This week’s decision by the GMB union to bring a legal case against firms delivering for Amazon, the e-commerce giant, throws into sharp relief how much the modern economy has been stretched to benefit a monopolistic form of tech-capitalism. Ostensibly the action is about employment law: it argues that couriers working for three delivery companies are not entrepreneurs working for themselves who contract their labour to anyone willing to pay, but are in fact employees of Amazon’s latent delivery and logistics network. If the trade union is right, then these couriers should be treated as staff and paid the minimum wage, as well as sick and holiday pay.
The price of Amazonian convenience to the British economy appears to be a few centuries of workplace progress. The union says the couriers are paid per parcel delivered, see wages deducted if unrealistic targets are unmet, and manage on illegal rates of pay. The government is picking up the tab: if these were Amazon delivery staff then the company would have to pay their national insurance. As they are deemed to be self-employed, there’s no employer’s tax to pay and the welfare system tops up their income with tax credits.
Amazon has established itself, as competition authority Lina Khan has noted, as an essential part of the internet economy and its dominance – its sheer scale and breadth – has been enabled in part by privatising profit and socialising losses. The firm seems to be entrenching a model of cheap-labour doorstep delivery by recognising an easily divided workforce is more easily conquered. This model may also one day compete with the Royal Mail; Amazon is reportedly planning to launch its own delivery service for US businesses to rival the state-owned US Postal Service.
Amazon’s skill is not just in technology but also in finance. Last year it generated UK sales of £9bn, a quarter more than the previous 12 months – while pre-tax profits halved to just £24m. Its effective UK profit margin is just 0.3%, an indication perhaps of its low pricing strategy. In revolutionising e-commerce the company has delivered enormous benefits to consumers, but at what cost? Surely it is morally right that large employers are accountable for the treatment of workers down the supply chain, so long as they are economically dependent on them.
Amazon might think differently. The tech giant wants privileged treatment because, like the economist Joseph Schumpeter, it thinks only corporate monopolies, with their economies of scale and ability to innovate, can marshall growth. This view should be resisted. Amazon’s service ensures consumers are better off, but undue focus on this neglects the interests of workers, rival entrepreneurs and voters. This is why the spirit of employment law must be honoured so Amazon shoulders the responsibility (and the cost) for contracted workers, or works out how to compel its suppliers to do so.
Amazon clearly would like to control the pipes of capitalism, siphoning off consumer demand for itself when it is lucrative to do so and charging others for use of its network. Amazon’s website is, in the west, the dominant platform for online retail sales. In the US Amazon leveraged this dominance to create a huge delivery business. In the UK it has delivered its first package by drone. Whether it is cloud computing or what ebooks are published, Amazon wants business to be done in arenas where it sets the rules. This is bad for democracy. Commerce ought to reside in markets governed by regulations set by democratic political process not those chosen by the world’s richest man, Amazon’s founder Jeff Bezos.
• This article was amended on 7 June 2018 to name Lina Khan, author of the Yale Law Journal article to which the editorial refers and links.
