The platform economy is a broad church. Legislation should embrace it

By looking to the past, rather than accepting the present and looking to the future, European institutions risk passing a law which leaves the European Union stuck in neutral.

Increased digitalisation has led to the development and expansion of the platform economy across Europe. This is changing the way we work, as well as how we buy, sell and share goods and services. In turn, this disruption and growth has attracted the attention of decision-makers and legislators.

Sceptics in political debates and media articles paint pictures of workers with less freedom, less options and less money: humans becoming slaves to algorithms and monopoly-seeking companies. Against this background the European Commission adopts its proposal for a directive on improving working conditions in platform work on December 8.

But what does this mean for the labour market, and what will be the implications for workers and entrepreneurs from Central and Eastern Europe in particular?

Aiming to protect, failing to understand

The new proposal for legislation covers almost every job that is facilitated by technology given the broad scope and definition of “digital labour platforms”.

While the proposed legislation aims to protect workers in the EU it misses the fact that many independent contractors value the flexibility that platform work affords them. A new pan-European survey of more than 16,000 couriers carried out by Copenhagen Economics highlights that most couriers prefer a flexible work model over fixed employment.

Almost 70 per cent of surveyed couriers would not give up flexibility for fixed schedules. Furthermore, delivery work is a complementary activity for 72 per cent of couriers, not their main source of income.

The platform economy is also a broad church: it covers not just delivery riders and people working for ride-hailing firms but also lawyers, architects, medical professionals, musicians, models and influencers. While there are low-skilled workers on small salaries, there are also highly educated platform economy workers who are earning good money doing time-limited gigs for a number of “employers”. In this way, the platform economy reflects the broad spectrum of jobs, salaries and skill levels that are found in the traditional economy.

This lack of understanding has been fuelled by the limited conversations that have taken place with freelancers, platforms and the people and organisations who are driving the new economy across Europe. The European Commission’s consultations have focused on the trade unions and dusty employers’ federations. These are traditional and slow-moving actors who neither understand the power of the platform economy nor grasp the full scale of the changes that are underway in labour markets across Europe.

While the traditional nine to five model of employment has not disappeared, there are now several ways to organise work. This should be understood and legislators should not try and force a square peg into a round hole.

Moreover, the requirements that are being proposed regarding the collection of data are very heavy and will impose huge costs on SMEs and affect the competitiveness of European industry as a result. In addition, there are proposals for the introduction of a number of penalties. These are a concern since they are heavy and will be imposed for even small mistakes.

A 1950s vision of the labour market is to blame

While platform workers should enjoy the same rights as staff in other forms of employment, the issue of being treated as second class citizens does not lie with platforms but rather wider society.

Traditional banks often do not welcome independent contractors and are loathe to give loans for large capital items like cars and apartments to people who do not have a fixed contract and set monthly salary. Similarly, independent workers struggle to get insurance since society is not up to speed with the realities of the labour market of today.

Many entrepreneurs from Central and Eastern Europe are starting technology-based companies and have the potential to provide an engine for growth, jobs and economic success.

By looking to the past, rather than accepting the present and looking to the future, the European institutions risk passing a law which leaves the European Union stuck in neutral.

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