Business as usual (Platform work scenario)

The business as usual scenario assumes the least change compared with the current situation, so it is the most probable in the short run.

The scenario assumes a continued moderate level of technological progress and labour market polarisation. Platform work is characterised by a dominance of non-EU platforms that aim to increase their profits, and further expansion and market diversification is expected.

In terms of labour (including social protection), sector and tax regulation as well as consumer protection, there is no harmonised approach across the EU on how to deal with platform work. Some Member States regulate some of aspects of platform work, while for other aspects and in other Member States, a lack of clarity over which regulation to apply remains. Overall, this results in divergent approaches across the EU.

Driver	Hypothesis
Technology	Moderate adoption
Labour market	Polarisation
Consumer protection	No common approach, with divergent approaches across Member States as to the applicability of the EU consumer acquis and data protection regulation
Labour regulation	No common approach and no clear definition in Member States
Sector regulation	Unclear which sector regulation applies
Information obligations regarding tax and social insurance	No harmonisation attempt for platform obligation at EU level
Platform ownership and governance	Dominance of non-EU shareholder-value model platforms
Platform business model	Market diversification and expansion

Opportunities

Risks

Concentration of platform work in urban areas facilitates regulation and enforcement. Increasing task diversity within platform work qualifies platforms to be classified as information society actors, facilitating their regulation at EU level in certain domains (such as the single market or data issues). More widespread use and task diversity within platform work provides better access to services to the dominant client group – private individuals and households. This includes services where demand is likely to increase, such as care and personal services, but which are increasingly difficult to access due to lack of provision or high costs. Increasing demand for services mediated through platform work and advancements in enabling technologies (such as electric bikes and virtual reality) enhances labour market access for a larger group of the population (such as physically less fit or less-skilled individuals). The increasing importance of ratings and automated task assignment based on transparent and objective criteria or algorithms enhances labour market access for some groups typically subject to discrimination (PD). Increasing demand for services mediated through platform work, particularly when consumer protection also covers peer-to-peer services, facilitates earning opportunities for those using platform work strategically (WI). Consumer protection regulation covering platform-mediated peer-to-peer services provides new business opportunities for the insurance sector.

Dominance of non-EU platforms challenges regulation and enforcement. Increasing task diversity within platform work qualifies platforms to be classified as information society actors, challenging their regulation at sector level in Member States in certain domains (such as labour or social policy issues). Dynamically changing business models challenge regulation of platforms through legislation, which tends to move slower. Dominance of large non-EU platforms results in an oligopolistic market situation, hampering the market entry of new players, thereby endangering healthy competition and economic and labour market innovation. Dominance of large non-EU platforms results in profits realised in the EU being spent in other world regions, thereby fostering these economies rather than the EU economy. Lack of clarity regarding the sector classification of platform work results in unfair competition between the platform and the traditional economies, with the latter crowded out, and deteriorating service quality and consumer protection. Concentration of platform work in urban areas hampers economic convergence of rural and urban areas due to diverging developments (platform work crowding out certain sectors of the traditional economy in urban areas). Concentration of platform work in urban areas accentuates the labour market polarisation that is already found to be more severe in urban areas than in rural areas. Increasing platform work in combination with a polarising labour market results in higher levels of labour market segmentation, with limited career options for workers, skills mismatches and potential deskilling. Working conditions deteriorate further due to the strengthening position of platforms caused by a plentiful and replaceable labour supply (PD). Unregulated consumer protection for platform-mediated peer-to-peer services leaves consumers in a high state of insecurity. The unregulated employment status of platform workers results in misclassification, in turn limiting their access to employment rights, social protection and representation (PD). The increased importance of ratings based on opaque criteria or underdeveloped algorithms unduly hampers workers’ access to work, particularly if portability of ratings across platforms is limited and redress options are few (PD). Tax and social insurance contribution evasion, due to the lack of obligation on platforms to report information, in combination with platform work increasingly replacing traditional employment, results in reduced state income and increased challenges for the welfare system (PD).

• PD – mainly relevant for on-location platform-determined routine work
• WI – mainly relevant for on-location worker-initiated moderately skilled work

These policy pointers are related to this scenario. As the analysis concentrates on two specific types of platform work (on-location platform-determined routine work and on-location worker-initiated moderately skilled work) and because of the heterogeneity within platform work, the policy pointers cannot necessarily be generalised for all platform work.

