Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Pay And Social Protection In Platform Capitalism

Jan Drahokoupil 21st December 2016

Jan Drahokoupil

Jan Drahokoupil

The market-making matching of supply and demand – not any kind of sharing – defines online platforms. Extension of markets into new spheres may provide new opportunities, but it also undermines the key institution through which our societies organize protection of workers and set their pay: the employment relationship. Re-organisation of activities that traditionally relied on employment into self-employment is, perhaps, the most radical transformative potential of platforms.

So far, however, successful platforms, such as Uber, have rather reorganized sectors that had already relied on some form of self-employment. However, platforms bring greater pressure on pay and working conditions generally as they increase competition by lowering barriers to entry, sometimes also by facilitating regulatory avoidance.

There is now a considerable body of evidence on the extent of platform work as well as working conditions within it (see, for example, here, here, or here). Most workers appear to use platforms to top up their regular income, but there is also a sizable minority, probably exceeding well over a million of workers in the EU, that rely on platforms as their main source of income. Only a small fraction of platform workers attain the local minimum wage. Most transactions on platforms are neither taxed nor covered by social insurance.

Low pay and, somewhat paradoxically, a lack of control over their working time are by far the top grievances of platform workers. Lack of insurance is a major concern for those delivering food. Accidents, including serious injuries, are common among cyclists.

Unfortunately, the regulatory response has neglected the issue of pay and working conditions. At best, we hear about how important it is to ensure portability of insurance systems. However, portability cannot bring security, particularly if the problem is low pay.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

Given the precarious position of platform workers, additional measures should be considered to address the risks related to platform-mediated work. First, while many platform workers are likely to be eventually recognized as employees, the specific nature of work on platforms calls for updating existing labour legislation. Indeed, platform workers represent a category of workers that require special protection, similar to the regulatory provisions for part-time, fixed-term, and agency work that exist also at EU level.

Second, EU competition law should not prevent platform workers from self-organizing, as might be the case under current provisions. At the moment, organizing of self-employed persons is in principle not permissible under Article 101 TFEU. However, EU case law has excluded “false self-employed” from the applicability of Article 101 (Case C‑413/13). The decisions by national courts of whether the platform-workers should be considered an employee, self-employed or false self-employed determine the scope to regulate salaries and working conditions via collective agreements but they will have to evaluate the cases in the light of EU competition rules.

Instead, collective agreements should be possible to extend to wider categories of worker than ‘employee’, with a view to including platform workers. At this moments, legislation in many member states does not include possibility for self-employed persons to conclude a collective agreement or to be covered by one.

Third, workers who do not qualify as employees should be protected through regulations on self-employment, or through a platform-specific protection.

Equally, it is important to distinguish a variety of platforms, with different impacts on labour markets as well as opportunities and limits for regulatory responses. Matching platforms that set pay and contract conditions, such as Uber or Deliveroo, are most compatible with protection that approximates to, or fully complies, with standard worker protection. In fact, Uber pays a guaranteed minimum wage per hour in a number of markets. In Belgium, Deliveroo workers benefit from an agreement, negotiated by the agency SMart, that includes a minimum hourly pay rate, minimum working time, insurance against injury at work, and social insurance. However, a regulatory framework is required to extend such provisions to wider groups of workers.

Platforms that reorganize local markets are also easiest to regulate as both customers and suppliers come under one jurisdiction. The oligopolistic tendency which comes with the network effects also makes it easier for the regulator to target the handful of dominant platforms – such has been the experience of Airbnb and, in some cases, Uber. Here, platforms in fact provide an opportunity to regularize undeclared activities, as their model allows for an efficient monitoring of micro-transactions as well as for their incorporation into insurance and tax systems.

On the other side of the spectrum are platforms , such as CrowdFlower and Upwork, that facilitate the remote provision of services, thus potentially leading to the offshoring of work from local labour markets, often across borders. This is one reason why an EU-wide framework is needed, but additional solutions need to be sought for outsourcing of services to low-income countries.

Finally, platforms, such as Upwork or Mechanical Turk, that allocate work through various types auctions or “contests” – which remunerates only the winners while competing bidders do a job without getting paid at all – call for new institutions of protection to address contest-specific issues, such as a lack of grievance mechanism in case of non-payment, or unfair practices in specifying work content. Again, decent pay is the main challenge.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

The rise of platforms thus brings a number of challenges and it is not obvious how decent pay and working conditions can be ensured in all contexts. In any case, we need an active response from the policy makers. It does not help that the approach from the European Commission, as well as in many member states, has focused on removing regulatory barriers to this “collaborative economy” and ignored the threat to pay and working conditions. Moreover, in practice, the question is not whether platform work can be left unregulated or not, as we have already seen platforms developing their own codes of conduct. The question is whether the new regulatory environment will reflect the narrow interest of some business(es), or a balance of interest among all stakeholders.

Jan Drahokoupil

Jan Drahokoupil is Senior Researcher at the European Trade Union Institute (ETUI) in Brussels.

You are here: Home / Economy / Pay And Social Protection In Platform Capitalism

Most Popular Posts

Visentini,ITUC,Qatar,Fight Impunity,50,000 Visentini, ‘Fight Impunity’, the ITUC and QatarFrank Hoffer
Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse
income inequality,inequality,Gini,1 per cent,elephant chart,elephant Global income inequality: time to revise the elephantBranko Milanovic

Most Recent Posts

Pakistan,flooding,floods Flooded Pakistan, symbol of climate injusticeZareen Zahid Qureshi
reality check,EU foreign policy,Russia Russia’s invasion of Ukraine: a reality check for the EUHeidi Mauer, Richard Whitman and Nicholas Wright
permanent EU investment fund,Recovery and Resilience Facility,public investment,RRF Towards a permanent EU investment fundPhilipp Heimberger and Andreas Lichtenberger
sustainability,SDGs,Finland Embedding sustainability in a government programmeJohanna Juselius
social dialogue,social partners Social dialogue must be at the heart of Europe’s futureClaes-Mikael Ståhl

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

The EU recovery strategy: a blueprint for a more Social Europe or a house of cards?

This new ETUI paper explores the European Union recovery strategy, with a focus on its potentially transformative aspects vis-à-vis European integration and its implications for the social dimension of the EU’s socio-economic governance. In particular, it reflects on whether the agreed measures provide sufficient safeguards against the spectre of austerity and whether these constitute steps away from treating social and labour policies as mere ‘variables’ of economic growth.


DOWNLOAD HERE

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

Foundation for European Progressive Studies Advertisement

The winter issue of the Progressive Post magazine from FEPS is out!

The sequence of recent catastrophes has thrust new words into our vocabulary—'polycrisis', for example, even 'permacrisis'. These challenges have multiple origins, reinforce each other and cannot be tackled individually. But could they also be opportunities for the EU?

This issue offers compelling analyses on the European health union, multilateralism and international co-operation, the state of the union, political alternatives to the narrative imposed by the right and much more!


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube