According to Spain’s new employment rules, courier Daniel Freitas should now be a staff member at two of the country’s largest takeaway companies. Yet he still roams around popular restaurants with one goal in mind — to earn €50 a day working for food delivery apps Deliveroo and Glovo. He says he can’t get off his motorbike before reaching this sum if he’s to reach a balance of €1,000 at the end of the month and support his family of four.
“Eight hours a day used to be enough. Now, I have to work more to earn the same amount of money,” says the 33-year-old. “It all started with the ‘rider law’. They [the Spanish government] said it was the best for us but it has only made our jobs more precarious.” Now he says he’s struggling to make ends meet after paying petrol bills, an accountant, VAT, and national insurance contributions that stand at a fixed monthly rate of €289 for freelancers.
The rider law is the Spanish government’s response to protests against job insecurity and low wages in the gig economy. Tailored to improve working conditions for riders, it became effective on August 12 with little success. Instead of forcing gig economy companies like Deliveroo and UberEats to provide employee status for their riders, the law has caused them to outsource and tweak their apps to avoid making changes to their business models. But the most extreme evasion tactic came from British unicorn Deliveroo, which unveiled plans to leave Spain entirely.
A spokesperson for Deliveroo said the decision to propose ending its operations in Spain “is not one we have taken lightly”. Spain has proven to be a challenge for Deliveroo: out of the 12 markets where it operates, it provided less than 2 per cent of the firm’s gross transaction value. While competitors Just Eat and Glovo have managed to gain more than 20 per cent of the market each, Deliveroo found it hard to corner more than 10 per cent, with some surveys reducing its share to as little as 5.5 per cent. That is far from the company’s ambition of being among the two largest players in the countries where it operates. “Achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns,” the firm said when it made the announcement.
“I was so angry when I heard it [Deliveroo] was leaving, it’s my largest source of income and then, all of a sudden, I’m told it’s going away,” says Lydia Camargo, a 42-year-old rider from Madrid who works with Deliveroo and Glovo. “I already went through this when Amazon was forced to stop working with self-employed drivers. Now, Deliveroo too. This law is leaving us with nothing.”
Deliveroo’s exit isn’t definitive though. The London-listed firm will start negotiations with staff and couriers this month, and make a final decision depending on the outcome. However riders are already reporting declining business and growing competition. “Demand has fallen since Deliveroo announced it would pull out of Spain,” says Camargo, who campaigned against the law with a riders association called Repartidores Unidos (United Riders). “I’m only doing peak times now. Even so, yesterday I got two orders in two hours when the average used to be three orders every hour.”
In January, Deliveroo’s debt with the Spanish national insurance agency stood at 2.8 million euros after being told to hire thousands of riders as employees. However, not all riders dream of becoming staffers. Freitas prefers being a contractor because he feels that working for several platforms will be the only way he can guarantee an income. “I am self-employed because job stability can’t be found in Spain. I’d start a new job, and then be fired a few months later. So I need to have many jobs in case one of them fails,” he says. Like him, many immigrants fleeing from Venezuela’s economic and political crisis now account for a significant proportion of riders in the Spanish takeaway industry. Even those without a work permit can easily rent a Deliveroo or Glovo account from other riders who advertise them on Facebook groups. “It’s the easiest job to find”, says Freitas. “Think about it, you arrive in a foreign country with nothing and someone offers you the chance to make money working off the books… You just do it, I mean, you’ll need to buy food at some point.”
But job opportunities for the riders who help to build the gig economy in Spain are now shrinking. Uber Eats replaced contractors with agency and outsourced workers in August when the rider law came into force. Just Eat is not an option for them either, since it has its own fleet of employed couriers and complements it with outsourced employees. Uncertainty about Deliveroo’s future puts many potential riders off, while salaries offered by outsourcing companies (€950, the minimum wage in Spain) are also discouraging. At the moment, they believe their best bet is the market leader— Barcelona-based Glovo.
