Sachem Head is a popular peak for walkers on the Pocumtuck Range, which is part of the Appalachian Mountains. A little known fact about the Appalachian Mountains is that they run across three countries: the US, Canada and France, the latter because of the 96-square mile archipelago of Saint Pierre and Miquelon, which is a French 'overseas collectivity' just off Canada's Atlantic coast.Why are we telling you this? Because Sachem Head is also the name for a New York investment firm which has just taken a 3.6% stake in Delivery Hero, the German multi-national which owns such brands as Foodora, Glovo and FoodPanda.Sachem Head's founder and manager Scott Ferguson is known as an "activist-investor", which means he doesn't invest in companies to passively watch the value of his asset rise, he invests because he thinks the company is under-performing and wants to push for changes. Reuters reports that Sachem Head is looking to get a seat on Delivery Hero's supervisory board "potentially to oust CEO Niklas Oestberg".The news of this potential ousting sent Delivery Hero's stock rising more than 14% to its highest level since November, which can't do much good for Oestberg's ego. The CEO has taken one blow after another in recent months. In January the company sold its stake in British food delivery platform Deliveroo at a 7% discount in a bid to raise money, a move which was interpreted by the money markets as a sign of desperation which led to the company losing a quarter of its stock value in less than a week, falling to its lowest level ever. Then in February, Delivery Hero had to admit that it had failed in its bid to sell its stagnating Asian brand FoodPanda, despite announcing sale-talks all the way back in September, another embarrassment which hit investor confidence again.The company's rocky finances have even been exposed by one of its own firms in court. Glovo managed to convince Spain's National Court that it shouldn't pay 12 fines amounting to €67.3 million for bogus self-employment by pleading that it was in an "extreme situation" financially, and part of the evidence the Catalan-founded food delivery platform provided to prove this was to highlight the collapse in Delivery Hero's stock value, which Glovo said "puts at risk the contributions [Delivery Hero] can make to the company". Glovo said that if they were forced to pay the fines now it may push them into "insolvency proceedings", which doesn't sound great considering Delivery Hero paid €2.3 billion to acquire Glovo just over two years ago.At the time that deal was struck, on 31 December 2021, the food delivery business was booming. The pandemic had led to a surge in demand and venture capitalists were happy to throw ultra-cheap money at the sector. Delivery Hero's stock peaked that year at €137.20. Today, they can be bought for €31.86, more than four times cheaper, and that's even after the recent uptick as news spread about Sachem Head's investment. What changed was that in 2022, as inflation and interest rates rose and the pandemic eased, it suddenly became prohibitively expensive for the financial masters of the universe to continue to bankroll loss-making enterprises, as virtually all food delivery platforms were and still are. Demand slowed and Delivery Hero suddenly found itself massively over-stretched. And it's not just Delivery Hero. Sachem Head also invested in Deliveroo in March, another food delivery platform that has over-promised and under-delivered (excuse the pun). Deliveroo has pulled out of a number of markets in Europe as it retreats from being a European platform to a northern European one, and not even all of north Europe: just the UK, Ireland, France and Belgium. Deliveroo reduced its losses in 2023 to £31.8 million, from £294.1 million the year previous, but it remains stuck in the red. All the other major European headquartered food delivery platforms are still struggling: Just Eat, the largest in Europe, made a pre-tax loss of €2.07 billion last year, down from €5.77 billion in 2022. Getir, the Turkish grocery delivery platform which has exited markets left, right and centre as it battles a major liquidity crisis, was reportedly losing more than $100 million a month as of July 2023. Given the dire financial figures across the board, one wonders what Sachem Head believes it can do to turn Delivery Hero and Deliveroo around.There is a limit to how low you can cut the pay of couriers before they just simply stop working. Recent strikes in the UK, France, Poland and Turkey over falling pay suggest many of the platforms are willing to test that limit. The fundamental problem is that