Capitalising on opportunities inherent to platform work

• Platform work offers opportunities, such as labour market integration of disadvantaged groups. Policymakers should actively consider these opportunities in their policies and instruments. Notably in economically challenging times, such as the aftermath of the Great Recession or the COVID-19 pandemic, employment forms that have low entry barriers can be beneficial for those hardest hit, such as the young or low-skilled. The EU level could act as a facilitator encouraging exchange of approaches and lessons learned across Member States.

• In this context, reviewing EU rural development policy to encourage the growth of platform work in rural areas could also be considered, either through raising the awareness of the population and workforce, or by incentivising platforms to offer their services there. Such an approach could serve a double objective: developing the rural labour market and enhancing service provision (thereby advancing societal goals, such as better provision of care services against the trend of demographic ageing).

• 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 wish so, rather than resulting in labour market segmentation or crowding out of traditional jobs.

• It needs to be ensured that the algorithms underlying the matching of supply and demand mediated through the platforms are fair and transparent, that ratings are portable across platforms, and that workers have redress options if they feel unfairly treated. Considering the widespread international business activity of platforms, such could be dealt with at EU level to ensure an effective and harmonised approach.

Clarifying the regulatory regime

• Platform work, as a new employment form and business model, does not fit well in the established regulatory frameworks. This challenges fair competition and labour standards, access to representation, consumer protection and the sustainability of tax and welfare systems. More clarity is needed about which of the current regulations apply to platforms and platform work, and how they apply – for example, which sector regulation does the platform adhere to, and what is the status of platform workers as regards labour law and consumer protection? It may be that existing regulations need adaptation or that new regulation is needed. Depending on the mandate for the different policy areas, such clarity could be established at EU level or at national level, with some guidance from the EU level.

• Platform work needs to be recognised as a complex phenomenon which touches upon a variety of policy and regulatory areas, such as employment and social policy, taxation, competition, consumer protection, data protection and intellectual property rights. These need to be dealt with in a holistic approach rather than in isolation as the areas are interrelated.

• That said, clarification of the employment status of platform workers could be an entry point as it affects a wide range of the issues at stake. Two different approaches could be considered:

  • In a wider consideration of potential misclassification of employment status, that is going 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/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 taken to establish a default employment status by type of platform work (for example, employee in case of platform-determined work, self-employed in case of worker-initiated work), with an option available to platforms and workers to provide evidence for diverging from this default status in individual cases if they prefer to do so.

Ensuring that regulations can be enforced in the platform economy

• Some of the characteristics of platform work, such as its fragmented nature, cross-border issues and the dominance of non-EU platforms, challenge the enforcement of EU and national regulatory frameworks. The capacities of national and EU authorities as well as cooperation and coordination across authorities (such as labour inspectorates, labour courts, tax authorities, social insurance institutes) to ensure effective enforcement need to be improved. This could be realised in a joint effort at the EU and Member State levels to draw on existing tools like cross-national networks of authorities, such as the European Network of Public Employment Services or the European Platform tackling undeclared work.

• Another approach could be the support of indigenous start-ups on the platform economy and assist their scaling up to gain a competitive edge to the large non-EU platforms. Such types of platforms are likely to be less challenging to subject to EU legislation and national legislation. 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 approach could facilitate worker representation and negotiations of working conditions. Using this approach, there is also a higher likelihood that profits realised in the platform economy in the EU are spent here.

Securing the employment rights and working conditions of platform workers

• In a situation of unclear employment status, platform workers’ employment rights and working conditions need to be fair and reasonable. This should be addressed in a wider discussion on precarious and vulnerable work prevalent in the continuously changing European labour market, notably as such workers are observed to be particularly hit by economic and labour market shocks like the Great Recession or the COVID-19 pandemic. At the same time, it is important to explicitly mention platform workers in any policies or initiatives established to address these issues, to ensure that they are covered and to avoid ambiguity.

• Existing regulation dealing with employment situations that share characteristics with platform work, such as temporary agency work or economically dependent self-employment, could be scrutinised to see whether it could be expanded to include platform work.

• Alternatively, or in addition, 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)), irrespective of employment status, could be implemented. This requires some consideration regarding the basis for contribution, which should not discourage workers to opt for self-employment status due to higher costs involved, while at the same time considering the financial sustainability of the system, given decreasing state budgets.

Supporting stronger collective voice of platform workers

• Some of the emerging issues related to employment and working conditions of platform workers might be better tackled through social dialogue and collective bargaining rather than legislation. However, in some cases, platform workers are denied representation because of their self-employment status. The often-narrow interpretation of the protective intention of competition law should be reviewed as regards its adequacy for platform work and other emerging activities in which actors are classified as self-employed. It could be considered that some types of self-employed workers are generally allowed to organise, with a guidance for relevant criteria coming from the EU level.

