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Europe’s gig economy is undergoing substantial changes, which are all front of mind for Glovo co-founder Sacha Michaud.

Top of that list is the treatment and welfare of the company’s couriers that carry out deliveries of food, groceries and goods every day.

“The gig economy has got a lot of positive things, but maybe one thing we didn’t look at is protecting these workers a little bit better,” he said.

Michaud is the co-founder of Glovo, the Spanish delivery firm that has been a mainstay of Europe’s gig economy for the last several years.

After years of growth and several rounds of VC cash that valued the firm at north of $2 billion, the Barcelona-based player was acquired earlier this year by Delivery Hero.

Throughout the years, Glovo has witnessed a drastically changing landscape for the gig economy and the way it operates – namely in the debate of employee versus contractor – and now more than ever, regulators are coming knocking.

October marks one year since Glovo launched the Couriers Pledge, a suite of measures for its delivery riders around fairer pay, sick leave, insurance and maternity and paternity leave.

The initiative, which has been developed in partnership with non-profit Fairwork, is a strategy by the Spanish company to shore up rights and benefits for its riders while eschewing a traditional employment relationship, something that remains a fine line to tread.

In an interview, Michaud said the roll-out of the Couriers Pledge over the last year has been gradual with around 25% of its fleet now covered in Europe and Africa.

“We’ve really learned a lot, but it’s definitely not one-size-fits-all in different regions, different continents, different cultures, languages. We’ve really had to work with the local teams in the sense of adapting it,” Michaud said.

According to stats from Glovo, riders have seen an average 10% rise in their earnings under the pledge while the level of churn in its rider fleets has reduced.

Seven more countries are expected to be added to the Couriers Pledge in the next month. Glovo operates in 25 countries in total.

“Some regulations in some of the countries don’t make it easy to implement that and maintain the flexible autonomous model, but we’re working on it and the commitment is still there.”

The matter of employment in the gig economy has long been a fraught debate and it is an issue where national and EU action is gathering pace.

In Glovo’s home market of Spain, a new regulation, known as the Rider’s Law, came into force recently that compels many delivery platforms that relied on contractors to shift those workers to employment.

The provisions of the Couriers Pledge do not line up fully with what is expected of Glovo and others, Michaud admitted.

There is difficulty to implement [the Couriers Pledge] in Spain for regulatory reasons. A simple equation is the regulation in Spain … basically the more social rights you give to a freelance worker, the more indicative it is of a labor relationship. There are regulatory things we’ll have to fix in Spain to get these autonomous workers more and more social rights,” he said.

Glovo has moved a portion of its delivery workers in Spain to employment agreements since the new law came into effect.

Spain has been a petri dish of sorts for implementing reforms to the gig economy model in Europe.

Last month Glovo was fined €79 million by Spanish authorities over the employment status of its riders. The fine was levelled against practices between 2018 and 2021 under the older regulations, rather than the newer law. The company intends to appeal the fine.

“We’re not in agreement with it, of course. We had a number of court cases which validated our model. We’ve had a number of judges who validated that pre [Rider’s Law],” Michaud said. “Justice can prevail one way or the other. We’ll be fine with that, but we just want to seek its course.”

These are the sorts of conversations and questions that founders, executives and legal departments at delivery and ride-hailing companies are facing across Europe.

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Beyond Spain, the European Union continues to thrash out a new framework for regulating the way gig economy companies employ or contract with workers. Unsurprisingly, the platform work directive has proven contentious with lawmakers as they tease out the finer details around the new laws and how they will apply across the EU.

Glovo and its competitors have been lobbying for their position on how the law should take shape. Crucially, many of these companies want to maintain as much of the freelancer style as possible with initiatives like the Couriers Pledge seeking to fill gaps on sick pay, holiday pay etc.

“Hopefully they’ll come up with something very solid and forward thinking at the EU level, to get some regulation that takes advantage of some of the benefits of the gig economy, which I think is easy access to work, income and flexibility, and then let’s reinforce the social rights on top of that,” Michaud said.

“There should be a mechanism that freelance workers can be in a position to get equal guarantees or coverage. Regulation needs to make that happen. I don’t see any reason why somebody working flexibly 10 hours a week cannot have a certain amount of coverage and guarantees around that without having a strict labor contract. Ideally that would be it.”

Depending on where the lines of the regulation are drawn, delivery and ride-hailing companies could be looking at significant increases in their operating costs should they be required to shift all workers to employment contracts.

“We adapt to regulation everywhere, we’re in 25 countries and we’ll adapt to any regulation whatever happens,” Michaud said. “We have our opinion on where we think things should be going, certainly at an EU level. Hopefully it’ll be a positive change in the sense of thinking forward about how the economy is moving and how society is moving.”

There is much change in the air for Glovo as German food delivery giant Delivery Hero is acquiring a majority stake in the company.

Michaud said he does not expect the deal to have an impact on the implementation of the Couriers Pledge as Delivery Hero gives “quite a lot of independence to their different brands.”

The deal was announced at the start of the year but has since attracted scrutiny from competition watchdogs at the European Commission. The merger would give the two companies a significant market share across all of Europe against rivals like Deliveroo and Just Eat.

Michaud is tight-lipped on the status of the probe and any possible legal challenges to it by the European Commission.

“We obviously collaborated fully with them and hopefully they will agree. I don’t know the timing of that to be honest,” he said.

Since the deal was announced at the start of the year, the food, grocery and goods delivery sector has changed significantly.

After two years of rapid growth in the sector – thanks in large part to lockdowns – food delivery companies are contending with a tighter economic environment. Many of the rapid grocery delivery firms, or q-commerce start-ups, that sprouted up since 2020 have retrenched significantly, cutting jobs, selling off to buyers or in some cases shutting down.

Michaud said a major challenge that these companies face is the culture of subsidizing deliveries to attract customers.

“We’ve never got into this battle with restaurant food or non-restaurant food of freebies, in giving away and couponing, which I think hindered a lot of these newer companies, especially in q-commerce or hyper-fast supermarket delivery, which was all about land grab,” he said.

“They received a lot of funding and they were pretty much incentivizing with [discounts on] orders. At the end of the day you’re bringing, in my opinion, low quality customer who are only in there for the freebies and they’re suffering the consequence of a slowdown in the economy and more focus on profitability.”

Profitability is also on the mind of Glovo after seven years in operation as it focuses on its current markets and investments like those in dark stores.

“The next two years we’re focused on reaching profitability. That’s a key focus. You can’t just expand everywhere you want, we have to choose our battles.”

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