Platform economy: Developments in the COVID-19 crisis

03 juli 2020

Early 2020, the COVID-19 pandemic hit Europe and immediately had severe effects on the society, economy and labour market. In an attempt to limit the spread of the virus, governments across Europe and beyond established restrictions related to physical contacts and mobility, also affecting business operations, work and employment. To cushion the negative effect of the lockdown on companies and the workforce, governments and social partners offer a wide range of emergency support instruments.

Not only the traditional economy, but also the platform economy – characterised by the use of digital networks to coordinate economic transactions in an algorithmic way – is affected by the COVID-19 crisis. Platform providers have been confronted with changes in demand and followed different strategies to react to them. This, in turn, impacted on the workers affiliated to labour platforms and their employment and working conditions. First policy initiatives targeting the platform economy in the COVID-19 crisis have emerged.

Platform reactions in the COVID-19 crisis

As a response to the pandemic, a few labour platforms provide workers with health and safety information (for example related to hygiene guidance or contactless task provision), income support or the guaranteed retention of bonus/incentive levels in case of temporary deactivation of workers. However, as of June 2020 the actual accessibility and effectiveness of such initiatives remains unclear.

  • Platform economy repository: Initiatives: COVID-19

Faced by changes in demand from the clients, several platforms reacted by adapting their business models and work organisation. Platforms mediating accommodation services have been observed to change from longer rental periods to hourly rentals, not at least taking into account the need for very short-time premises to accommodate the needs of those forced to telework during the pandemic. Platforms mediating transport services for persons or food expanded their services to the transport of other types of goods, including groceries and medical supply to accommodate the respective needs of the population isolating at home. In Slovakia, for example, HOPIN (mediating transport services) has turned taxi drivers into express city couriers who deliver food, medicine or parcels to people.

Large platforms mediating various types of services encourage workers to look for work in other areas. Uber, for example, launched a Work Hub enabling taxi drivers to look for alternative assignments, such as in food production or logistics. To protect workers and clients, platforms informed the workers through the app on the inherent risks and recommended safety measures, including no-contact delivery.

Some platforms adjusted their business model to the very nature of the COVID-19 health crisis. Airbnb (mediating short-term accommodation), started helping to connect medical professionals with accommodation providers for facilitate healthcare provision in Europe and the US. The Belgian platform Helpper mediating home care at local level opened up its services to volunteers. Within two weeks, about 2,500 people applied to the platform. In Malta, a new platform was created to link individuals with private healthcare professionals (many of whom stopped offering their services in clinics during the pandemic).

On the negative side, some platforms were reported to downscale their workforce to cope with the drop in revenue due to decreased demand. Such refers to both, the workers affiliated to the platforms by providing the services mediated through the platforms to the clients, as well as the core staff of platforms involved in the administration and running of the company.

In early May 2020, media for example reported that Airbnb (mediating short-term accommodation), confronted with a forecasted revenue of less than half of what the company earned in 2019, planned to reduce its global workforce by about 25% (amounting to about 1,900 staff). For Europe, the CEO announced that employees who have to leave will receive at least 14 weeks of pay plus tenure increases aligned with the respective country-specific practices as well as support to find new job opportunities. Similarly, and also in early May, Uber (mediating transport services) announced to cut 3,700 jobs (notably in customer support and recruitment teams), corresponding to 14% of its global workforce, and referred to severance and benefits pay. Later in the month, another 3,000 workers were laid off, including amongst others due to the closure of its customer support centre in Ireland accounting for about 140 jobs.

Free Now, a platform mediating person transport services, announced to apply for public short-time working support for some of its 1,400 staff, but indicated that this might not be sufficient to prevent dismissals.

  • Platform economy publications database: COVID-19

Crisis impact on platform workers

Across Europe, there exists a variety of different types of platform work which show different effects for the workers and the labour market. This heterogeneity became again obvious during the COVID-19 crisis. Particularly in the beginning of the crisis delivery services, including those mediated through platforms, saw an increased demand. Restaurants confronted with the lockdown started or increased their delivery offers, resulting in higher workload for delivery riders such as those affiliated to Deliveroo (in several countries), Thuisbezorgd in the Netherlands; Wolt, Bolt Food, Barbora or Lastmile in Lithuania; Holpr in Belgium. The above-mentioned expansion of delivery services of some platforms to other goods also contributed to this development. While this resulted in better opportunities for platform workers to access work and hence income, it also partly resulted in long and unsocial working hours in physically demanding work. It is likely that this increased demand will not be sustainable over time but decrease in the ‘return to the new normal’.

Other platform workers, particularly those active in person transport or household services, experienced a decline in work and hence income, driven by a lack of demand due to governmental restrictions, measures taken by the platforms or their own wish or need to isolate. This is particularly problematic for those workers in a precarious situation, including lacking social protection, and there is anecdotal evidence that some workers with very low income continued their platform work in spite of the inherent health risk.

Interestingly, and in spite of the otherwise experienced shift to ‘virtual work’ in the form of telework, the Online Labour Index (tracking demand on leading online labour platforms) also recorded a drop in demand for tasks related to clerical and data entry, professional services, creative and multimedia, sales and marketing support in March and April 2020 compared to the same months in 2019 and 2018. Software development and technology remained rather stable and writing and translation experienced increased demand. Since mid/late April, demand is observed to increase again in all areas. Data from the US show an increasing number of registered platform workers particularly for software development and technology. This is attributed to the pull of increased opportunities caused by growing demand. At the same time it is acknowledged that some part of the increasing number of registered platform workers is caused by an attempt to find an alternative income source as a result of the crisis. Overall, it is concluded that the platform related online labour supply exceeds the demand.

A few adhoc surveys among platform workers come to the result that the majority of platform workers experience a substantial loss of income from their platform work since the outbreak of COVID-19. The Fairwork Foundation, for example, estimates that 50 million platform workers globally have been affected by COVID-19, with half of them having lost their jobs and those still in work having lost two thirds of their income on average. As platform workers are widely considered to be self-employed, the do not have the same entitlements as employees to sick pay or sick leave, unemployment insurance and other benefits.

Policy initiatives tackling the COVID-19 impact on the platform economy

While governments and social partners implemented numerous measures to support businesses, workers and citizens affected by the COVID-19 pandemic, the coverage of platform workers remains widely unclear. As the vast majority of platform workers are classified as self-employed, they are not eligible to apply for one of the most important public income support measure for reduced working time offered in all Member States of the European Union – short-time working or temporary lay-off support – as these instruments mainly target employees.

Governments across Europe initiated or extended income support schemes for self-employed and freelancers, including in the creative industries who are traditionally more affected by on-demand work and particularly suffered from the COVID-19 confinements. However, only few of these schemes at least implicitly cover platform workers. In Denmark, for example, self-employed workers including platform workers who expect a loss of revenue are eligible for a temporary compensation of 75% of the expected loss of income. In the UK, the government facilitated access to social benefits for self-employed workers and workers in the platform economy, and introduced online registration for these benefits. In Italy the wage replacement scheme for self-employed and professionals introduced in March 2020 provides income to those not eligible for other income support measures. While the instrument does not explicitly refer to platform workers, it can be assumed that they can be covered by the target group of the measure.

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