It’s known as the “platform economy” or the “gig economy”. And it’s about much more than technological change through digital advances and algorithms. The economic model evolved by giants such as Airbnb, Uber, Amazon, Google and Facebook has profoundly changed social and power relations in the workplace and markets, raising important political questions about what sort of society we want and what value we put on what we have.
Platforms do not own means of production, but rather create the means of connection. They provide a service to consumers and producers by linking them, but in this intermediary role they also acquire the power to set prices, contracts and wages. It is a steadily growing part of the economy – the percentage of European workers using online labour platforms as their only or main source of income is about 4-5 per cent of the total working population – but the platform economy is beginning also to rewrite the rules of the old economy.
The tensions between assumptions underlying models of rewarding and protecting wealth creators have come to a head in a series of political and legal tussles across the globe in the past few weeks, not least in the ongoing Australian row with Facebook over news republication rights and the UK’s important court ruling recently against Uber over worker rights and bogus “self-employment”.
And the political climate is changing – the US is now poised to address the market power of its domestic platform giants, and there’s growing regulatory and taxation consensus emerging in many states, in the OECD and the EU. But, as Ireland knows only too well, a consensus on how to tax the digital giants is difficult to sustain.
Attempts by India, for example, to toughen its 2 per cent “equalisation levy” on digital services has prompted talk in the US of a trade war over alleged discrimination against the US giants. But although France has been embroiled in a similar row with the US, Delhi’s contention that taxation should be based on a “significant economic presence”, not corporate HQ location, has strong support in the EU and will find an echo in developing nations and the crucial discussions in the OECD.
Precarious conditions
Some see platform economy changes as bringing welcome new flexibility and efficiency to labour markets. Others see it as a return to the precarious working conditions that the labour movement fought against throughout the 19th and 20th centuries and an attack on the social protection model that has evolved as a defining characteristic of the EU.
“The notion that everyone has a responsibility to contribute to the common ‘social contract’ has been for a long time part of the European social model,” the European Commission’s Roberto Viola argues. “Simply saying that because you are an intermediary you are exempt from such responsibilities will not cut it – as temporary work agencies have learned, sometimes painfully, in the past.”
It is an argument that applies not only to Uber and its “self-employed” workforce but to Facebook, which has long insisted that its intermediary – merely a “host” not a publisher – role absolves it from responsibility for generating or paying for news content. But in a significant sign that the company is now being forced by Australian legislators to recognise new obligations to news producers, Facebook last week, in return for small changes in a proposed law, backed off its decision to remove Australian news from its platform.
And the UK supreme court’s recent ruling that Uber’s drivers are entitled to workers’ rights and should not be seen as self-employed is sets a precedent internationally, underscoring the urgency of government action to clarify workers’ status and enforce their rights to such things as minimum pay, welfare, sick pay, holidays and the right to union recognition for collective bargaining over pay and conditions.
Huge control
Similar cases have been taken successfully in California and France, while Uber employees in the Netherlands are suing over alleged unfair treatment.
Uber insists that the UK ruling applies only to those who sued, but other employees will follow both at Uber and at other platform companies. Importantly, the court emphasised the reality that Uber exercises huge control over wages and conditions; a typical power imbalance between platforms and their users that the Australian press legislation also attempts to address with a mandatory arbitration system.
At EU level, the commission this week launched a consultation on whether gig workers should be given the same employment rights as those of staff in more secure forms of employment, including the ability to bargain for wages and working conditions as part of a collective.
Scott Morrison, Australia’s prime minister, recently posted that his government would not be “intimidated” and he is in regular contact with other world leaders about tackling the digital giants. While big tech companies “may be changing the world … that doesn’t mean they run it”, he insisted. And the tide does appear to be turning.
