The digital platform economy has impacted employment in many ways. “Traditional” jobs, such as office workers and the service industry, are being enhanced by collaboration, video, and cloud-based platforms. New tech industry jobs are being created in countries that have successfully encouraged the development of platform companies. Finally, many platforms foster the sharing and gig economies and have created employment opportunities for individuals who have an asset, skill, or time to share. In this Signal post, we touch briefly on employment in the tech industry but focus primarily on employment in gig and sharing platforms and provide an update on how the early promises of the sharing and gig economies have played out in reality.
The promise of platforms
Digital platforms are disrupting established business practices and redefining the relationships between producer, consumer, and worker. By creating multi-sided marketplaces and ecosystems, they promise to democratise both consumption and production. Empowering participants and creating environments where workers have flexibility and control over the goods, services, and labour they provide are some of the key goals of platforms.
The growth of the platform economy is part of what the World Economic Forum describes as the 4th Industrial Revolution (4th IR). While the 4th IR includes technological advances in areas like robotics and artificial intelligence, it also includes eCommerce, mobile payments, as well as sharing and marketplace platforms. As these technologies spread globally they bring opportunities for people in developed as well as developing countries. Whether you’re in Spain or sub Saharan Africa, if you have an asset to share, a skill, or a product you produce, the platform economy gives you the opportunity to monetise it.
Policies to encourage growth
While the users of platforms are increasingly global, the development of the platforms, and the tech industry jobs are concentrated in a small number of countries, mainly in the US and China. Other countries, such as Finland, Canada, and the EU as a whole, are actively working to encourage the creation and growth of locally developed platforms. As we wrote in an earlier Signal post about GDP and the Platform Economy, countries recognise the need to encourage the development of platforms to ensure future growth in their economy and employment for their citizens.
In addition to fostering the local tech industry, many countries recognise that some platforms will replace “traditional” jobs. For example, Finnish researchers estimate that 23% of jobs in Helsinki, such as salespeople, waiters, and accountants could be replaced by 2030 through digitalisation technologies such as robotics and Artificial Intelligence. Re-training displaced workers, through government programs or platforms such as Udemy or Google Career Certificates, are part of the solution to increasing employment opportunities.
Other policy initiatives are focused on equity and inclusion of women and minorities in the platform economy, as both tech workers and/or participants in the sharing/gig economy. The International Finance Corporation (IFC) and the European Commission (EC) created Digital2Equal, an initiative involving 17 leading technology companies with a focus on increasing opportunities for women in emerging markets.
The challenges created by the gig and sharing economy
While platforms have technically delivered on their promise of democratising production and consumption, they have introduced new challenges. Some platforms allow producers and “workers” more control over how their work is valued, while others are highly competitive and drive earnings lower.
Producers such as those selling products on Etsy, providing skilled services on Upwork, or renting properties on AirBnB face competition but generally have control over the prices they charge and how they operate. Producers/workers operating on platforms that provide ridesharing, food delivery, or crowdwork participate in a highly competitive environment with little control over the fees they’re paid and none of the benefits associated with being a “traditional employee”.
These challenges have been written about in detail recently, including: being at the mercy of bad reviews, high levels of pressure, working long hours, no employment benefits, low-paying crowdwork, concentrating economic gains in the hands of the platform, and poor working conditions inside eCommerce warehouses.
Creating a fair and sustainable gig and sharing economy
While labour laws and social security infrastructure vary by country, addressing the challenges associated with employment in the platform economy is a key issue for policymakers. The European Foundation for the Improvement of Living and Working Conditions (EUROFound) outlined policy suggestions that include: clarifying employment status definitions for platform workers, setting minimum payment standards, setting up dispute-resolution mechanisms, and allowing platform workers to organise and establish representation.
The unique situation in the Nordic countries is highlighted by TemaNord (funded by the Nordic Council of Ministers). While platform work is still relatively small in Nordic countries, some platforms are being assimilated into the Nordic labour model, such as Foodora in Norway and Hilfr in Denmark reaching collective agreements with workers. However, other platforms are eroding the Nordic model, such as Uber instigating the deregulation of the taxi industry.
The World Economic Forum suggests four steps to build a fairer gig economy: rate platforms on fair work practices, ensure platforms are accountable to existing (or new) regulations, allow workers to organise, and allowing democratic ownership and worker cooperatives.
While Uber is advocating for the creation of a new employment classification for gig workers, some observers take the position that new policies and laws may not be required since they feel existing labour law and social security frameworks already apply to platforms and platform workers in most countries. They assert that a case-by-case assessment of different platforms will clearly identify if the workers are entrepreneurs or employees and which existing laws apply.
Selected articles and websites
The sharing economy has made life easier — and better too
Can work still have real meaning in the age of digital platforms?
WEF – How to build a fairer gig economy in 4 steps
UN Frontier Technology Quarterly – Does the sharing economy share or concentrate?
