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Cleaning up the black market

There has been a lot of chatter in the press lately about workers’ rights in the sharing economy.

These articles, in case you missed them, made the argument that skilled people (e.g. cleaners) using online platforms to find work are disadvantaged as they miss out on sick pay, holiday pay and other rights afforded to them by fixed-term employment.

This is true. Sharing economy platforms do not offer the aforementioned HR benefits, because to be an employer in the traditional sense is not their design or their purpose.

However, this emphatically does not mean that workers are being exploited as a result of these platforms’ business models.

Commentators who take this position fail to acknowledge that, contrary to encouraging exploitation, shared-economy platforms lift cleaners out of the black market – where they have no rights and little safety – and instead empower them with self-employed status.

Risks and cost of the black market

Helping cleaners out of the black market is in everyone’s interest: the cleaners, our Government and all platforms in this space.

Most cleaners operating in the informal economy do so due to lack of opportunity, poor pay, or lack of resources or knowledge, rather than through a conscious choice to avoid working officially. These people aren’t trying to beat the taxman for the fun of it – they often feel they have no other choice.

The black market also leaves cleaners vulnerable to exploitation, including facing customers refusing to pay or settle their bills. It has been noted that some cleaners have been made to work in dangerous conditions.

It is estimated that the UK black market (including cleaning) is worth £150bn, costing the UK Government hundreds of millions of pounds in taxes, a proportion of which could be clawed back through opening up the cleaning industry to thousands of self-employed, empowered cleaners.

Pulling workers out of the black market

Used correctly, the sharing economy can help these types of workers to become self-employed and, as a result, valuable contributors to the formal economy.

Using legitimate online marketplaces allows cleaners to:

  • Market themselves to a wider audience than word of mouth allows

  • Clearly clarify and record the agreed service with the customer

  • Enable a clean and transparent payment transaction

  • Take control of their calendar and working hours

  • Offer insurance to protect both themselves and the customer

Being paid through a marketplace also creates a transaction record (they are usually paid directly into bank accounts) that encourages workers to declare their earnings and pay taxes and National Insurance.

In turn, as with traditional self-employed individuals, this then entitles them to claim benefits such as Employment Support Allowance should they may be unable to work for health reasons or similar.

It is true to say that those who work in sharing-economy marketplaces and who become micro-entrepreneurs must practise the same disciplines as the ‘traditional’ self-employed, including making provision for pension, sick pay and holidays. This is not an issue unique to the sharing economy, and nor is it evidence of exploitation.

Professionalising the black market

Chatter is good as it helps to educate and move a market forward.

But it’s important to note that sharing economy startups for skilled workers have a different purpose to the traditional agency model – facilitating the success of the people who work on its platform as self-employed individuals.

If the sharing economy model becomes more widespread, then black markets in many different industries (and not just cleaning but also gardening or handy men) will start to be addressed, and more workers will be brought out of the informal economy and encouraged to become micro-entrepreneurs with self-employed status, with all the benefits that brings.