California’s landmark Assembly Bill 5, which makes it harder for workers to be classified as independent contractors rather than employees, has started to make waves across the state. This past week, a county judge in San Diego noted “the handwriting is on the wall” and ordered the grocery-delivery service Instacart to reclassify 2,000 local workers as employees.
Far from California, there are other recent signals that the vise is tightening for gig-economy companies.
This week, Foodora delivery drivers became the first app-based workforce to unionize in Canada. The Ontario Labour Relations Board ruled Tuesday that Foodora food couriers are dependent contractors, a classification that falls between independent contractors and employees—and gives them the ability to unionize, according to labor officials. “This decision shows that the tide is turning towards justice for thousands of gig workers in Ontario and soon these workers will have the right to their union,” Jan Simpson, national president of the Canadian Union of Postal Workers, said in a statement.
Foodora is based in Berlin and operates in 15 countries. The labor board ruling in Canada comes after Foodora workers in Norway—who are largely part-time employees—formed their first union after a six-week strike in September. The 600 employees involved were demanding higher pay as well as guaranteed compensation for workers’ use of bikes, uniforms, and smartphones.
In Japan, where 3 million workers are estimated to be working as freelancers, UberEats workers unionized last October, with the chairman of the union calling for “safer and more stable working conditions for all platform workers.” Uber said it would locally introduce an injury-compensation program, cover insurance fees, and pay up to 10 million yen ($93,000) in case of death.
The recent uprising of app-based workers has been brewing for the past couple of years, says Kate Bronfenbrenner, director of labor education research at Cornell University’s School of Industrial and Labor Relations, where she researches unions in the global economy. She says workers tend to mobilize in areas where legislation is more progressive or where there’s already high union density, often with higher percentages of workers of color.
“AB5 happened because there was all this activity out there,” Bronfenbrenner says. “And so many times, unions think, ‘If we just wait for labor law, we have to wait for labor law reform before we can organize,’” she says.
But they don’t necessarily have to wait. The Foodora workers in Ontario, for example, held a union vote last August. (The results were sealed pending the labor relations board ruling and have not yet been disclosed.)
Meanwhile, back in California…
AB5 is heralded as a big win for California workers by labor advocates, as it could push on-demand companies to provide benefits like a minimum wage and workers’ compensation. But that would be costly to the companies, many of which are still losing money.
Uber, Lyft, and Doordash have pledged $90 million for a ballot initiative this coming November to win an exemption from the legislation. Their alternative, the companies say, would preserve worker flexibility while forcing concessions on minimum wage standards, health benefits, and collective-bargaining rights.
While the ballot fight plays out, California courts are taking their cues from the legislature that passed AB5, from the governor who signed it, and from the state supreme court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court, which set precedent for how employers should determine whether workers are really contractors or full-time employees.
“The policy of California is unapologetically pro-employee (in the several senses of that word),” San Diego Superior Court judge Timothy Taylor wrote in his ruling in the Instacart case. “While there is room for debate on the wisdom of this policy, and while other states have chosen another course, it is noteworthy that all three branches of California have now spoken on this issue.”
Instacart has long faced questions about its labor model. Last year, the company was found cutting into workers’ wages by using customer tips to subsidize the fees paid to drivers. It was a tipping structure used also by DoorDash and Amazon until widespread criticism pressured the companies to modify how they handled tips. In a February blog post on Medium, Instacart CEO Apoorva Mehta said the company will revamp its pay structure.
Uber, meanwhile, has been making changes to its app that underscore the view that its drivers are contractors and not employees. For instance, in California, a “marketplace fee” charged to riders is not shown to drivers, suggesting a separation between drivers and the relationship between Uber and its customers. (In other states, the fee is visible on drivers’ receipts.)
Over the years, Uber has shown a willingness to engage in regulatory battles—but it isn’t always successful. For example, its drivers have already been recognized as employees by UK and French courts.