EuroFound – Employment and working conditions of selected types of platform work
Past Signals related to this one
Finland’s master plan for platform economy
Additional references
The Fourth Industrial Revolution (WEF)
Does the fourth industrial revolution offer hope for workers in the developing world
Finland’s master plan for platform economy
Canada Innovation Supercluster Initiative
Digital2Equal – Case studies on women and the platform economy
Work revolution and digitalisation – what changes are promised for the labour market in the Helsinki metropolitan area? (Työn murros ja digitalisaatio – mitä muutoksia on luvassa pääkaupunkiseudun työmarkkinoille?)
How modern workers are at the mercy of ratings
Survey reveals app drivers’ misery
California judge rules Uber and Lyft must classify drivers as employees
A Data-driven analysis of workers’ earnings on Amazon Mechanical Turk
Here’s what it’s like to work in an Amazon warehouse right now
TemaNord – Platform work in the Nordic models: Issues, cases and responses
Uber CEO advocates for ‘third way’ to classify gig workers while fighting California labour lawsuit
Markus Äimälä: Platform economics and labor law – a lot of noise from nothing? (Markus Äimälä: Alustatalous ja työoikeus – paljon meteliä tyhjästä?)
Rantahalvari: The platform economy challenges social security – perhaps not (Rantahalvari: Alustatalous haastaa sosiaaliturvan – ehkei kuitenkaan)
PWC Legal – Gig economy employment status
Gig economy
The new ways of working enabled by platforms are referred to with term such as gig economy, on-demand economy or open talent economy. What is common to all of these is that they redefine the relationship between the employer and employee. While connecting supply and demand of work through a platform is nothing new, there is currently a massive growth in the size of the gig economy, fuelled by increasing online access and willingness to do disparate tasks.
Why is this important?
The welfare system, especially in the Nordic Countries, is based on the assumption of a steady employment with one employer. The current legislation and regulation is not capable of dealing with the new ways of working emerging from the platform economy as traditional criteria for what is considered as taxable income or work regulated by labour legislation no longer fits the scheme. Is everyone an entrepreneur in the platform economy or should the platform be viewed as an employer? How can social security and fair working conditions be ensured?
Gig economy proponents highlight the flexibility and freedom that platforms provide for the worker as well as the company. Especially SMEs benefit from the gig economy, as they are often agile enough to recruit quickly and are more prone to experience changing demand. Critics state that the work is unstable, isolating, stressful and devoid of welfare benefits. Gig economy favours highly skilled people with good health and thus may contribute to societal polarization. Furthermore, it is driving wages down globally, as platforms enable outsourcing of a variety of tasks, thus expanding the global marketplace.
Things to keep an eye on
To ensure fair and decent working conditions, a mix of regulation, new practices and worker collective action is required. The big benefit but also the central challenge with gig economy is that it is global. Regulation puts countries at different positions and workers have a tough time coming together and bargaining in a dispersed global network. For new practices and ways of operating, platform cooperatives are worth keeping an eye on.
For a company wanting to benefit from gig economy the focus should be on improving human relation practices. Employing should be swift and there should be a good balance between full-time and temporary workers. Different metrics to gauge employee satisfaction and working conditions should be in place and up-to-date.
Selected articles and websites
What’s After The Gig Economy? The Talent Economy
What the Gig Economy Looks Like Around the World
How The Gig Economy Will Change In 2017
The Gig Economy Celebrates Working Yourself To Death
Harnessing The Power Of The Open Talent Economy
10 Ways the Gig Economy Can Help Small Manufacturing Businesses
LinkedIn Finds Small Businesses Driving Gig Economy
Ukko.fi saa tuhat uutta asiakasta kuukaudessa – “Lainsäädäntö ei pysy mukana”
Mistä on kevytyrittäjät tehty?
Social impacts of the platform economy
Platforms create value well beyond economic profits, and the topic of social and societal impacts resulting from the emerging platform economy has been getting more and more attention lately. Platform economy undoubtedly has both positive and negative impacts on individuals and families as well as wider communities and entire societies. However, the range and depth of these impacts can only be speculated, as only very early evidence and research on the topic has been produced. After all, the platform economy is only in its infancy.
Why is this important?
Platforms have potential to address major societal challenges such as those connected to health, transport, demographics, resource efficiency and security. They could massively improve our individual daily lives as well as contribute to equal opportunities and progress in developing economies. On the other hand, platform economy can result in negative impacts in the form of disruptions and new threats. Privacy and safety concerns have deservedly been acknowledged, and other possible risks include those related to social exclusion, discrimination and the ability of policies and regulations to manage with whatever platform economy may bring about.
Some examples of positive and negative social impact categories of the platform economy include the following, which may distribute equally, create further division or bridge the gap among various social segments:
- employment and unemployment
- livelihood and wealth
- education and training
- skills, knowledge and competences
- health and physical wellbeing
- mental health and wellbeing
- privacy, safety and security
- social inclusion or exclusion, access to services, etc.
- new social ties and networks, social mixing
- social interaction and communication: families, communities, etc.
- behaviour and daily routines
- living, accommodation and habitat
- personal identity and empowerment
- equality, equity and equal opportunities or discrimination
- citizen participation, democracy
- sufficiency or lack of political and regulatory frameworks.
