Two bits of potentially important news from California the birth place of the gig economy and home of much of the world’s original disruptive technologies.
In today news Uber, having gone public earlier this year, has announced it is now cutting back 435 workers in their US world HQ based product and engineering teams, having dismissed 400 from their marketing team in July. The move is being made to try and turn a profit for Uber and its new shareholders, something which they have yet to achieve since their launch there in 2011.
Rather than disrupt and then the winner takes all, Uber is perhaps now suffering from the growth in its own disruptive competitors, who are equally struggling to make profit. It is hard to feel too sorry for any of the gig businesses in such circumstances and almost impossible to predict who, if anyone, will eventually be left standing to take all.
Winning all may also just have got markedly more difficult, following yesterday’s California courts ruling that contract workers must be treated as employees, entitling them to appropriate employment rights and protections. This drives a coach and horses through the gig-based business model of many operations in various sectors, impacting on an estimated 1 m plus workers in California alone. A series of failed attempts to gain similar recognition in other US states is likely to be re-energised by the ruling.
What difference, if any, does Uber’s difficulties and the Californian State ruling on gig employees make in the UK? None directly, but if the business model isn’t working as well as we were perhaps led to believe for a leading world player like Uber and California, the birth place and leader in the gig economy, has now had cause for serious second thoughts about the wider social and economic consequences of the employment model underpinning the gig economy, then surely that should give cause for many more Countries and jurisdictions to stop and reconsider their own relationship with the gig economy?
The gig economy is creating new jobs and is accounting for much of the recent growth in UK employment, but are the business and employment models driving that growth, themselves sustainable and having disrupted the old way of doing business could they themselves collapse?
The reason we of course need to be interested is that gig economy is that it increasing touches on many businesses involved in tourism and many more of those businesses that are involved within the wider visitor economy.