the unit economics of food delivery are tight: this is a low-margin sector. As a 2021 Open University of Catalonia paper found, 8,000 deliveries are required in any one city just to break even, and double that if the commission platforms take from restaurants fell from 30% to 20%. The academics estimated that if the platforms had to employ their riders, as may happen following the Platform Work Directive agreement, labour costs would rise "by up to 30%"."Their ability to become profitable strongly depends on the volume of orders they can capture, the conditions imposed on restaurants, the precariousness of riders, and the conditions of the environment in which they operate: our cities," the authors' concluded. Food delivery could yet become even more concentrated. There are three global players at the moment: Uber, DoorDash and Delivery Hero. That could become two in the not so distant future. Greater monopolisation might be what is required to produce profits in this sector, but it's unlikely to lead to better jobs for food delivery couriers. Is another food delivery business model possible? In his book 'Digital Working Lives', philosopher Tim Christiaens makes the case for platform cooperativism to "rekindle the promise of the sharing economy". Christiaens idea is not that platform cooperatives would compete with the big corporate platforms, but that they would be in a position to "step in when privately owned platforms go bankrupt.""Platform cooperativism is a sustainable organisational form, granted that they constitute successors to rather than competitors of privately-owned platforms," he argues.Co-op Cycle, the bike delivery software co-operative, now has 60 local companies using its 'peer-licensed' software in Europe, having only launched in 2017. Could it be the basis for an alternative to the big platforms? No meltdown of the corporate food delivery sector has happened yet so it's too early to tell, but such a financial collapse is not impossible to imagine.Ben Wray, Gig Economy Project co-ordinator
|
|
Gig Economy news round-up |
- SUB-CONTRACTED GETIR COURIERS STRIKE IN ISTANBUL: Grocery delivery couriers for Vigo, a sub-contractor of Getir, have been on strike over cuts to their pay. The strike began last Saturday, 6 April, with various videos on social media showing hundreds of riders participating in protests and strike rallies. A new strike rally has been called for on Monday [15 April] outside Vigo's office in Istanbul. In a press statement, the Tourism, Entertainment and Service Workers Union (TEHIS) and the Motorcycle Couriers Workers Association, the organisers of the action, explained that "previously, we were earning 85₺ (€2.46) per hour plus 50₺ per package, but now the company wants us to work for only 70₺ per package. This change was announced via message on the night of April 5th, just before the start of the Ramadan Eid holiday." The union has two demands: that no worker will face repercussions for participation in the strike and that they go back to their previous pay system before 5 April. They are calling for customers to boycott the app until their demands are met.
- SPANISH GOVERNMENT PREPARES TO PROSECUTE GLOVO UNDER THE CRIMINAL CODE: The Spanish Government's Labour Inspectorate has sent information on the wrongful employment classification of hundreds of riders for Glovo to the Attorney General's Office, in preparation for the Spanish-founded food delivery platform to face criminal prosecutions for bogus self-employment. Shortly after its election victory last July, the Spanish Government announced that it would be pursuing criminal proceedings against Glovo for the first time, which could see company executives personally fined or even imprisoned for bogus self-employment. The Penal Code was amended in 2022 so that companies which fraudulently hire workers on a bogus self-employed basis could be prosecuted, with potential prison sentences ranging from six months to six years. Glovo refused to employ its riders despite the passing of 'the Rider Law' in 2021, which established a legal presumption of employment in the food delivery sector in Spain. The company has faced hundreds of millions in fines so far for bogus self-employment and back-dated social security contributions. Glovo and Uber Eats also face criminal court cases brought forward by the Observatory of Work, Algorithms and Society last year. Glovo, the largest food delivery platform in Spain which is owned by German multi-national Delivery Hero, responded to the news of the Spanish Government prosecution by saying they were "not aware of this issue". Read more here.
