Spain Versus the Gig Economy
Spain’s left-wing government is clamping down on bogus self-employment — and the gig companies are angry.
(Photo by Jack Taylor/Getty Images)
In 2021, Spain passed pioneering legislation against the use of bogus self-employment in on-demand delivery work. The Riders’ Law took aim at the gig economy model of hiring couriers as freelancers for per-delivery pay — a practice which had allowed digital platforms like Deliveroo and Uber Eats to massively drive down labour costs but left workers facing extreme precariousness and below-minimum wage. Under the new law, app-based couriers are instead classified as employees of the platforms, thus becoming entitled to standard workers’ rights such as a fixed hourly wage and sick pay.
Such uncompromising legislation targeting gig economy exploitation was a first in Europe, and for a minority of couriers, the law quickly translated into substantive material benefits. ‘My quality of life has improved so much since gaining employee status,’ Fernando García Pallás, a Madrid-based delivery rider and trade unionist with the Unión General de Trabajadores (UGT) tells Tribune.
I now have a weekend or, at least, I only have to work five days a week; something unthinkable before. I also have a month’s paid holiday, a guaranteed forty-hour work week and [the delivery platform] has to provide me with a motorbike and uniform.
These conditions should now be the norm for all platform couriers in Spain. But since it was passed two years ago, the Riders’ Law has also been dogged by non-compliance, with the country’s two largest delivery platforms, Uber Eats and Barcelona-based Glovo, continuing to employ more than 80 percent of their riders as freelancers in open defiance of the legislation. Of the 30,000 on-demand couriers in Spain, only approximately 5,000 actually have employment status.
This corporate revolt has shown how difficult it is to impose regulations on major platforms, with Spain’s left-leaning government continually having to play catch-up in terms of the country’s outdated sanction regime, as well as having to operate with the Labour Inspectorate, which had been gutted during nearly a decade of austerity.
As this standoff has rumbled on, many in the international media jumped at the chance to dismiss Spain’s law as a failure. According to Maria Alemany Ortiz and Will Hecker in Huck, the first attempt in a ‘European country to significantly regulate the gig economy’ has ‘backfired’ while Wired’s Stefania Gozzer claimed that ‘couriers’ conditions are worse than ever’ and that Deliveroo’s exit from the country was proof the legislation ‘didn’t work’.
These conclusions are not shared, however, by the country’s largest trade unions. While acknowledging that the platforms ‘are currently making a mockery of the law’, Daniel Cruz, an analyst with the Spanish trade union Comisiones Obreras, insists to Tribune that ‘the legislation itself is sound’, leaving little margin for platforms to argue against an employment relation with couriers. ‘With sufficient political will to face down the platforms, it can be fully implemented,’ he adds.
But as left-wing labour minister Yolanda Díaz looks set to bring criminal charges against the companies’ executives, the stakes are high: Spain has become a test case in enforcing employment rights against gig economy giants, and the European labour movement cannot afford for it to fail.
Growth at All Costs
García Pallás explains:
Deliveroo was the first company in Spain to move to a per-delivery pay model in 2016, which, in turn, led to the initial attempts at collective organising in the sector, as well as the first legal actions brought by riders against such fraudulent practices.
Yet, beyond that, he also sees Deliveroo’s move as ‘initiating a race to the bottom in the sector’, which would ultimately see it unable to compete with the likes of Glovo in terms of further innovations in cost-cutting and lower pay.
Pallás insists:
Deliveroo itself was very clear that the Riders’ Law was not the determining factor that forced it out of the Spanish market — that is a myth, but rather it was down to its rivals’ ability to reduce prices yet further and thus erode its market share.
Cruz agrees, and notes:
[T]he on-demand delivery sector is defined by such brutal competition that the only way for these platforms to conceive of a path to elusive profitability is by driving out the competition and then, from a near monopoly position, being able to increase prices to sustainable levels.
Uber pioneered this ‘growth at all costs’ business model in the ride-share sector; fuelled by venture capital investment, the delivery platforms’ priority has been to achieve market domination, not reach long-term financial stability.
In this context, defying the Riders’ Law was seen by Glovo as a further means to gain a competitive edge over its rivals as it announced in August 2021 that, unlike other platforms, it would continue with a freelancer model under the new legislation. This was justified in terms of tweaking how its app functioned for riders, giving them a degree of autonomy around pricing and hours. Glover argued this meant the relationship with riders did not constitute formal employment.
Even as Díaz strengthened the Labour Inspectorate’s sanction regime last year so that fines jumped from the initial range of between €5 million and €8 million to upwards of €80 million, Glovo continued to hold out — and was then joined by Uber Eats, which reverted to a self-employment model in September 2022. Glovo has currently accrued over €200 million worth of fines for its past use of bogus self-employment, and its parent company, the German multinational Delivery Hero, estimates the company is facing a further potential €200 million in the coming months — a combined figure which nearly reaches the company’s total 2022 revenue of €490 million.
‘Glovo keeps delaying payment as it launches legal appeal after legal appeal and drags out cases in the courts,’ García Pallás explains. ‘But beyond that, the competitive advantage non-compliance gives the company means it is calculated to still be worth the cost of eventually assuming these massive fines.’ Indeed, Just Eat, the largest platform that is complying with the law and which last year signed a collective agreement with the unions, estimates that each delivery costs it €10, while for Glovo and Uber Eats the figure is somewhere between €4 and €5.
Enforcing the Law
In October, the head of Comisiones Obreras union, Unai Sordo, described Glovo and Uber Eats actions as ‘nearly seditious’ and warned that as ‘financial sanctions do not in themselves have a deterrent effect’, the government now needs ‘to resort to criminal law’. Frustrated at the slowness of the government’s actions, grassroots riders’ groups have already launched criminal lawsuits against the two platforms, including accusing Uber Eats of engaging in criminal organisation.
For her part, Yolanda Diaz has insisted that ‘no company will be allowed to remain outside the law’, but while she is invested heavily in the law’s success, her ministry has repeatedly underestimated the resolve of the platforms. ‘The government has introduced three major reforms around the labour code in the wake of the Riders’ Law; but these came slowly one after another as each preceding measure failed to dent the companies’ continued resistance’, García Pallás explains. Alongside the higher fines, the socialist Unidas Podemos coalition also changed the law, mandating for future financial penalties to be paid upfront before any appeals process, as well as making false self-employment practices a criminal offence for the first time in Spain.
Pallás insists:
If other countries want to learn something from the Spanish experience, it is that you need to have these types of necessary legal tools already in place so as to get to grips with the scale of the fraud being perpetrated by the platforms.
Now that the labour ministry has issued a final warning to Glovo and Uber Eats, criminal charges are expected in the coming months.
According to Pallás, who is president of the workers’ committee in Glovo Madrid, this means very little for many of those working as freelancers.
Unlike initially when platforms recruited among Spanish students, two-thirds of riders are now migrants and many are undocumented. On average, they only work with Glovo for somewhere between six and nine months as they sort out their residency or seek out more stable employment. For them, our struggle can seem quite abstract.
Yet he points to the example of one of his colleagues who was hit by a rubbish truck at the start of 2023, to demonstrate what is actually at stake:
Luckily, like me, he worked in Glovo’s grocery delivery service, which is the part of the company where riders are directly employed, and so was eligible for the eight months of sick leave he needed to recover from his three fractured vertebrae. If he had been a freelancer, what would he have done? It’s very common for self-employed riders to continue working after accidents, even with broken bones. What choice do they have?