The realities of forced self-employment in Hungary.
When we talk about the situation of the workforce in the first half of the 21st century, we cannot ignore the phenomenon of Internet-based job placement, the gig economy. This system exploits the potential of internet technologies, the very permissive labor laws in favor of capital in many countries, and the systemic state-sponsored repression of unions and labor combined with the disappearance of traditional jobs.
The main principle of the system is that it does not consider its workers as employees, while in practice they work as employees. Weak and weakening regulations in the interest of wage-earners do not protect workers in this system, because legally they are considered contractors to whom the company merely outsources the work.
The Velorex of the employment system
Like the justly forgotten Czechoslovak bat did with the motorbike and the car, so does the employment model of the gig economy combine the disadvantages of traditional wage work and small entrepreneurship. A good example of this in Hungary are food delivery services such as NetPincér [literally: NetWaiter – transl. note] and Wolt.
Let’s consider the example of NetPincér: when the company was launched in 1999 as Hungary’s first online food ordering aggregator, it was a platform through which users could browse through the menus of several restaurants. Their order was then transmitted to the restaurant, which then delivered it using its own couriers. Over the years, there have been some minor changes, with the introduction of online payment, different advertising formats for restaurants, etc., but the formula has remained essentially the same.
The big change – at least in Hungary – came in 2018. NetPincér had already been acquired by the German Food Panda in 2014, and by the German Delivery Hero in 2016 (which, incidentally, has led to a growing concentration of the European and global food delivery market). Finally, at about the same time as Wolt’s entry into Hungary, NetPincér also switched to its current business model and entered the delivery market.
Although there are differences between the business models of food delivery companies such as NetPincér, Wolt, and Deliveroo in the UK (and several other countries), the basic pattern is similar.
We contacted NetPincér and Wolt to inquire about the ratio of registered workers to contracted couriers. NetPincér’s response reveals that although the demand for couriers had been increasing year by year and recruitment had been steady even before the coronavirus pandemic, the company had to step up their efforts even more since the outbreak. In the past year, the company’s courier workforce has grown by more than 2,500 to almost 4,300. Although its clerical workforce has also grown significantly in the past year, there are still many times fewer office workers than couriers – almost 300, after their number doubled in 2020. This also means that there was a proportionately higher increase in the number of couriers.
Background work is carried out by workers with a registered employment status, as NetPincér representatives have said:
“A professional back-office team ensures the smooth running of the company to provide the highest level of service to customers, as well as partner restaurants and various business and courier partners. This background work is carried out by NetPincér’s skilled staff. The organizational structure of Netpincér includes typical corporate areas such as logistics, product, tech, BI, marketing, finance, HR, sales, and customer and partner service.”
According to Wolt’s responses, they currently employ 6,000 couriers and 150 registered employees, which is also a significant increase compared to previous figures.
Companies are preparing for further growth in the coming period, both in terms of the number of contractors and registered workers.
What does the gig worker make of all this?
In addition to the fact that in both cases couriers are formally hired as self-employed, there are significant differences between the employment models of the two large companies. At NetPincér, couriers have to pick up their shifts in advance each week and receive a base rate as well as per-delivery pay, while at Wolt there is no base rate, couriers can start work when they feel like it, and can also choose to stop work early if they don’t have a package or task. However, Wolt couriers can agree in advance to be available for a certain period, in which case if they do not earn the availability fee, the company will supplement their earnings This option is available to a limited number of couriers in a given area and time period.
Both companies advertise themselves as offering flexible working arrangements, but as many examples in the gig economy show, even if this is true in form, the situation is more nuanced when one intends to actually earn a living from this kind of work.
According to our sources at NetPincér, the earning potential is strongly influenced by the courier group in which a worker is assigned by the system. Those in higher ranking groups can take up shifts earlier, and have access to better shifts. Unsurprisingly, the system encourages couriers to work as many shifts as possible, delivering to as many addresses and as quickly as possible. Those who are not willing to self-exploit will be ranked lower by the algorithm, so they will only be able to take on worse shifts.
