Tag Archive: social

Swiss Legislation: The Breakdown of the Social Contract Between the Generations

When the legislator seeks to overrule a previous law or decision, it can adopt one of three different approaches (Holland and Webb, 2013):

  1. Approach 1: say that the law becomes [x] and, if that differs substantially from what the understanding of law was until now, then hard luck – it was always [y] but it becomes [x] now. Here, any decision which changes the law from what it was previously used to be operates retrospectively as well as prospectively. It is retrospective in that the parties to the case are caught by the ruling and so are all those who have created leases or contracts on the basis of what used to be the law. Of course this can produce disturbance.

    For example, this year Romania’s President signed into law a bill that enables property buyers to walk away from overpriced mortgages, setting it on a potential collision course with commercial banks, the central bank and the European Commission. What the news conceal, however, is that the banks in Romania (about 90.2% of bank assets are held by institutions with foreign [read: EU] capital) transferred full currency risk to the borrowers, imposing credits in Swiss francs (CHF) instead of Romanian lei (RON). Since the Swiss unpegged the franc from the euro (€), those credits have become a borrower’s trauma.

  2. Approach 2: say that the new law is [x] but, because everyone has organised their affairs until now on the basis that the law was [y], the new view of the law only affects events occuring after the decision. So only contracts or leases formed after the date of legislation would be affected by the new law [x]. Contracts and leases, etc. formed before the ruling would continue to fall under the old law [y]. This is the ‘purest’ form of prospective overruling.
  3. Approach 3: it is possible to come up with other variations (mixtures). For instance, the decision might be held to be prospective as regards everyone not involved in the case but retrospective in its effect as between the parties to the case in which the ruling is given.

This month, the Swiss people will get the final say on reforms to the pension system in a referendum. Instead of a real reform with a flexible retirement age, the set of reforms would see the retirement age for women raised to 65 – it is currently 64 – bringing it in line with men. Secondly, pension payments will decrease from 6.8% of the capital per year to 6%, although salary deductions will go up slightly. That will be compensated with a ridiculous monthly 70 franc bonus in AVS/AHV (state pension) payments for everyone (Giesskannenprinzip). On top of that, the reforms will be financed by a 0.6% increase in VAT, a change to the constitution that will be put to the people – and especially to the young. The whole package is another symptom of the breakdown of the social contract between the generations.

How can politicians make a mark? By creating new laws and regulations. Preferably, these laws carry their names and have such fancy designations as the ‘Dodd-Frank Act’. As Niall Ferguson (2013) puts it: “Among the most deadly enemies of the rule of law is bad law.”

The Future of Work: Driving for Uber

“Professionals who work for Google and Facebook can use the apps on their phones to get their apartments cleaned by Handy or Homejoy; their groceries bought and delivered by Instacart; their clothes washed by Washio and their flowers delivered by BloomThat. Fancy Hands will provide them with personal assistants who can book trips or negotiate with the cable company. Task Rabbit will send somebody out to pick up a last-minute gift and Shyp will gift-wrap and deliver it. SpoonRocket will deliver a restaurant-quality meal to the door within ten minutes. The obvious inspiration for all this is Uber, a car service which was founded in San Francisco in 2009 and which already operates in 53 countries.” (The Economist, 2015)

I learned about Uber through a workmate who used it for getting home after a work gathering. Being always a bit short of cash, I thought it might be an opportunity to work as a driver in order to get some extra pocket money. So I enrolled on their website and was promptly invited to an information evening. Obviously, quite a lot of people came with the same hope of brushing up their valet: Foreign workers, retired persons, outsiders, insurgents – in other words, desperate people like me.

“They have created a plethora of on-demand companies that put time-starved urban professionals in timely contact with job-starved workers, creating a sometimes distasteful caricature of technology-driven social disparity in the process; an article about the on-demand economy by Kevin Roose in New York magazine began with the revelation that the housecleaner he hired through Homejoy lived in a homeless shelter.” (Economist, 2015)

In contrast, the venue of a Zurich web agency, welcomed by a Yuppie-style host who informed us participants what a great thing Uber was. We were presented a short marketing movie about Uber’s history and finally got to employment details. I learnt that I am going to drive for their new service UberPop, their cheapest line of business open to anyone who owns a car not older than eight years and willing to engage in “ride sharing”. UberPop is not about ride sharing, but it sounds less suspect in the dawn of potential government intervention (as happened in the Netherlands, which banned Uber completely). The Economist (2015) refers in this context to “underused capacity” (how polite…):

“Underused capacity applies not just to people’s time, but also to their assets: to drive for Lyft or Uber you do need a car. The on-demand economy is in many ways a continuation of what has been called the “sharing economy” exemplified by Airnb, a company which turns apartments into guesthouses and their owners into hoteliers. For people with few assets, though, on-demand labour markets matter more.”

Our host stressed the fact that Uber is insured up to US$ 5 million – should there be an accident or an issue with one of the customers. The lengthy contract, which I received after the info meeting, says something else: That it is the driver’s responsibility to be properly insured and that the driver is obliged to inform his insurance that he is carrying out (professional) driving services. True, Uber as a company is insured against any claims customers may create after an incident, but it does not apply to the driver. The contract also makes clear that it is a driver’s responsibility to oblige to local laws and pay taxes – in other words, Uber does not care about local frameworks: Taxes, social security contributions, insurances – all left to the driver, returning to pre-industrial revolution principles of piecework with the associated exploitation and insecurity. Therefore, UberPop can be cheaper than any local transportations service, as it undermines competition through unequal conditions. Are these the working conditions of the future? Brave new world… The Economist may be too optimistic in its statement:

“The on-demand economy is not introducing the serpent of casual labour into the garden of full emoployment: it is exploiting an already casualised workforce on ways that will ameliorate some problems even as they aggravate others.”

So far the downside of the coin. Once I started driving, another side emerged. My customers were cheerful, between 16 and an estimated 35, knew how to make good use of their smart phones, many in well paid jobs.

“The on-demand economy is the result of pairing freelance workforce with the smartphone, which now provides far more computing power than the desktop computers which reshaped companies in the 1990s, and to far more people. […] Now that most people carry computers in their pockets which can keep them connected with each other, know where they are, understand their social network and so on, the transaction costs involved in finding people to do things can be pushed a long way down.” (Economist, 2015)

Using a taxi in Zurich can ruin you, but for many of my customers that was not the issue. The point was that taxi drivers were perceived as unfriendly (best case) to rude (worst case), that there were issues with acceptance of credit cards (instead of cash) and safety (for female customers). My backseat drivers had a higher opinion of Uber (painless service, easy payment, friendly drivers).

Besides the social problems that it creates, I strongly believe that Uber is undermining local rules and that is unfair. But Uber also addresses a public nuisance (expensive, unfriendly local taxi service) and an understandable need for painless service.

At the end of the day, the question for me was if Uber has fulfilled my expectations for a bit of pocket money. Somehow it is a yes – I made some cash. But compared to the amount of hours spent, very low. Subtract from that gas, more time spent for cleaning the car, and general car usage. Without Uber’s incentive program (extra payment for being available in the city on Friday and Saturday evening), it would definitely not pay to drive for UberPop. Not surprisingly, I was asked by my customers if I am a temporary “job seeker” (i.e. unemployed).

“The on-demand economy is good for outsiders and insurgents – and for entrepreneurs trying to create new businesses using such people. […] In Europe, the labour market drives a wedge between insiders who have lots of protections and outsiders who don’t; on-demand arrangements may give outsiders a chance of breaking in. […] If this seems attractive, it is also a measure of the way that the on-demand economy will contribute to pressure to reduce labour rights in all sorts of situations; a growing abundance of on-demand employees with no normally accepted rights such as sick-pay and overtime will give employers at firms with more standard structures an incentive to cut back. The more such pressures spread, the more protests against “Plattform Kapitalismus” the world is likely to see.”

[All quotes from: The Economist (2015): The Future of Work: There’s an App for that, EU Edition, January 3]
Further reading: How Payroll Survey is Missing Uber