It's been another difficult week for the food delivery sector in Europe. Our 'Gig Economy news round-up' section below is a litany of stories about companies exiting countries', considering selling parts or all of their business, and redundancy money paid or - in the case of Uber Eats in Italy - unpaid. Just Eat CEO Jitse Groen has provided some commentary on this situation in a conference call as the Dutch food delivery platform announced its Q1 2024 financial results, which Reuters finds were "below expectations". Just Eat exited the New Zealand market this week and is reportedly considering buying German grocery delivery platform Flink. Groen said that more mergers and acquisitions were on the cards in the European market in particular.“Unfortunately for us Europeans, the valuations in Europe are much lower than they currently are in the US and that will create obviously some consolidation globally," he told investors.Just Eat, Europe's largest food delivery platform, has changed strategy in recent years. In 2020, the company announced that it was moving towards an employment model for all of its riders, establishing a 'Scoober' service where riders were employed in-house, whilst continuing to hire many others via sub-contractors. In the UK and France, that service has been axed, as Just Eat has returned to exclusively hiring riders on an independent contractor basis, laying-off thousands of riders across the two countries' in the process. Why the change of heart? Groen has insisted that the company remains an advocate of employment status for riders in principle, but that Just Eat cannot compete by doing so in the current regulatory environment, as its rivals are gaining an advantage by not paying the higher labour costs which are required with employment contracts. Both the French and UK governments have shown no inclination towards establishing employment laws which would level the playing field upwards, so Groen is levelling it downwards. Thus, Just Eat effectively accepts that its riders are bogus self-employed, but is hiring them on that basis anyway.Groen told investors that Just Eat is now producing positive results in northern Europe as a result of this shift in policy, but what about in a country like Spain, which has established a legal presumption of employment through the Rider Law? Just Eat employs its riders there and has a collective agreement with the UGT and CCOO unions, but Groen told investors that the company has identified southern Europe as an area to reduce investment. The company's Q1 statistics show a 16% fall in orders in Southern Europe. "A clear segment where we are investing less money is, for example, southern Europe," he said. "And you can say that it is growing less, or that it is contracting...But if we are reducing investments in these territories it is because we do not believe that the horizon there is close in terms of profitability."While Spain should be a country where Just Eat operates on a level-playing field due to the Rider Law, in reality the two largest players in the Spanish market, Glovo and Uber Eats, have refused to employ their riders. Glovo has accrued over €300 million in fines as a result, and its executives now face the prospect of criminal charges for bogus self-employment. That might sound terrible for the Barcelona-headquartered platform, but by operating an independent contractor model it has been able to expand its market share at the expense of Just Eat.One doesn't have to be an expert in the economics of food delivery to understand how this works. If there is almost zero cost to registering a rider on your app on an independent contractor basis, platforms' like Glovo and Uber Eats can have an over-supply of riders at any one time searching for work, meaning that they will accept less for each delivery as they're competing with their fellow workers, delivery times are faster as there's more riders available for each delivery and customers are happier because they get cold food less often. That's before one considers the additional costs of employment like holiday pay, sick leave, minimum wage and social security contributions, as well as the cost of bikes and bike repairs. A figure of 20-30% increase in costs from employment contracts is typically cited by experts."Spain, for me, is a very clear example where we are in a situation of compliance with the law and others are not," Groen said. "There is a lot of scrutiny on these other operators, so the situation of the Spanish market as a whole can change from one day to the next."The Just Eat CEO has called on the Spanish National Court to collect all fines owed by Glovo, after judges suspended the collection of 12 fines worth a combined €67.3 million due to Glovo pleading that it is in an "extreme" financial situation, and could be pushed into "insolvency proceedings" if they had to pay up. While the money will eventually have to be paid at a 10% rate of interest, from the perspective of Just Eat, the Spanish judges are effectively intervening to protect a law-breaking firm's position as the leader in the Spanish market. The decision by Stuart Delivery, one of Just Eat's main sub-contractors, to exit the Spanish market this week (see news round-up section below for details) is another win for Glovo and Uber Eats' strategy of dodging the law. Stuart Delivery has employed its riders in Spain since the Rider Law came into effect in August 2021, and claimed the legislation was one reason for the company's exit from the southern European country. Will the Platform Work Directive finally level-up the playing field in Europe's food delivery labour market? That is yet to be seen, but one would be surprised if the same resistance from platforms that we have seen in Spain did not occur in other EU member-states, and most countries will not establish as strong a presumption of employment as Spanish labour minister Yolanda Díaz did with the Rider Law. Plus, the Platform Work Directive, which will be ratified on Tuesday by the European Parliament, will take two long years to transpose into national law, practically a lifetime in the rapidly-changing food delivery sector. It's anyone's guess what food delivery platforms will still be left-standing in 24 months time. Ben Wray, Gig Economy Project co-ordinator
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Gig Economy news round-up |
- STUART DELIVERY TO EXIT SPAIN: Stuart Delivery announced on Monday [15 April] that it will exit the Spanish market, with all of its riders, who are employees, set to be laid-off. The delivery specialists, which operate as a sub-contractor for Just Eat across many countries, said that it wanted to "concentrate its resources and efforts on markets that offer greater opportunities for growth and profitability". The French company blamed the decision on "the impact of inflation, rising operating costs and the recent implementation of the Rider Law in Spain, which have directly influenced Stuart's ability to generate profitable growth in the Spanish market". The Rider Law established a legal presumption of employment in the food delivery sector in 2021. The company, which will continue to operate in France, the United Kingdom, Poland and Italy, said that it "announced today to worker representatives its intention to initiate a collective dismissal procedure in Spain". CGT Riders, which is the majority representative of Stuart Delivery riders on the Barcelona Works' Council, tweeted that they "will not leave any worker behind", adding that "the company's own mismanagement and unfair competition from Glovo cause 468 families to be left without work." Glovo, Spain's largest food delivery platform, has refused to employ its riders despite the passing of the Rider Law. Read more here.