“This means that only the first two or three groups can actually plan their own schedules, the others less so. My roommate is also a courier, he’s in group six or seven, and he can only pick up one two-hour shift daily, after which he has to keep refreshing the app at dawn and throughout the day to find free shifts. This is his main livelihood, and he can’t really make ends meet with two hours of work a day. I’m in the second group now, but this has cost me a fuck-ton of work. And by fuck-ton I mean more than 40 hours a week. I wasn’t late from shifts, I didn’t do no-shows, what can I say, I’m a model citizen.”
— one of our sources from NetPincér told us. But it is also possible to get behind in rankings if, for example, you are forced to stop work because of a punctured tire, as this reduces the number of hours you have actually worked. What’s more, flexible working hours do not include the right to take time off without penalty – not only is there no paid leave, unlike in the case of registered jobs, the system even penalizes absences. As our source has noted regarding taking time off,
“They say that you can manage your schedule however you want. But if you miss a week’s work, that’s one week less of hours worked, so you’ll move down in the group rankings again.”
Although Wolt’s system does not penalize in this way – given that the couriers can practically check in when they have time – there are incentives for a worker to take on as many hours as possible, and there is also a sort of “hunger games” nature to the work in the field. Since there are no set shifts, beyond the small number of guaranteed hours, the couriers have to compete for orders, i.e. for per-delivery pay. As our source from Wolt reported,
“You have some freedom in deciding what to do when, but if you want to do something else on the side, it’s not really worth it. There are also dead periods despite the pandemic. You get 500 HUF per hour for an address, lunch and dinner times have a higher rate, 750 and 600 HUF, respectively. So these are the periods you should aim for, and that’s also when you get more orders. Because of this, Friday evenings, Saturday evenings, Sunday lunches, weekday lunches, these are the ones that are worth it. Which is pretty spread out.”
In other words, shifts become fragmented, with long times between the busiest periods. This is when, for example, you might see dozens of Wolt delivery-people in Kálvin Square in Budapest, waiting for orders, looking for an opportunity to make some money.
“There were times when I was out for an hour with only one address, or even none, so I went home instead and stopped working [for that day].” — our source described the situation.
In short, companies are putting the burden of the unequal distribution of orders on the couriers. They have no obligation to them, and if there are no shifts, worst case scenario the couriers will get no work and pay.
For the busier days and periods, there will be enough applicants anyway, given that companies are over-insuring themselves – overall, they employ more couriers than they usually need. This way, deliveries can go uninterrupted, but couriers have to compete among each other to make a living, while there is no compensation for idle time. One of our sources, who — like many others — became a courier after losing his job in the hospitality industry, highlighted the drawbacks of the competition between workers:
“It’s a terrible system to work in, there’s constant competition [between couriers]. A lot of people were hired during COVID, and obviously as the lockdown ends, people will order less. I’m afraid there’s going to be a hell of a fight for shifts. The whole compulsory self-employment thing is quite shit, there are no proper holidays, if you go away for two weeks, you can go, but you will just fall out, or get put in worse groups. So the mood is constantly tense, and this competition will only increase once there are fewer orders and better weather and more couriers wanting to work. Nobody needs that.”
In light of the above, it is no wonder that — although some people may spend years at a food delivery company — there is also a high turnover rate, as our sources reported.
“There’s always new ones, new people who want to be couriers. There was this Tények report not too long ago, about how much money couriers make, and then the Facebook group was flooded with a ton of applicants asking, ‘Oh my god, do you really make three thousand HUF an hour?’ The word out there is that we’re making very good money, it’s an easy job, so there’s always more people coming in. And then of course you meet a courier, you start talking, and it turns out that he’s been doing this for three weeks, he loves cycling, but he can only do it for two more weeks at most, because he can’t take the traffic and NetPincér’s behavior. People are spinning out and new people are coming in.”
In this respect, the situation is no better at Wolt:
“I’ve been hearing this from people doing Wolt for a long time, that there is a clearly growing market, and a tendency that before Christmas and during pandemic restrictions they hire lots of people, they offer you a lot of surge rate hours, and if you deliver to six hundred addresses in a month, you’ll get a bonus of 15,000 HUF. So they try to hire slightly more people than they need all the time, and then some people leave. Then they hire more, and then these people pull out again during the next period of more consolidated operations or more stable planning. It doesn’t matter who they keep, who keeps on working there, as long as the company is always a little over-insured, and has a little more coverage compared to NetPincér for example.”
