Stuff: Independent operators shouldn't have to shoulder the biggest risks

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A truck driver, hunched over his wheel, speeds through the night from Hamilton to Gisborne, nodding off but unable to pause for rest because he’s running late. His situation highlights the appalling damage done in this country by a seemingly innocuous force: the transfer of risk.

Economic risks – potential dangers – are all around us, and must be managed by someone. In decades past, that task would have fallen to whoever had the deepest pockets. Governments handled an array of risks: taxes pooled our collective incomes, funding relatively generous welfare payments that cushioned the effects of job loss. Large employers endowed well-funded pension schemes that helped ward off pensioner poverty, and provided employees with risk-cushioning benefits like sick pay.

The biggest players managed the biggest risks because they were best placed to do so. They had the deepest reserves, and could most easily deal with shocks. They had the knowledge and capacity to predict and respond to changing trends.

In line with the hyper-individualistic tendency of the modern world, though, many of the largest economic risks have been pushed down onto the person least able to handle them: the ordinary individual.

We saw this on Thursday in a damning Waka Kotahi report that found Mainfreight truck drivers felt forced into falsifying logbooks and skipping legally mandated rest stops to make deliveries on time.

Once, such drivers would have been directly employed – and their trucks owned – by freight firms. Now they are “owner drivers”, labelled self-employed contractors and forced to maintain their own trucks, despite not being paid enough to do so.

As First Union’s Anita Rosentreter argues, this is an industry-wide issue. Of course conventional employees can also be placed under excessive pressure. But labelling drivers contractors, so that they have fewer rights and find it harder to organise collectively, makes such pressure even easier to apply.

Lacking the holiday pay, sick leave and pensions of conventional employees, these drivers are far more exposed to economic – and safety – risks. It is illogical, too, that they must own and maintain their trucks when firms are clearly best-placed to do so, given their expertise, deep pockets and economies of scale.

The conventional counter-argument is that the flexibility contractors enjoy more than outweighs these disadvantages. For highly paid management consultants, perhaps. But not for those at the other end of the chain.

A recent First Union report on Uber drivers, for instance, shows many of them – between one-third and two-thirds – struggle financially, fail to get enough regular work, effectively earn less than the minimum wage, and only do “gig” work because they can’t find full-time employment.

The economy we have built in the last few decades has been disastrous from the point of view of security. A 2018 OECD report found half of New Zealanders lacked the liquid assets – cash, or things easily converted into cash – they would need to sustain themselves for three months at the poverty line. Just 5 per cent of Japanese people are in the same boat.

On this score, ours is the fourth most precarious country in the developed world. No wonder, too, given how many of us are forced into poorly paid, part-time contracting gigs. When it comes to job loss and redundancy, we also have one of the OECD’s least protected workforces.

And despite this increased precarity, the Government does less to cushion its effects than it once would have. The unemployment benefit, essentially an insurance policy against economic shocks, used to replace over 40 per cent of the average wage; now it’s more like 30 per cent.

Fortunately, some forms of collective insurance against risk – like New Zealand Super – remain. It’s hard for individuals to know how much to save for retirement, people are naturally short-sighted, and private savings can be quickly wiped out in stockmarket crashes. Much better to use taxes to collectively insure against pensioner poverty.

Labour’s social insurance proposal, meanwhile, will do something similar for workers. Benefits have also been raised significantly, and sick leave for employees doubled.

But so much more is needed to reverse the most damaging forms of risk transfer that have taken place in recent decades. The welfare safety net needs further repair, so that long-term job loss doesn’t spell disaster for the families thus affected.

The Government has promised action on so-called dependent contractors: workers who are actually employees but labelled contractors by firms seeking to shirk their responsibilities as employers. That action needs to be sped up, and gig-worker protection strengthened across the board.

But such steps must form part of something larger: a society-wide recognition that the biggest risks – job loss, ill health, recessions, poverty and so on – cannot be shunted onto individuals. They are too big, too complex; often it is out of people’s power to affect them. Those with the greatest resources must bear more of that burden.