- ITALIAN UNIONS SEEK MILLIONS IN COMPENSATION FOR FIRED UBER EATS RIDERS: Two Italian unions brought forward a class action to the Milan court on Thursday [18 April] against Uber Eats Italy, after the company refused to respond to a previous court ruling in October which found that it's exit from the Italian market in July 2023 was an illegal mass firing. Uber Eats was required to present a redundancy management plan for the 4,000 riders who were de-activated from the Uber Eats' app, but has failed to do so, despite urgings from the Italian Minister of Labour and the regional government in Milan. A few hours after the hearing, Uber Eats contacted the NIdiL Filt and Filcams CGIL unions which brought the case forward to say that it was not possible to bring forward such a plan in the current context. The two unions responded by stating: "It is very serious that a few hours after the hearing, by omitting any discussion on the redundancy management plan imposed by the relocation law, Uber Eats has once again shirked its social duty by preventing riders from having access to the minimum forms of protection provided for all workers." If the unions were to win the full compensation they have demanded for the fired workers, who had been hired by Uber Eats on an independent contractor basis but were considered by the court to be employees, it would amount to €52.9 million. The unions added that they will "evaluate with extreme urgency the initiatives to be undertaken, including mobilisation, to oppose this umpteenth violation of riders' rights”. Read more here.
- GETIR COULD EXIT EVERY FOREIGN MARKET: Embattled grocery delivery platform Getir could be on the verge of exiting every market it operates in outside of Turkey, according to a report in 'Wirtschaftswoche'. A meeting of the company's senior management and major investors took place in Istanbul at the beginning of April with various options for Getir's future discussed, the most likely being a retreat to solely operating in its home market. Mubadala, the company's largest investor based in Abu Dhabi, suggested the company could exit the UK, United States, Germany and the Netherlands as early as next month. A final decision has yet to be made but is expected within the next two weeks. Another report in Sky News said a number of options were being considered, including breaking up and selling-off parts of the company and "some form of emergency restructuring mechanism". Getir had to deny that the company was on the brink of insolvency, with a source telling Sky News that any re-structuring would be done in an "orderly fashion". Restructuring firm AlixPartners is said to be advising Getir. The company was valued at $12 billion in March 2022, but that valuation has fallen off a cliff as the pandemic retreated and interest rates rose, with the most recent investment placing a value of €2.5 billion on the company. Getir exited Spain, Italy, France and Portugal last year and cut 2,500 jobs globally. Read more here.
- FLINK RAISES CASH AMID SALE POSSIBILITIES: German grocery delivery platform Flink has raised an additional €100 million from its investors, as the company looks to sure-up its position as sale and merger talks continue. Flink, which has among its investors German supermarket brand REWE, has struggled to cope with falling demand and rising costs, like all players in the 'Q-Commerce' space. Flink, which exited the French market last year and now only operates in Germany and the Netherlands, has been in talks with Getir and Just Eat about a sale/merger, although it is reported that talks with Getir are currently on hold due to the crisis at the Turkish company (see above). Just Eat, Europe's largest food delivery platform, refused to comment on a Flink takeover, but in a conference call on Wednesday [17 April] CEO Jitse Groen indicated that more mergers and acquistions in Europe were likely. Flink has been criticised for what former workers have described as 'union-busting' tactics. Read more here.
- STRIKING VIGO RIDERS IN ISTANBUL GAIN POLITICAL SUPPORT: Striking food delivery couriers at Vigo, a subcontractor of Getir, were in the Turkish Parliament on Tuesday [16 April], as politicians expressed their support for the workers. At a press conference in the Turkish Parliament, 10 politicians from the Social Freedom Party and DEM party expressed their solidarity with the strike. The latest industrial action took place a day earlier as the riders demand to be paid per hour, as they previously were, rather than per delivery, a move that was announced on 5 April and has seen their average pay fall sharply. The strikes, organised by the Tourism, Entertainment and Service Workers Union (TEHIS) and the Motorcycle Couriers Workers Association, began on 6 April and more strike dates are expected. “The contract signed between the company and the couriers includes an hourly wage guarantee," Tolga Kubilay Çelik, President of TEHİS said at the strike rally. "The company unilaterally changed this contract." Azad Aktaş, a Vigo rider, told the rally: "The reason I became a Vigo employee today was the hourly guaranteed wage system. I thought at least my life would be safe. Now, overnight, they usurp this right without asking any of us." Read more here.
Have we missed something important? You can help keep us informed by sending information to GEP@BraveNewEurope.com. |
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- The European Parliament votes on the Platform Work Directive on Tuesday 24 April, in Strasbourg, France.- 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.
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