The Gig Economy and European Labour

In a recent conference hosted by the Socialists & Democrats Group of the European Parliament the topic of “Employment and Social Security in the Digital Single Market: Chances and Challenges” was discussed, featuring prominent speakers from a range of European agencies, civil society organizations and a number of members of the Socialists & Democrats group.

The Digital Risk to Employment

MEPs Maria João Rodrigues and Jutta Steinruck opened the session by underlining the Socialists’ position on the forthcoming Digital Single Market, noting the groups concerns over the associated risks for the labour market and the potential for the Digital Revolution to distort the understanding of what it means to be a worker.

The prospect of the Digital Revolution’s effect on jobs was a core area discussed during the conference. Indeed, one of the most pressing topics for any sector, not least digital practice, are employment figures. The maxim of growth and jobs going hand-in-hand is at the heart of any government’s economic strategy, but for the implementation of a Digital Single Market (DSM), the European Commission focuses all its effort on the technological detail, whilst failing to address the issue of Europe’s labour market structures. The Commission’s conviction that the DSM will create a range of new jobs is problematic. While the Commission might well be right, the first thing to consider is what exactly these jobs will be and who will be filling the vacancies. One size rarely fits all in the free market.

The ‘Gig Economy’ is a phenomenon that has grown rapidly over the last few years and is challenging labour market structures. The concept was highlighted by Valerio de Stefano of the International Labour Organization, who defined “gig economy” as the emergence of ‘on-demand work’, typical of such services as Uber, which allow work and labour to be allocated to anyone, anywhere in the world, via online platforms. The immediate benefits for the consumers are clear – lower costs for services and quicker-responses to sporadic requests – and such platforms do add some fluidity to the economy, but they could, without checks, do damage to labour standards. As Stefano clearly underlines, “if people come to be identified solely as forms of service, there is a risk of dehumanization and of concealing labour behind closed doors. Risks could shift from business towards workers”.

The current regulatory framework of the labour market has been in place since the 20th century. Its purpose was to maintain stability for labour forces. But the rise of a ‘Gig Economy’ put at risks crucial aspects of this framework as unchecked “pay-as-you-go” wage system will inevitably result in a race to the bottom. Such systems give employers carte blanche to organize and mobilize cross-border workforces based on the lowest possible cost and without proper regulation or contractual status. Likewise, the platforms relieve employers of the obligation to continue using the labour of the worker who becomes dissatisfied with the conditions of his or her employment.

As Irene Mandl of Eurofound, the EU agency for the Improvement of Living and Working Conditions was quick to address, online-based labour poses a significant threat to wages. A monthly income of €300 goes much further in India than in France or the UK. Thus, there is little incentive for employers to pay above that level and meet the minimum wage standards that are currently in place in many EU countries. In other words, applying competitive practices to the workforce expose workers to a reduction in wages and an erosion of their collective bargaining over time.

Is Labour Mobility Even a Concept in the Digital Age?

The labour market is no stranger to paradigm reform. Editor-in-Chief at Social Europe, Henning Meyer, underlines the historical factors concerning technological implementation into the market, “the first emergence of technology onto the market was to replace humans with machine muscle. The second one we are experiencing is seeking to replace cognitive functions with artificial intelligence”. With the former, jobs were lost, but a degree of mobility was still possible as human was still required in the labour force. As such, it was possible to offset job losses by relocating workers. Today’s challenge is to compensate for job losses from the rise of AI. But it comes with many more problems. As Henning sets out, “how likely is it that truck drivers are going to move up the ladder and become software engineers if we replace them with driverless trucks? Where will they go?”

We often speak of interoperability. It works great with machines. For people, not so much.

We often speak of interoperability. It works great with machines. For people, not so much.

Moreover, if the money isn’t going to the workers then it isn’t going to the treasury. Nor are social security contributions being paid. This will inevitably be a strain on government spending on key areas such as welfare. This is where the Commission’s strategy falls short. It may be laced with cool-sounding phrases that grab the reader’s attention, but it has moved the focus away from jobs, filling the gaping holes with technological solutions, without really assessing what the consequences of this will be.

Gig Economy is not a Separate Market

Valerio de Stefano’s closing statements underlined where social structures need to shift before digital deregulation can be safely implemented in the way the Commission is proposing. “A Stronger emphasis [is needed] on defining workers as workers and understanding that the Gig economy is not a separate market”. It will need to be subject to the same rules and regulations that are abided by in the traditional marketplace, with the further inclusion of trade unions to sufficiently protect the labour force.

Certainly the prospect of a new digital economy is an exciting concept, but a mature digital strategy should account both for those who benefit from it and, more importantly, those who stand to lose out. The European Commission would certainly benefit from considering the points raised during the conference.