Platform work scenarios: Policy pointers

The research project ‘Future scenarios of platform work’ explores the economic, labour market and societal impacts of two types of platform work – platform-determined routine work and worker-initiated moderately skilled platform work – by 2030. The project identified key driving forces deemed to substantially influence the development of these two types of platform work. These driving forces and associated hypotheses were then used to derive potential platform work scenarios, and, from these, pointers were developed on what policy could do to make a desirable future happen and to avoid an undesirable one.

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Below are the consolidated policy pointers from the overview report Back to the future – Policy pointers for platform work scenarios. Not all the policy pointers below are explicitly featured in the scenarios – some are implicit in the opportunities and risks identified for each scenario. While these policy pointers provide an overview, the policy pointers included with related scenarios should be used for a more comprehensive understanding of this issue.

Publication: Back to the future: Policy pointers from platform work scenarios

  • In spite of the considerable differences among the scenarios analysed, all show a variety of opportunities for the economy, labour market and society. Policymakers should be aware of these. For example, in economically challenging times, such as the aftermath of the Great Recession or the COVID-19 pandemic, an employment form with low entry barriers like platform work can be beneficial for those worst hit – the young or low skilled, for instance. The EU level could act as a facilitator, encouraging an exchange of approaches and lessons learned among Member States.
  • In this context, a common finding across all scenarios is that the growth of platform work in rural areas could be fostered, either through awareness-raising among the population and workforce or by incentivising platforms to offer their services in those areas. Such an approach could serve a double objective: fostering the rural labour market and enhancing the provision of services of public interest (thereby advancing societal goals, such as better provision of care services for the ageing). Reviewing EU rural development policy in this regard could be considered.
  • For such an opportunity-based approach to work effectively, it is important to ensure that platform work acts as a stepping stone into standard employment for those who want this, rather than a route to labour market segmentation or crowding out of traditional jobs.
  • With sound framework conditions, platform work can also be used strategically to promote entrepreneurialism. Platform workers aspiring to work in a self-employed capacity can be supported to try it out, while those who are already genuinely self-employed can be supported to expand their economic activity. In particular, support could capitalise on the networking element of the platform economy, to foster exchange and cooperation among the workers and encourage stakeholder-value business models among platform providers.
  • The establishment of labour platforms applying a stakeholder-value business model can serve a double benefit of improving the working conditions of the affiliated workers and providing accessible and affordable services of public interest. National governments could incentivise the establishment of such platform models (for example, as worker cooperatives) through start-up subsidies or procurement and outsourcing. Or governments could operate such platforms themselves – for example, offering care or transport services in rural areas through community-owned platforms. Such intervention would need to be done in a way that is not perceived as unjustified subsidisation of certain activities, causing social discontent and challenging public budgets.
  • Taking advantage of the data gathering inherent to the platform economy, tax and social security contribution evasion (and hence undeclared work) could be reduced if platforms – voluntarily or legally required – share this information with relevant national authorities. A balance between such information provision and the data protection rights of platform users needs to be ensured. The experience in this context of some Member States as well as the proposal for an EU-level ‘digital single window’, as proposed by the high-level expert group on the impact of the digital transformation on EU labour markets, could be considered.