• National governments could support trade unions or other representative bodies in their efforts to negotiate employment and working conditions, for example, by capacity building (which could also be supported at EU level), including safeguarding sufficient resources.

The project identified eight key driving forces deemed to substantially influence the development of the two analysed types of platform work by 2030: technology, the labour market, consumer protection, labour regulation, sector regulation, information obligations relating to tax and social insurance authorities, platform ownership/governance, and platform business models. Based on assumed developments of these driving forces, 10 possible future scenarios were derived.

Technology

Technology develops at a moderate pace. 5G mobile technology is available only in the main cities, so that the Internet of Things (IoT) has developed only in these cities for predictive maintenance of buildings or large appliances or for tracking vehicles more systematically. Interconnectivity between technologies has improved but requires further development to arrive at a seamless connectivity and fully integrated solutions. Robotics, including artificial intelligence, develops for businesses. Households and private individuals tend to reject connected technologies to avoid companies’ intrusion into their privacy. Electric vehicles have reached a high level of market maturity, with widespread adoption of electric cars and bikes. Autonomous vehicles, in contrast, are still in a trial phase, with pilot projects in some areas, but they are not widely deployed.

Competencies and capacities to develop and implement algorithms, data storage and data analytics have developed and are widespread but have not yet reached their full potential in terms of both technological development and operational deployment in the economy and labour market. 3D printing has reached a substantial level of application in some manufacturing industries and some countries, driven in part by the need to reduce transport for environmental protection. The technology is not common in individual households. Virtual reality is often used for training purposes but not much elsewhere. Augmented reality and blockchain are still being tested, without wide deployment across sectors.

For platform work, a moderate pace of development results in a further concentration of its use in urban areas, while application in more rural areas remains limited. The limitations as regards interconnectivity, algorithms and data analytics hamper the appeal of platform-determined and worker-initiated platform work for business clients; hence, private individuals and households remain the main clientele.

On the demand side, no particular changes in dynamics occur as the services provided are neither strongly fostered nor hindered by the technological developments. For example, the need for maintenance services is unchanged as replacement parts are not yet 3D-printed by households themselves.

On the supply side, the advances in electric bikes and virtual reality facilitate platform work for a larger group of workers: electric bikes enable less physically fit people to engage in platform-determined work, and virtual reality enriches training in worker-initiated platform work.

Labour market

In the European economy and labour market, there is high degree of demand for high-skilled and low-skilled workers, with a hollowing out of moderately skilled jobs (polarisation). This is driven by the combination of megatrends: technological change, environmental developments, demographic changes and societal developments, and globalisation.

This stimulates more demand for workers for platform-determined work but also more supply, as moderately skilled workers opt for platform work due to a lack of alternatives. This development further enhances the power of platforms (and their clients), as the supply of labour exceeds demand, so workers are replaceable. The result is a further deterioration of the employment and working conditions of platform-determined workers and an increasing skills mismatch.

For the worker-initiated type, the resulting increase of platform work means people are more familiar with and accepting of this business model, which leads to more demand for platform-mediated household services at the expense of more traditional ways of making such arrangements. This improves the situation of workers who use platforms strategically to make a living or to earn additional income, while it decreases the earning opportunities of self-employed workers and companies (and accordingly, their employees) who rely exclusively on the traditional economy.

Consumer protection

In terms of consumer protection, there are different approaches across Member States to the application of the EU acquis and data protection. In some Member States, the competence of national consumer protection authorities has been expanded to cover platform-mediated peer-to-peer transactions. In others, platform-mediated transactions delivered by individuals not recognised as professional providers are not covered. In the latter case, consumers sometimes file complaints to the EU Court of Justice when a problem occurs in a platform-mediated transaction (mainly for worker-initiated platform work).

The enhanced security resulting from both the default expansion of consumer protection to platform work and court rulings positively influence clients’ willingness to use platform work. Accordingly, the development of platform work, notably the worker-initiated type, diverges across Member States, with more dynamic growth in those countries where consumers are protected. Due to the better market potential, (international) platforms are more likely to settle in those countries with stronger consumer protection. The position of workers in relation to the platforms further improves as there are more platforms to choose from.

