“By striking an agreement with the GMB, Deliveroo PLC (LON:ROO) is hoping to ride away from rising concerns about its reliance on the gig economy model, but this could be wishful thinking. The delivery company is on a fresh PR collision course over this deal. The IWGB union which represents couriers is calling it a cynical and underhand ploy to undermine the appeal it’s bringing to the Supreme Court in the case it’s fighting for statutory collective bargaining on behalf of Deliveroo contractors. Under the GMB agreement Deliveroo promises to give self-employed contractors guaranteed minimum earnings and will negotiate with the union every year on issues like safety, security, wellbeing and diversity but collective bargaining will only be voluntary.
Q1 2022 hedge fund letters, conferences and more
Deliveroo's Deal With GMB
Delivery on demand clearly requires flexibility and the business models have developed around offering exactly that. Now at a time when the pressures of competition and input costs are intensifying, Deliveroo and Uber are trying to bring up the drawbridge and deflect the arrows being aimed at their gig economy model by reaching these ‘recognition lite’ agreements. The compromise deal with the GMB may placate some concerns but challenges to working practices at the companies are likely to continue, particularly as the cost-of-living crisis mounts and couriers see earnings eroded by inflation. This is likely to be why there was a lukewarm reaction to this deal from investors, with shares still down 1% on the day and down 56% year to date."
Article by Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown
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