Regulating the Platform Economy in the New World of Work

This article is authored by Bettina Schaller, Head of Group Public Affairs

Over the last few years, the platform economy has been one of the most hotly debated political topics in "Social Europe”. The Adecco Group is involved in this debate for three main reasons:

1. We provide so called triangular employment relations (where we as the employer arrange the placement or assignment of the employee with a third party) and may also be defined as a platform, depending on the definition one chooses to use.

2. We have a well-regulated agency model, our unique business solution. Platforms that use bogus self-employment models compete unfairly and that's one of the reasons we call for the need of an even playing field.

3. We are part of the solution to the current crisis and we already support some of the big platforms with our decade-long experience in HR and employment.

The (EU) policy debate

On a conceptual level, we do not believe it makes a great deal of sense to create specific rules for platforms. Everyone has a different understanding of what a platform is so instead of differentiating between "platforms" and others, a better approach would be to examine the underlying relationship between employment and freelancing.

Although employment relationships are already well protected, and new rules are being added on transparent and predictable working conditions and minimum wage, there is a problem (not limited to platform work) with fraudulent self-employment as well as with genuine but vulnerable self-employed individuals.

In the UK, over five million people work on platform work, according to Mick Rix, the national officer at GMB.

“And that's becoming a large proportion of the labour force, the vast majority of these people didn't get any earnings during the pandemic. They didn't get any social protection and still they paid taxes,” said Rix. “That is something that gets regularly overlooked, whether it's genuine self-employment or bogus.”

Based on the Adecco Group’s (TAG) decades of expertise in offering flexible work via the agency work model, TAG’s paper Delivery Pending: How to drive a better instant delivery platforms world of work examines not only the business landscape of those job platforms but also the policy conversation surrounding platform workers' employment conditions and labour rights. We published the report at the end of last year, contributing to the current gig economy discussion and platform work.

According to Max Uebe, European Commission’s Head of Unit for "Future of Work, Youth Employment” over 5 million people providing services on platforms are misclassified, which means they don't have the status they should.

“It is important to know that the employment status of a worker is the gateway to labor rights and social protection,” he said.

To address this challenge, the Commission has established five criteria and if two out of the five are met, the presumption of employment will be established at a European level and throughout the European Member States,” says Uebe. “We hope that is a really important and urgent piece of legislation that is to be agreed upon very soon by the Council of the European Union and the European Parliament so that we can contribute to improved working conditions for the people.”

All things considered, we support the Commission's Directive proposal to improve the working conditions in platform work. In light of the current political climate, a rebuttable employment relationship does help level out the playing field and avoid competition at the worker's expense.

It doesn't mean this presumption should apply to all self-employed workers, as some EU stakeholders are proposing though. It should only apply when there is a reasonable expectation that the worker will indeed experience dependence and a lack of true entrepreneurship. As an example, many architects, designers, or even contractors do not need this.

“Certain self-employed workers though are very vulnerable, including platform workers, and this is something we know for a very long time,” says Stijn Broecke, Senior Economist at the OECD. “There are plenty of workers who are classified as self-employed workers, but when examining their working conditions they really are employees. Most countries have legislation and regulations in place for that so it's really about applying that legislation and making sure that workers are correctly classified,” he argues. And even then, even when we can get the classification right according to Broecke, there will always be workers financially dependent on one client, one employer. And that’s another form of vulnerability. “And let’s not forget particularly vulnerable workers, for instance, recent migrants who might not have many outside options, which give the platforms a disproportionate amount of bargaining power over these workers.”

Platform work: A vision for the future

Platform work is one of many forms of flexible work. We at the Adecco Group believe that when diverse forms of work are available and accessible, labour markets, workers, and businesses will thrive.

Instead of restricting access to these forms of work, we should focus on ensuring that they are paired with social protection. With decades of experience, the Adecco Group provides flexible and secure employment options for companies and workers.

However, this protection comes at a cost. In our paper, Delivery Pending: How to drive a better instant delivery platforms world of work we argue that the platform work sector might need to radically change business models in order to prepare for this. In addition, consumers also have a role to play. We have to accept that pizza delivery does come with a price. Would it be acceptable if the pizza cost one or two euros more, knowing that the mark up would lead to a higher pay and access to benefits of the delivery person?

We can only succeed if we work together. There in a need for platforms, labour unions, and policymakers to come together and work collaboratively. This webinar and TAG's efforts in highlighting the gig economy challenges are geared to contribute to the discussion toward a regulated platform economy.