..by Terrance Hunsley
A short time ago an American journalist Steven Hill wrote about the issue of Uber and Lyft not treating their workers as employees, and thereby depriving them of basic social protection like employment insurance, health insurance and pension savings. The new platform businesses prefer a contractual relationship with their workers whereby they pay only for direct services.
Of course, this is not new. For some time now, many businesses have been getting out of the role of employer. This does not just reduce their costs. It removes the shared risk (and shared security) which used to bind employers and employees together. Workers used to depend on the employer to succeed in order to have a good pension. They also shared risks with each other under workplace health and disability insurance plans. And businesses used to depend on the loyalty of their workers. Governments relied on this interdependence to sustain the social security systems. But labour has become a less important factor in service delivery and manufacturing and the system has broken down enough that a new kind of system is needed. Since unions have not succeeded in establishing themselves in this area, the need falls to government.
Hill recommended that the state set up a security account for every worker. Any business that purchases their labour would be required to make state-set contributions to that account to pay for the benefits normally attributable to employment. He called these accounts “portable safety nets.”
Each contract worker would have an Individual Security Account into which any business that uses that worker would contribute an amount pro-rated to the number of hours worked for that business. Those funds then would be used to pay for income security.
Uber came up with a similar idea themselves. Except that in the US, they had quite a different estimate of what value their contributions might be. As Hill says;
It would seem like this has the makings of a win-win solution, and indeed has been proposed by Uber and Lyft in other state legislatures, notably New York, Washington and New Jersey. But the legislation died in all three states because the companies came to the table with a measly offer – rather than something close to the 20% of a worker’s wage that is necessary to provide an adequate safety net, Uber and Lyft offered around 2.5%.
Now, Uber is proposing something similar to Canadian provinces, but not specifying the amount:
Today we’re introducing Flexible Work+: A Modern Plan for App-Based Workers. This new proposal would help drivers and delivery people who earn through app-based work receive new benefits and protections—while still keeping the flexibility they value.
We’re asking provinces to require our industry to provide:
- Self-directed benefits based on hours worked, allowing drivers and delivery people to withdraw cash for the benefits they want to fund. Items like dental or vision care, RRSPs, or tuition and education expenses.
- Enhanced worker protections through additional training and tools to help keep workers safe and protected while driving and delivering.
…But to make a real difference, reform must be industry-wide. Every person that signs up with a platform company should be able to get the same benefits and protections, no matter the company, and count on the same set of rules to hold these companies accountable. We invite policymakers, platform companies, and social representatives across Canada to come together to set this new standard for app-based work.
So Uber is also recognizing something that governments should consider more seriously: If the regulations establish a fair base for wages and benefits that applies equally to all, then no one suffers a competitive disadvantage.
Another idea whose time has come
It seems to me that the concept has merit and could be implemented in conjunction with an idea I put forward in a report that I wrote for the Pearson Centre entitled Future of Work Policies for the 2020’s, I suggested a system where each person in the country should have a Comprehensive Personal Account, which would be hosted and managed by the Canada Revenue Agency. It could house the information required for individuals to manage their ‘portable safety net’.
The safety net portion should require contributions to cover EI, CPP, disability insurance, training credits, and adequate retirement savings. It should likely equal something like 30% on top of the pay received by the worker. Workers should also have an option, if they wish, to invest the retirement savings portion (above the mandatory CPP contribution) in the CPP investment fund. They would pay the (prorated) low management fees that the CPP incurs, and enjoy the excellent returns.
But the Comprehensive Personal Account could have a broader purpose as well. We might envisage it a bit like our individual online bank accounts. Mine has both up to date and historical figures for my savings account, checking account, my RRSP account, my TFSA, my credit card charges, my investment accounts, my mortgage, etc. When I take out a loan it shows how much I owe and how much I have paid back. It calculates the rate of return on my investments every day. People can transfer money into the account and I can transfer money out. In other words, my complete financial relationship with my financial institution is right there in front of me.
So why not have an account that shows our complete financial relationship with government? All of our contributions could show there. EI, CPP, Income taxes, etc. Employers could contribute their contributions there. Student loans would show there. So would benefits that we receive or are eligible for – EI, Parental Leave, OAS, CPP, our gas tax credit and other credits like disability, Canada Child Benefit, Canada Worker’s Benefit, family caregiving, etc. We could see the prorated value of our medicare coverage, of costs of education for our children. We could apply for any benefit, such as a student or adult training loan, with the touch of a link.
Such an account would let us know not only our payments, but the value of government services that we receive. And when we move from job to job, it would still be with us, so that contributions and benefits accumulate.
There may be some who will cry Big Brother and reject the idea. However, the information is there now in corners of various departments and if Big Brother wants it, he can get it. For citizens it would be easier to deal with the whole of government through one account. And it would be good for us to know what we get for our taxes and contributions over the course of our life. It might provide for a better appreciation of government and a better attachment to democracy.