miércoles, 17 de febrero de 2016

A European approach to "on demand economy" policies

Among the hot debate regarding the role of digital platforms in EU, one the hottest topic is the definition of a European policy towards the so-called "sharing economy". What started as new social model for sharing unused resources between individuals, has evolved and it is now a complete set of companies based on a new business model that aims to connect in a more efficient manner supply and demand. Departing from the sharing economy we have arrived to the "on demand economy".

The not so new phenomenon has economic and social advantages, but also drawbacks. Among the economic advantages, it is not difficult to find studies highlighting the unleashed potential of this business model. McKinsey estimates that platforms oriented to connect supply and demand for jobs could add 2,5% of new job posts in Europe. A recent study of the European Parliament valued in €572 billion the underused resources in Europe. Beyond this figures, the on demand economy model certainly would have a positive effect for consumers (more choice and better prices), unemployed (new job opportunities) and the environment (a boost for the circular economy).

Besides the above described advantages, the on demand economy brings new challenges to solve that would not be solved with a laissez-faire approach. Even those who support the model recognises the difficulties we will face in order to reign over it. For instance, the European Parliament calls "to ensure that employment and social policies are fit for purpose for digital innovation" and the UK government highlights the need to make "people participating in the collaborative economy to understand their tax obligations". 

The general feeling that has been made obvious in the first results published of the EU public consultations on platforms is the existence of an "uncertainty over the rights and obligations of users and providers". This uncertainty would be difficult to solve with a model that fits for all the cases. But although I am generally in favour of a sector-by-sector approach and the update of the sectoral rules or the enforcement of its fulfilment, there are aspects that should be tackled horizontally. Some horizontal measures to be analysed could be:
  • Clarification of the status of online intermediaries, in particular when they are exempted of responsibility due to its "neutral", "passive" and "automatic" role
  • Mitigation of the social exclusion due to lack of digital skills
  • Update of the competition tools and capabilities to deal with the "net effect" and "winner takes it all" consequences of internet business models
  • Overhaul of the labour market rules to take into account the new kind of platform employees
  • Decoupling of social benefits from the employment relationship
  • Moving from the tax return model towards a tax account model

The soft approach towards the definition of the "on demand economy" EU policy looks to be the option taken by the European Commission. It could be a right way to start to provide “more guidance and better information on the application of existing rules as a policy response” as it is stated in the Internal Market Strategy, however it should be not taken as the final point of the journey. Being continuously aware and vigilant to disruption in order to quickly act is the only option for policy makers. But would be EU ready for that? 

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