Unlike Deliveroo, Glovo doesn’t set up high entry barriers for riders—over the years, it has amassed 12,000 compared to Deliveroo’s 3,500. To comply with the new law, Glovo said it will hire 2,000 riders as employees, but it insisted on keeping the rest as contractors. A spokesperson for Glovo claims that they have designed a new relationship model between the company and freelance couriers that complies with the criteria set out by the courts while providing the “flexibility, autonomy and independence” that it believes couriers want.
Glovo’s new model attempts to respond to employment court’s orders without explicitly changing workers’ status. For instance, the company used to penalise riders who didn’t log into the app during the time frames they had previously chosen. For judges, this was evidence of Glovo controlling couriers’ working hours, which meant they didn’t have the freedom that self-employed people should. Now, the new model lets anyone log in and out at any moment without incurring any penalties. But it has also introduced a controversial feature called “the multiplier” which lets riders decide every day if they were willing to work for the regular fee (x1), more (with a maximum of x1.3) or less (with a minimum of x 0.7) ahead of assigning them work. This is Glovo’s way of contesting the argument that riders should be considered employees instead of contractors because they have no power to make basic business decisions such as defining their own fees.
But riders aren’t happy. Teomarys Jiménez, a 35-year-old Venezuelan rider in the city of Valencia logs into the app to show how the multiplier works. Soon after it was enabled, some riders began to put in low bids to get more orders assigned to them, Jiménez explains, to the point where others were struggling to get commissions even at the regular rate. Faced with complaints, Glovo eventually ditched multipliers below 1.
“The company is now paying poorly,” says Jiménez, who blames the new law for her income falling in the past two weeks from €1,000 to €300. “We’ve asked them to set a base rate of €2.5 per order, but they claim that wouldn’t be profitable,” she says. After Deliveroo’s withdrawal, Jiménez believes riders will flock to Glovo and will worsen the already high competition for orders.
While many couriers blame the new law for the takeaway market’s current state, unions say it's the gig companies' fault and that they will take companies to court to stop them from flaunting the rules. “They continue stretching the rules and competing unlawfully with firms that do comply,” says Rubén Ranz, a representative of Unión General de Trabajadores, the second-largest union in Spain. The biggest one, Comisiones Obreras, also dismisses outsourcing and Glovo’s new model as valid mechanisms to eschew the law’s requirement to employ riders, said Carlos Gutiérrez, the union’s Youth and New Work Realities Secretary.
Gig companies say that providing employee status would make 23,000 of their 30,000 riders lose their jobs, since they would have to shut down operations in cities with fewer than 100,000 inhabitants. This is why recent developments in Spain are their worst nightmare. And in the case of Deliveroo, exiting the country will not be the end of it. The firm has vowed to pay staff and riders “an adequate compensation package in accordance with local legislation”. It is unclear what parameters it will use to calculate how much people are owed. Many couriers are now registered with the national insurance agency as part-time employees of Roofoods Spain, Deliveroo’s Spanish subsidiary. This means that if the firm withdraws from the Spanish market, they’ll have to be included in a collective redundancy process.
But even if Deliveroo’s foray into the Spanish market comes to an end, the issue of employment status isn’t going away. Italy is looking at the Spanish rider law for inspiration for similar legislation, while employment rulings against the firm are piling up costs in both those countries. New claims have begun to appear in employment courts in the Netherlands and Australia, and the European Union has launched a consultation into the working conditions the gig economy offers. As Deliveroo admitted in its IPO investment prospectus, its business model would suffer if changes in law require us to reclassify our riders as employees. If the Spanish approach becomes widespread, a rapid retreat will no longer be enough.
- 💼 Sign-up to WIRED’s business briefing: Get Work Smarter
- The draconian rise of internet shutdowns
- They saw a YouTube video. Then they got Tourette’s
- Speedy grocery delivery firms are racing to survive
- Supercharge your chats with these WhatsApp tricks
- The truth behind China’s online gaming crackdown
- A radical plan to treat Covid’s mental health fallout
- The 100 hottest startups in Europe in 2021
- 🔊 Subscribe to the WIRED Podcast. New episodes every Friday
This article was originally published by WIRED UK