- SPAIN TAKES FIRST STEPS TOWARDS REGULARISATION OF UNDOCUMENTED MIGRANT WORKERS: A citizen initiative which collected over 600,000 signatures to demand the regularisation of the work status of undocumented migrant workers in Spain has successfully put the proposal onto the Spanish Parliament's legislative agenda. In Spain, an initiative can be put onto the parliament's legislative process if it collects half a million signatures. The '#RegularizaciónYa' initiative was first presented to the Spanish Congress in March last year, and has the support of left-wing parties Podemos and Sumar, the latter of which is part of the Spanish Government, but was opposed by right-wing opposition parties PP and Vox. In a vote in the Congress on whether to take it into consideration, all parties voted in favour except Vox. In Spain there are at least 500,000 migrants without papers who are working illegally, putting them in a vulnerable situation in relation to labour rights. The food delivery sector is one of the most prominent for undocumented working, due to the ease of accessing the apps by renting an account from someone who is legally resident, usually at a cost of somewhere between 20-50% of the workers' wages, a system known as sub-letting. In the big cities like Madrid and Barcelona, it is thought that a majority of riders are undocumented, which as well as losing much of their income via sub-letting means that they cannot access health insurance in case of an accident. It's unclear as of yet whether the initiative has the support of PSOE, the largest party in the Spanish Government who's backing would be necessary for the initiative to become law. Read more here.
- GLOVO RIDERS STRIKE AGAIN IN POZNAŃ: The second strike of food delivery couriers in the Polish city of Poznań is taking place after Glovo refused to respond to the workers' demands after the first strike. 'Zentrale' stated that the reason for the two-day weekend strike on 13-14 April was "simple: the platform completely ignored the demands of the previous strike." The organisers are calling on Glovo riders in other Polish cities to join the action to increase the pressure on the Catalan-headquartered food delivery company. The riders are angry over "systemically falling wages". Glovo Poland had previously told journalists that it would not increase rates because there are less orders in Spring than Winter, meaning the company is earning less money. The riders, who are hired on a self-employed basis, say that after costs they earn about 1,800 PLN a month (equivalent of €418), lower than the national minimum wage of 3,221.98 PLN. One of the strike leaders, Ivan, told Zentrale that they had "worked very carefully on our petition, collected the couriers' opinions, analyzed it, in order to convey our problems to GLOVO as quickly as possible. And this is very strange, but no one from them expressed any interest." This has led the workers to lead this strike with the slogan "stop ignoring workers". The strike will also see the founding of the Couriers' Trade Union to formalise the organisation of the riders. Read more here.
- OLA CABS ENDS OPERATIONS IN THE UK: Indian ridehail platform Ola Cabs is ending its operations in the UK, as it plans to focus on its home market. The company announced it was also exiting Australia and New Zealand. Ola Cabs, which is the most popular in India, entered the UK in March 2019, but has never established a major presence. A 2022 study found Ola collects the most data on its drivers of any major global platform, and last year it lost a case in Amsterdam brought forward by the ADCU union, when Uber and Ola were ordered to provide information on automated decision-making and worker profiling. "Our ride-hailing business is growing rapidly, and we remain profitable and segment leaders in India," Ola said when announcing the retreat from its three foreign markets, adding: "With this clear focus, we've reassessed our priorities and have decided to shut down our overseas ride-hailing business in its current form in the UK, Australia and New Zealand." Responding to Ola's exit from Australia, Transport Workers' Union (TWU) National Secretary Michael Kaine said that the industry "is cannibalising itself" through "unchecked supply chain pressure and exploitative competition." Read more here.
Have we missed something important? You can help keep us informed by sending information to GEP@BraveNewEurope.com. |
|
|
|
|
Precariously Busy
NetzPolitik.org report on a new new study from the Institute for Labor Market and Vocational Research on Germany's gig economy (in German).
|
|
|
- A hybrid event on employment practices in the Scottish food delivery sector will be held on 8 May at the Strathclyde University Business School, in Glasgow, 11-1pm GMT. Click here for full details and to register.- The European Parliament votes on the Platform Work Directive on 24 April, in Strasbourg, France.
|
|
The Gig Economy Project is a media network for gig workers and we welcome contributions from workers, writers, academics, activists - anyone who wants to stand up for workers' rights in the gig economy.
If you would like to write for the site, discuss arranging an interview with GEP, or simply have information about developments in the gig economy in Europe you think we should be aware of, get in touch.
Contact project co-ordinator Ben Wray at GEP@BraveNewEurope.com or send a direct message to the Twitter: @project_gig.
And if you like the Gig Economy Project weekly newsletter, why not get your friends and colleagues to subscribe? Here's the link.
|
|
|