Chipmakers Are Flashing More Warnings on the Global Economy – BNN Bloomberg
(Bloomberg) — Mounting concern over semiconductor demand is sending shudders through North Asia’s high-tech exporters, which historically serve as a bellwether for the international economy.
South Korean behemoths Samsung Electronics Co. and SK Hynix Inc. have signaled plans to dial back investment outlays, while across the East China Sea, the world’s biggest contract chipmaker Taiwan Semiconductor Manufacturing Co. indicated a similar expectation.
Fading tech demand highlights a darkening picture as Russia’s war on Ukraine and rising interest rates damp activity. The following charts look at the chip industry and its implications for the world economy.
In recent weeks, major chip manufacturers Micron Technology Inc. Nvidia Corp., Intel Corp. and Advanced Micro Devices Inc. have warned of weaker export orders.
Gartner Inc. predicts an abrupt end to one of the industry’s biggest boom cycles. The research firm slashed its outlook for revenue growth to just 7.4% in 2022, down from 14% seen three months earlier. Gartner then sees it falling 2.5% in 2023.
Memory chips are among the most vulnerable segments in the $500 billion semiconductor market to global economic performance, and Samsung and SK Hyinx’ sales of dynamic random access memory, or DRAM, a chip that holds bits of data, are central to Korean trade.
Next year, demand for DRAM is likely to rise 8.3%, the weakest bit growth on record, says tech researcher TrendForce Corp., which sees supply climbing 14.1%. Bit growth refers to the amount of memory produced and serves as a key barometer for global market demand.
South Korea’s exports are bolstered when demand outpaces supply in bit growth. But with supply likely to expand at almost twice the pace of demand next year, exports may be headed for a major downturn.
Signs are rising that trade is already starting to deteriorate. Korea’s technology exports slipped in July for the first time in more than two years, with memory chips leading the falls. Semiconductor inventories piled up in June at the fastest pace in more than six years.
Among potential victims will be Samsung, the world’s biggest memory-chip producer and a linchpin of Korea’s trade-reliant economy.
Samsung recorded rapid sales growth when demand was strong relative to supply. As the chip outlook turns gloomy, shares of Samsung have been declining this year, with occasional rebounds on better-than-expected profits.
Samsung and SK Hynix control roughly two thirds of the global memory market, meaning they have the power to narrow the gap between supply and demand.
Memory is loosely tied to other types of semiconductors, built by firms such as TSMC that produces chips in iPhones, and Nvidia, whose graphics cards are used in everything from games to crypto mining and artificial intelligence.
The Philadelphia Semiconductor Index, which includes these firms, has ebbed and flowed together with memory demand in recent years.
Korean exports have long correlated with global trade, meaning their decline will add to signs of trouble for a world economy facing headwinds from geopolitical risks to higher borrowing costs.
Micron Technology, the world’s third-largest memory maker, last week issued a warning about deteriorating demand, triggering a selloff in global chip stocks.
Korea’s stock market has been among leading indicators of the country’s trade performance, with investors dumping shares well before exports slump.
“The trend is important for Asia as its economic cycle is very dependent on tech exports,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis SA. “Fewer new orders and the large inventory pile-up mean Asia’s tech sector will see a long destocking cycle and a shrinking profit margin.”
The International Monetary Fund last month downgraded its global growth forecast and said 2023 may be tougher than this year.
Deutsche Bank AG sees a U.S. recession starting in mid-2023 and Wells Fargo & Co. expects one in early 2023. A Bloomberg Economics model sees a 100% probability of a US recession within the next 24 months.
©2022 Bloomberg L.P.
Russia ministry says economic slump less severe than feared – Al Jazeera English
Economy ministry says gross domestic product to shrink 4.2 percent this year amid sanctions over the war in Ukraine.
Russia’s economy will contract less than expected and inflation will not be as high as projected three months ago, economy ministry forecasts showed, suggesting the economy is dealing with sanctions better than initially feared.