  • An important characteristic of platform work as of mid-2020 is a striking lack of clarity over whether the established regulations apply to this employment form and business model and, if so, which ones. These questions go beyond employment-related regulation and relate to aspects of sector regulation and consumer protection, for example.
  • The scenarios discussed assume different levels of regulatory clarification in the various areas. Overall, more positive outcomes for the economy, labour market and society are expected if regulatory clarity is higher. This, however, is based on the assumption that the regulations are fit for purpose. Regulation needs to ensure a balance between creating a level playing field between the traditional economy and labour market, on the one hand, and the platform economy, on the other, and it must maintain the attractiveness of platform work as an employment form and business model for the actors involved. If regulation is too relaxed or not well-designed, it can create advantages for platforms at the expense of the workers, clients or competitors in the traditional economy. If regulation is too rigid, platform providers might refrain from offering their services due to lack of profitability, clients might find the business model not cost-efficient or time-efficient, and workers might not be able to capitalise on the flexibility offered through this employment form. From a macroeconomic perspective, this might be undesirable due to the innovation and competitive advantage that could be generated through platform work.
  • Irrespective of the regulatory intensity, a common feature across the scenarios is the enforceability of the regulations. Platform work, similar to other forms of non-standard employment, challenges the surveillance that ensures that market players adhere to the regulations. Capacity-building in national enforcement bodies is recommended. This could have a quantitative aspect (such as investing in digital tools for monitoring or increasing the number of staff) and a qualitative one (such as awareness-raising, exchange of experiences and good practices). Both could take place at national or local levels, with support from the EU level. Existing instruments and networks, like the European Network of Public Employment Services [1] or the European Platform tackling undeclared work, [2] could be used for this purpose.
  • Another approach could be the support of indigenous start-ups in the platform economy and assisting their scaling up to gain a competitive edge over the large non-EU platforms. These platforms are likely to be less challenging to subject to EU and national legislation. Furthermore, a larger number of EU platforms with market maturity will positively influence the competitive landscape of the platform economy, with expected benefits for clients and workers. This could facilitate worker representation and negotiations of working conditions, and the profits they generate in the EU platform economy are more likely to be spent here.

  • Several of the challenges identified for platform work are not specific to this employment form and are found elsewhere in the labour market. Examples include issues related to the misclassification of employment status, bogus self-employment and dependent self-employment in certain types of activity (such as the creative industries); evasion of tax and social security contributions and undeclared work in certain sectors or types of work (for example, household services); access to employment entitlements related to training and health and safety if work is based on tasks rather than a job (as in casual work); and access to representation and a collective voice based on specific employment characteristics (such as solo self-employment or fragmented types of employment).
  • To maintain and improve the labour market standards achieved in Europe over recent decades, further work should be done on these aspects. Their re-emergence in policy debates linked to platform work can give new or enhanced impetus in the effort to find solutions. Such solutions should explicitly cover platform work but could go beyond by comprehensively covering situations characterised by these issues.
  • For better regulation of new employment forms, including platform work, new regulation is not necessarily required. Existing regulation dealing with more traditional employment situations that share characteristics with newer labour market trends could be scrutinised to discover whether they could be expanded to also cover the new employment forms. In the context of platform work, regulations related to temporary agency work or economically dependent self-employment could be considered.
  • From a different perspective, the platform economy could be used as a ‘laboratory’ to pilot innovative approaches, learn from their implementation, and explore the possibility of expanding them to the traditional labour market. Such initiatives could be launched at national level, with exchange facilitated at EU level.
  • On the other hand, there are some matters that are specific to platform work and should be tackled by targeted approaches. Examples are the fairness and transparency of the underlying algorithms, data protection and ownership, surveillance of platform workers, portability of ratings across platforms and redress mechanisms in case of perceived unfair treatment. Considering the international nature of many platforms, and some types of platform work, cross-national regulation or guidance for national actors would be beneficial.
  • One of the most discussed aspects related to platform work is the employment status of platform workers. The outcomes of the various scenarios suggest that clarity on this is key for creating a ‘desirable future’ for platform work in the EU. To achieve this goal, the different scenarios illustrate two options:
    • Beyond the platform economy, Member States could continue the work on defining criteria to differentiate between employees and self-employed. Within Member States, efforts could be enhanced to harmonise the application and interpretation of such criteria across different institutions (such as labour, tax and social insurance authorities or labour courts).
    • With a specific focus on platform work, efforts could be made to establish a default employment status by type of platform work; for example, employee in the case of platform-determined work and self-employed in the case of worker-initiated work. Platforms and workers could have the option to provide evidence that they diverge from this default status if they prefer to do so.
  • Alternatively, or additionally, schemes guaranteeing minimum employment standards including social protection (such as the Council Recommendation on access to social protection for workers and the self-employed (2019/C 387/01)), [3] irrespective of employment status, could be implemented. This requires some consideration regarding the contribution basis, which should be designed so as not to discourage workers from opting for a self-employment status due to higher costs involved, while at the same being cognisant of the financial sustainability of the system in the context of decreasing state budgets.

