and the gig economy, click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“Uber has, as expected, accepted the Supreme Court judgment and is offering the benefits to which worker status entitles drivers. This will be costly to the company, and fares may ultimately rise by about 30 per cent.
“Although they will be entitled to sick pay and holiday pay, drivers may well end up out of pocket in the short run. The entitlement to National Minimum Wage hourly rates is an illusory benefit, as most were earning more than this anyway.
“Despite Uber’s claims to the contrary, drivers may end up paying higher tax and national insurance if the tax authorities query their self-employment status. The pension scheme possibility may seem attractive, but analysts have argued that those on low pay gain very little from auto-enrolment as management charges are disproportionate to the small amounts invested.
“If prices rise, the number of hires may recover from lockdown levels more slowly, which also could leave drivers worse off. Many may end up doing more work for less regulated and cheaper minicab firms.
“More generally, a signal is sent out that innovative employment possibilities must increasingly be shackled with regulations and higher costs. This is a worrying message at a time when we face the biggest employment challenge in decades.”
ENDS
Notes to editors
For media enquiries, please contact Emily Carver on 07715 942 731 or ecarver@iea.org.uk.
IEA spokespeople are available for further comment and interview.
For more about Uber and the gig economy, click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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