It’s a term that the world has been listening to and reading about for more than four years. Ever since the campaign leading up to the 2016 referendum, business leaders and economists have been conjecturing about the short and long-term effects of Britain’s departure from the UK.
Now that a trade deal has finally been agreed on, experts are taking stock of what those negotiations really mean.
As things stand right now, many economists hold a pessimistic view of Brexit’s impact on the British economy — particularly for gig workers and their rights.
Tariff-free Exports and Imports of Goods
One of the main sticking points in the Brexit negotiations over the last few years has been the desire for the UK to retain tariff-free exports and imports of goods, while limiting the free movement of workers. In fact, one of the main goals of Brexit campaigners was to reduce the number of low-skilled, low-wage workers entering the UK. By looking at traditional labor data, these types of workers predominantly fell into the farming, catering, nursing and care categories.
These lower skilled and lower wage workers are also a large portion of the British gig economy. According to research from the UK’s Department for Business, Energy & Industrial Strategy, about 2.8 million people worked in the gig economy in Britain over the last 12 months. Those workers were generally younger, with 56 percent aged between 18 and 34. Their most common type of gig work was providing some form of courier service (rideshares, food delivery, last-mile transport, etc.), earning them an hourly income of less than £7.50.
This puts international gig workers in Britain square in the crosshairs of new, limiting immigration laws.
And it’s not just expats currently residing in the UK who are worried about the impacts. Business owners are concerned that the British gig workforce won’t pick up the slack when their international cohorts are no longer able to work.
According to Ana Andres, co-founder of the independent cleaners platform TidyChoice, a gap in gig work demand and supply is already forming. On her platform, she typically sees 10,000 applications per year.
“Currently, only 40 percent of our applications come from UK nationals. I am worried that without new workers coming into the UK, the [gig-based cleaning] sector will shrink and consumer prices will inevitably increase.”
– Ana Anders, TidyChoice
Freelancers in the UK Generate £130 Billion for the Economy
Such a gap in labor, followed by market contractions and consumer prices increasing around the gig economy, could have major implications for the broader British economy. It’s currently estimated that freelancers in the UK generate £130 billion for the economy.
Beyond worker shortages and the acute economic impact of limiting work visa programs, another knock-on effect of Brexit is the uncertainty around worker rights and safety.
Under the current trade pact, the UK and EU agree to coordination of social security benefits for their citizens who are working in the other’s labor market. This covers pensions, sick leave, maternity leave and other benefits.
However, workers rights and their safety standards have fallen into a considerable gray area according to the Institute for Public Policy Research. While both sides have agreed on a new process for safeguarding a level playing field, that process sets an incredibly high bar to prove that one side is playing unfairly.
In theory, the UK could try to make itself more attractive to business investment by allowing fewer worker protections – which means less cost to businesses. This could be achieved by working in the margins to reduce employer safety requirements, lowering climate goals, or simply not keeping up with the EU’s implementation of progressive worker rights legislation.
Brussels does have some recourse in this situation, however it requires working through a highly bureaucratic process. Complaints must meet a set of strict criteria and be argued before an arbitration panel. Should an unfair market advantage be discovered and confirmed by the panel, the aggrieved party has the opportunity to impose tariffs on the other in order to rebalance the relationship. Although, since the panel will be made up of foreign judges, rather than those on the European court of justice (in an effort to limit bias), the IPPR said that these “rebalancing measures are only likely to be used in a rare number of scenarios.”
With only a loose threat of punishment, the EU and UK could look to gain the upper hand on each other slowly from within the bureaucratic morass. Think: death by 1000 paper cuts.
Given the doom and gloom that Brexit can conjure, it’s important for gig workers to identify any silver linings. While there certainly are clouds of uncertainty, that also means there is opportunity.
Freelance and gig workers have the advantage of taking on temporary work – meaning they aren’t tied down to one job role, employer or location for too long. That flexibility provides these workers with more options in a market transition period.
According to writer Kareen Friedman, who covers freelance news for the blog Payoneer, workers would do well to diversify their work portfolio and client base right now.
“Not putting all of your eggs in one basket will make sure that, if one aspect of your business dips, others will make up for the loss.”
– Kareen Friedman, Payoneer
A point she likes to remind all freelancers and gig workers is to ensure you are financially set up to receive payment from clients. Particularly for international workers, it pays to seek financial guidance, or even talk to your bank, to ensure that you will be able to properly invoice and access funds for the work you perform.
Surely, despite some silver linings in the short-term gig economy, workers will need to adapt to new marketplace dynamics. For many EU nationals working in the British gig economy, it may likely mean relocating either to Ireland, or on the other side of the English channel.
The Future of Work Institute will continue to monitor Brexit’s continuing impact on the wider European gig economy, and we will report on new trends as soon as they emerge.