Furthermore, as workers engaged in the worker-initiated type have the autonomy to set prices, they will charge clients higher rates to cover higher liability risks. If clients accept these rates, workers’ earnings are likely to increase. The insurance sector, in addition, will benefit from offering specific packages for platform workers (to cover their liability risks and possibly social protection).

In those countries with less consumer protection, consumer awareness of the risks related to services mediated through platforms increases due to the developments in countries with more protection. Accordingly, demand for platform-mediated services decreases, to the advantage of service provision in the traditional economy, where protection is better.

Labour regulation

There is no legal clarification on the employment status of platform workers in Member States or at EU level. This means that most EU platform workers are considered independent, self-employed workers or have a specific national employment status related to marginal or occasional work. If cases are brought before the courts, national courts decide on a case-by-case basis regarding platform workers’ classification as employee or self-employed. This results in different approaches across Member States and also within Member States across platforms and authorities (such as labour, tax and social protection authorities), as they might apply different criteria or interpret the criteria differently.

This situation has a strong potential for disadvantageous outcomes regarding employment rights and entitlements (including social protection and representation), particularly for platform-determined work. This type of platform work resembles more a hierarchical employment relationship than a market-based one, which would more likely justify employee status.

Sector regulation

Due to the particular characteristics of platforms, it is unclear which sector regulation should apply. Platforms argue that they are information society companies, while businesses in the traditional economy offering comparable services argue that platforms should be considered to belong to that specific sector (for example, transport or construction). It is left to the Member States to decide which sector regulations apply, and court cases on this issue emerge.

Unless it is clarified that platform-mediated services are subject to a specific sector regulation, platforms and their workers are not obliged to adhere to the requirements related to market access and business conduct in the traditional economy. This results in cheaper prices in the platform economy, fostering the demand for platform-mediated services at the expense of the traditional economy. This increases clients’ insecurity regarding service quality levels and liabilities, pushing up the importance of ratings. This, in turn, increases workers’ demand for transparency and objective criteria for ratings (to ensure fairness), redress options in case of perceived unfair treatment and the portability of ratings across platforms.

Information obligations regarding tax and social insurance

Similarly, it is left to Member States to decide whether platforms have to declare workers’ revenues for work performed through the platform or whether the worker is responsible for informing national tax and social security authorities. Accordingly, it highly likely that there is no common approach across Member States.

From the perspective of platforms, this is an incentive to operate in those Member States in which they are not obliged to follow any declaration or information-reporting procedures. From the workers’ perspective, those engaging in platform work as part of their overall professional activity (hence, worker-initiated rather than platform-determined work) are more aware of tax and social security regulations and procedures and are likely to report their platform work income as part of their overall income. Some of those conducting platform work as a side activity earn below the national declaration thresholds and hence are not subject to any reporting obligations. However, there will also be some platform workers who should declare their income but either are not aware of this obligation or consciously do not do so. This constitutes undeclared work, so state revenues from taxes and social protection are reduced.

Platform ownership and governance

The platform economy remains dominated by non-EU platforms that follow a shareholder-value model, whose aim is profit maximisation. This, in combination with the above-mentioned unclarified legal issues, will make it challenging to impose EU or national legislation on the platforms. These, furthermore, find creative approaches to circumvent regulations that reduce their shareholders’ profits – which tend to be spent outside of Europe.

Due to the strong position of the existing platforms and their networking effect binding workers and clients to them (‘lock-in effect’), and the above-mentioned economic and labour market situation, the existing non-EU platforms can further increase their market share in Europe. It will be difficult for new, indigenous platforms to successfully start-up and reach a competitive scale and scope. Such a situation is likely to further increase the market power of the existing platforms in relation to clients and especially workers. This challenges those engaged in platform-determined work due to their greater dependency on the platform.

Platform business model

Encouraged by these developments, the platform economy will expand further, and online labour platforms will diversify their fields of activity further. Platform-determined tasks expand beyond food delivery to the delivery of goods, including parcel and mail delivery; worker-initiated tasks are offered for additional types of household services, including care and personal services. The dynamically changing business models challenge the effectiveness of legislative regulations as these tend to take some time to be drafted and implemented, and hence might not ‘fit’ well as the platforms have developed further. Alternative regulatory approaches, such as collective agreements or soft law, might be required.

Consumers become more familiar with services mediated through platforms, resulting in increased acceptance and higher competition with similar services in the traditional economy.

Workers find more tasks on offer through platforms, hence increasing the potential to earn income through platform work; at the same time, jobs in the traditional economy might decrease due to the competition from platforms.