If so many workers are in such a vulnerable position, one might ask why they are not collectively demanding better working conditions or a registered job and the benefits that go with it, seeing as they are de facto employees of a company. In other countries where this type of employment is more common, we can see examples of such organization. In the UK, workers at the courier company Deliveroo have recently staged a protest, and we have seen thousands striking in the US in recent periods. Partizán told the story of couriers organizing in Western Europe, and of course humor can be used to highlight the inhumane and exploitative nature of the gig economy, which has successfully started to undermine workers’ collective rights even in a “social market economy” such as Germany — where the following program was broadcast by the German public broadcaster ZDF.
In Hungary, however, this form of employment is still relatively new, it affects a small proportion of society, and there has not yet been much trade union organizing among the workers of the gig economy. Many people, aware of the painful experience of a large part of humanity, feel that any job that provides some kind of a livelihood is better than starving to death without work.
“It’s [an] interesting [situation], because it’s cool that [under the small business tax system] we pay 50,000 [HUF] a month in taxes, and we can get cash and tips, and that’s all ours, but that’s exactly why NetPincér doesn’t see us — I don’t know about Wolt, because I work there less — as if we matter. They don’t care if there’s a courier less, and that’s why they treat us the way they do. Certainly, if we were their own employees, we would be taken more seriously. I suppose it would make a difference if they lost one of their own employees every week and then had to register a new one. That would certainly be a lot of money, but this way it doesn’t cost them much to get rid of us. (…) In the courier Facebook group, we all see couriers ranting every day, and whenever you meet another courier at a restaurant, they start cursing at something, of course often at NetPincér. But I don’t think they realize that things could go differently. I think couriers much prefer being partners [i.e., contractors – KSÁ] than employees of NetPincér, and it would be difficult to convince them that there are disadvantages.” — one of our sources shared. This phenomenon is not specific to one company:
“The majority of the couriers I met were very dissatisfied, but there were also some who did these things in a completely robotic way. Working for Wolt in itself gives the illusion that you are playing a computer game. You have minimal contact with anyone, whether they’re customers or restaurant workers, everyone just wants to be done with you. But you have this app in your hand that operates with little ringing tones and stuff like that. A lot of people do it as if they were playing, I don’t know, GTA or something, I don’t know any delivery games (laughs). So, on their part I don’t think there’s any [intention to organize]. And a lot of people want to do this temporarily, while they don’t have a job. This is not representative, but most of the people I spoke to had come from other sectors of the hospitality industry. They’re in a vulnerable position at their other jobs on the one hand, and they probably wouldn’t want to get involved [in organizing] because they’re not in it for the long run. So I see relatively little chance that they could be mobilized quickly. Of course, during the pandemic, the semesters go by quite quickly, and it might look quite different if you had to do this for a longer time.”
It might also be interesting to think about why the government, tax authorities, labor authorities, and other relevant institutions turn a blind eye to the phenomenon. After all, according not only to the experience of the couriers, but also to the advertisements of the companies themselves — although, officially, they act as intermediaries — in practice, they virtually employ the couriers. Stricter government regulation would not be unprecedented, with Spain and California among others who are already taking steps towards recognizing workers in the gig economy as waged employees.
However, it is not yet known what the government will do about the gig economy in Hungary, and how companies will get around the measures to eliminate hidden employment. In any case, it would be an alarming trend if the government were to allow the masses of unemployed people to be absorbed into the gig economy, which provides much worse conditions for its workers.
It would be wrong to deny that courier work – as NetPincér pointed out in their response to our enquiry – has undoubtedly been a lifeline for the masses of people who have lost their jobs as a result of the crisis, as there are people – including some of our interviewees – who have been working in the gig economy for years for their daily livelihood – and of course, one could also cite the example of the Wolt couriers who earn 800,000 a month.
We also had sources who were happy with their situation and with what the company was offering them. According to one,
“For me, it means a lot to be my own person, to not have to go to a certain place at a certain time. (…) You put yourself online and then you work. And if you get bored because you’re tired, hungry, or have any problems, you can quit if you don’t have any deliveries on you. Actually, I think you’re completely free.”
This source has been a courier for years, initially to supplement his income, but this is now his main job. He gets by on 40-42 hours a week and 4-5 days off a month. In his opinion, there is no perspective in Hungary for the kind of organizing seen abroad, as he believes there is no demand for it. This is consistent with Wolt’s view:
“Our couriers are self-employed, so they can decide when and how much they work, as well as how long they work as couriers. Flexibility is what couriers value most in their partnership with Wolt.”
However, for most, gig economy, and courier work within it, has been a forced career path that has provided an escape route from unemployment as numerous jobs have disappeared. And while we know that in the hospitality industry there was already a very high proportion of people working in the black or declaring fewer hours, the pandemic has only accelerated the growth of the gig economy in Hungary (which is already a serious problem in the West).
In other words, by the first half of the 21st century, emerging companies that take advantage of the opportunities offered by digital capitalism and build on the model of gig economy, and the model itself have successfully halted the major achievements of labor organizing of the previous centuries. They do this not by abolishing or weakening the regulations protecting workers’ rights — although there is a tendency to do so, as exemplified by the “slave law” in Hungary — but by denying the status of workers as wage workers. As one of our sources said,
“The system is very good at planting the idea in people’s minds that they are all self-employed entrepreneurs, making their own fortunes. And objectively speaking, this system encourages competition rather than cooperation. Plus, there’s this weird legal situation that we’re under the small business tax system, which makes joint action legally impossible, or at least very difficult. Of course [registered employment] would have its advantages. There would be slightly less pay, but more predictability, more time off, and so on. But this… is obviously a big fucking lie. You’re not an entrepreneur, clearly you’re not an entrepreneur, only formally. You don’t behave like an entrepreneur because you don’t own a share in anything, you don’t own a business, you own a bike or a Suzuki Swift. You are actually a worker who ‘enjoys’ all the disadvantages of being an entrepreneur and all the disadvantages of being a worker.”
The market-concentrating effect of food delivery platforms
The quality of service available to restaurants using these platforms depends on their capital strength. For example, in addition to advertising directly to users, select customers and restaurant chains can also be prioritized by the system on the basis of individual agreements, and ranked higher on the platforms seen by customers. Conversely, smaller restaurants in poorer negotiating positions can be charged higher commissions than larger ones by online food ordering companies – while their own shadow kitchens are naturally trying to improve their position.
When Netpincér was launched, the company charged shops a commission of seven per cent; today they can charge a restaurant up to thirty per cent per order. Of course, over the past two decades, the quality of service and the market share of online food ordering has grown. This also means that restaurants don’t have much of a choice. Especially in a pandemic situation, when people are ordering takeaway food at a much higher rate than before, it is only a small exaggeration to say that the survival of restaurants depends on their presence on online food ordering platforms. We asked NetPincér how the pandemic has affected registered restaurants, and the company was happy to answer that,
“In the past year, more than 2,500 new restaurants and shops nationwide have signed up to NetPincér: restaurants, cafés, grocery stores, bakeries, florists, liquor stores – our list of almost 5,000 partners is growing. Even before the pandemic, we were already experiencing a steady increase in the number of orders, which has continued to grow over the past year, and we now have a customer base of almost 1.5 million.”
Wolt has also seen an increase in the number of restaurants contracted during this period, as they reported,
“There are nearly 3,000 restaurants on offer, but this number is steadily rising with the opening up of cities in the countryside. Signing on retail partners will also be an important objective for us in the coming period.”
This can also lead to smaller restaurants that are less able to bear the burden going out of business, or their owners might prefer to use their infrastructure exclusively as a shadow kitchen – which, while making their revenues more predictable, makes them more dependent to the platform. Hybrid solutions can also be envisaged, where a kitchen serves both a restaurant for on-site consumption and a shadow kitchen.
This article was originally published in Mérce and was translated by Noémi Bíró. It is part of a series by ELMO (East Left Media Outlet). In honour of the international labor day, May 1st and May as a month dedicated to workers’ struggles, this article is part of an ELMO series titled “Gig work in CEE’s platform economy”, a series of texts about the gig economy and platform work in various Eastern-European countries. ELMO plans to hold a panel discussion on the topic at the end of the series.
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