The economy is plunging into recession after Moscow sent its armed forces into Ukraine on February 24, triggering sweeping Western curbs on its energy and financial sectors, including a freeze of Russian reserves held abroad, and prompting scores of Western companies to leave.
Yet nearly six months since Russia started what it calls a “special military operation”, the downturn is proving to be less severe than the economy ministry predicted in mid-May.
The Russian gross domestic product (GDP) will shrink 4.2 percent this year, and real disposable incomes will fall 2.8 percent compared with 7.8 percent and 6.8 percent declines, respectively, seen three months ago.
At one point, the ministry warned the economy was on track to shrink by more than 12 percent, in what would be the most significant drop in economic output since the fall of the Soviet Union and a resulting crisis in the mid-1990s.
The ministry now sees 2022 year-end inflation at 13.4 percent and unemployment of 4.8 percent compared with earlier forecasts of 17.5 percent and 6.7 percent, respectively.
GDP forecasts for 2023 are more pessimistic, though, with a 2.7 percent contraction compared with the previous estimate of 0.7 percent. This is in line with the central bank’s view that the economic downturn will continue for longer than previously thought.
The economy ministry left out forecasts for prices for oil, Russia’s key export, in the August data set and offered no reasons for the revision of its forecasts.
The forecasts are due to be reviewed by the government’s budget committee and then by the government itself.
China’s premier urges pro-growth policies as economy sputters – Al Jazeera English
Li Keqiang calls on provinces to bolster growth after consumption and output fall short of expectations.
China’s Premier Li Keqiang asked local officials from six key provinces that account for about 40% of the country’s economy to bolster pro-growth measures after data for July showed consumption and output grew slower than expectations due to Covid lockdowns and the ongoing property slump.
Li told officials at a meeting to take the lead in helping boost consumption and offer more fiscal support via government bond issuance for investments, state television CCTV reported Tuesday evening. He also vowed to “reasonably” step up policy support to stabilize employment, prices and ensure economic growth.
“Only when the main entities of the market are stable can the economy and employment be stable,” Li was cited as saying at the meeting in a front-page report carried in the People’s Daily, the flagship newspaper of the Communist Party.
The meeting came after Monday’s surprise interest-rate cut did little to allay concern over the property and Covid Zero-led slowdown. Economists have warned of even weaker growth and have called for additional stimulus, such as further cuts in policy rates and bank reserve ratios and more fiscal spending.
Li acknowledged the greater-than-expected downward pressure from Covid lockdowns in the second quarter and asked the local officials to strike a balance between Covid control measures and the need to lift the economy. “Only by development shall we solve all problems,” Li said, according to the broadcaster.
Indicating China may resort to more local debt issuance to pump-prime the economy, Li said “the balance of local special bonds has not reached the debt limit” and the country should “activate the debt limit space according to law,” according to the People’s Daily report.
Based on the government budget, local authorities may be able to issue an estimated 1.5 trillion yuan ($221 billion) of extra debt and bonds this year to support infrastructure spending, after top leaders urged better use of the existing debt ceiling limit in a key July Politburo meeting. The arrangement could be approved in August, according to some analysts.
China’s 10-year government yield rose for the first time this week, up one basis point to 2.64% from the lowest in more than two years.
Li urged local governments to accelerate the construction of projects with sound fundamentals in the third quarter to drive investment, the report said, and also asked officials to expand domestic consumption of big-ticket items such as automobiles and support housing demand.
He also stressed the importance of opening up the domestic market to foreign investors, noting that the six major provinces — Guangdong, Jiangsu, Zhejiang, Henan, Sichuan and Shandong — account for nearly 60% of the country’s total foreign trade and foreign investment.
“Opening up is the only way to make full use of the two markets and resources and improve international competitiveness,” Li was cited as saying.
Li’s appearance suggests state leaders have completed their annual two-week policy retreat in resort area of Beidaihe.
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