  • Due to the substantial challenges related to legislating for the employment and working conditions of platform workers, alternative forms of regulating the relevant frameworks need to be considered. One option is applying more effort to give platform workers a collective voice and to enable social dialogue and collective bargaining. In spite of the considerable differences across the analysed scenarios, they all conclude that trade unions or other representative bodies (like grassroots organisations) need to be strengthened to better represent workers’ interests in the platform economy. This is particularly the case for platform-determined platform work, which is characterised by a wide range of unfavourable working conditions and low negotiation power of the individual worker – even in the more favourable scenarios.
  • Another aspect to be considered is the lack of or limited access to representation for platform workers acting as self-employed. Competition law needs to be reviewed to discover whether current interpretations might be too narrow to adequately cater for the changing realities of the labour market. Such assessments could be driven at European level, so as to provide guidance for national implementation. These should go beyond platform work and more generally cover solo or small-scale self-employment, including dependent self-employment.
  • At the same time, it should not be taken as a given that all platform workers want to be or have a need for representation. This is particularly the case for those acting as genuine self-employed, as observed with regard to worker-initiated platform work. Instead of finding solutions through representation, efforts could explore whether and how platform-to-business regulation could be further improved to avoid unfair terms and conditions for self-employed trading with platforms.
  • Along this line, platform workers’ role in the governance structures of platforms could be strengthened to provide them with greater influence on the employment conditions created by platforms. Regulations addressing workers’ representation on management boards could be reviewed, for example as regards the feasibility of extending the minimum threshold numbers of employees to affiliated workers (that is, including those acting as self-employed for the platform).

  • It is striking that in those scenarios where the regulatory aspects of platform work are less of an issue, policy pointers related to digitalisation are prominent. Europe needs to ensure that it does not lag behind in the development and deployment of modern and advanced technologies, so that it maintains and improves its competitive position in an increasingly globalising digital era. While this is relevant beyond the platform economy, it should also be considered here, due to the strong technology reliance of the business model. Investments of the EU and Member States in research and development, along with deployment in the economy, such as the Digital Europe Programme (2021–2027), can foster the competitive position of indigenous platforms.
  • Because the platform economy is based on data, regulators need to create adequate frameworks to protect users – workers and clients – as regards the creation, collection and use of data (such as the General Data Protection Regulation rules). The EU should invest more in identifying the issues at stake (the ‘power of data’) and how they could be dealt with, and facilitate capacity-building and exchange of practices (such as support, regulation and enforcement) across Member States.
  • Cybersecurity is another issue related to data in platform work that could be tackled at supranational level. Based on the example of other sectors (like in the airline industry), an EU-wide infrastructure or umbrella organisation that sets minimum standards of conduct that all market players must adhere to could be established.
  • Skills development should receive more attention in discussions and initiatives related to platform work. This could be initiated at EU level and operationalised in Member States. Different target groups should be considered, as noted below.
    • From a societal perspective, the increase in services mediated through platforms requires that specific population groups are familiarised with the use of this technology to satisfy their needs. Particularly the older generation should be targeted, considering the demographic trend of an ageing society and an emerging trend of digitisation of services of public interest.
    • From a labour market perspective, workers should be familiarised with using platforms to find and conduct work. Notably, lower-skilled workers who run a higher risk of losing their jobs because of automation and who may need to find alternative employment could be coached in the effective use of platforms.
    • From an economic perspective, highly educated professionals tasked with programming the algorithms underlying platforms need to be further trained to progress the quality of the algorithms. Emerging alternative platform business models (those based on stakeholder value) will have different requirements of such algorithms (for example, incorporating societal values or demands in the selection mechanism rather than using price as the dominant criterion).

References

  1. ^ European Commission, European network of Public Employment Services
  2. ^ European Commission, European Platform tackling undeclared work
  3. ^ European Commission, Council Recommendation of 8 November 2019 on access to social protection for workers and the self-employed, 2019/C 387/01

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