Platforms may have very different impacts on different social groups, for example, based on age, gender, religion, ethnicity and nationality. Socioeconomic status, i.e. income, education and occupation, may also play an important role in determining what the impacts are, although it is also possible that platform economy balances out the significance of suchlike factors. One important aspect requiring special attention is how to make sure that vulnerable groups, such as the elderly or those with disabilities or suffering from poverty, can be included to benefit from the platform economy.
Things to keep an eye on
Value captured and created by platforms is at the core of our Platform Value Now (PVN) project, and there are several other on-going research strands addressing social and societal impacts of the platform economy. One key topic will be to analyse and assess impacts of the already established platform companies and initiatives, which necessitates opening the data for research purposes. To better understand the impacts and how they may develop as platform economy matures is of upmost importance to support positive progress and to enable steering, governance and regulatory measures to prevent and mitigate negative impacts.
Selected articles and websites
Koen Frenken, Juliet Schor, Putting the sharing economy into perspective, Environmental Innovation and Societal Transitions, (2017)
The Rise of the Platform Economy
Uber and the economic impact of sharing economy platforms
VTT Blog: Openness is the key to the platform economy
SUSY project: Solidarity economy
Technophobia – fear of technology
Although new technology intrigues us and makes us curious about what can be achieved with it, the flipside of the human reaction to anything new is suspicion and even fear. Technophobia means fear of technology, and it can stem, for example, from not fully understanding how something works, possibility of danger and negative impacts or risk of malicious misuse. Another flavour of technophobia is anxiety over our personal competences to deal with new technologies and the downright possibility of social exclusion if we lack the access or skills to adopt them.
Why is this important?
Some of the technology fears connected to the platform economy have been around for a long time, and they apply to pretty much any technologies linked to machines and computing. The archetype of suchlike concerns is the fear of losing our jobs because of automation, something that has been a worry for well over a century.
Another major concern in the context of platform economy is how the disruption to economy will impact us as individuals (for example moving from regulated labour market to the gig economy), as businesses (for example smaller companies being bulldozed by large platform corporations) or as society (for example governments trying to keep up with regulation, legislation and fiscal needs related to platforms).
Fears do not either escape the indirect risks and negative impacts that may arise with platformisation, such as loss of knowledge and survival mechanisms if digitalised assets are destroyed or if there’s a prolonged power cut. Intentional misuse and criminal activity is also a scare experienced by many, and evolving platform configurations may indeed be extremely vulnerable.
Examples of specific fears include:
- Fear of technology eliminating jobs and the need for human workers.
- Fear of technology taking over the human (individual or society).
- Fears related to privacy and cyber security.
- Fear of losing control and getting lost in the technology mesh.
- Fear of not learning the skills or not having access to use a technology.
- Fear of dependence and not surviving without the technology (for example in case of a power cut).
- Fear of negative social and societal impacts (for example lack of face-to-face interaction).
- Fears related to fast and vast information flows (for example validity of news).
- Fear of governments not having the means to monitor and control malicious and criminal activity related to new technologies.
Things to keep an eye on
The important thing is to try understand the root causes of fear of technology in the context of platform economy, regardless of whether the threats are real or perceived. Also, it should we noted that technophobia may influence not only consumers but businesses and policy-makers alike. Through addressing technology-related concerns appropriately we can ensure that individuals as well as companies and other organisations have the courage to make the best of the platform economy opportunities. On the other hand, the assessment of fears helps us to pinpoint risks and vulnerabilities that need to be fixed in technological, regulatory or other terms. To dispel mistrust, impartial and validated information to support technology proficiency and awareness is needed. Similarly important are also investments in for example digital security and technology impact assessment.
Selected articles and websites
Robots have been about to take all the jobs for more than 200 years. Is it really different this time?
The Victorians had the same concerns about technology as we do
Fear of Technology
Hot Technology Pilots in 2016 – Fear & Chaos in Technology Adoption
Why do we both fear and love new technology?
Americans Are More Afraid of Robots Than Death. Technophobia, quantified
Ever-present threats from information technology: the Cyber-Paranoia and Fear Scale
The access – Platform economy: Creating a network of value
Choosing a Future in the Platform Economy: The Implications and Consequences of Digital Platforms
Skills for platform economy
Why is this important?
Platform economy requires a new set of skills. Understanding the big picture, interpreting information in the right context, networking and collaborating with people with diverse backgrounds in growing in importance. In addition, while being able to code and understand code is needed, it is more important to understand the consequences of digitalization and have the competence to design platforms that benefit the society.
Things to keep an eye on
The shift in skills needed may easily lead to growing inequalities between different regions but also between the old and young. Learning new skills related to platforms is not just for young students, but also for those in work life. In addition, platform thinking is not disrupting all industries at once, so there are differences between different fields. Educational platforms also challenge existing educational institutions.
Selected articles and websites
Design It Like Our Livelihoods Depend on It: 8 Principles for creating on-demand platforms for better work futures
Learning is earning in the national learning economy
The 10 skills you need to thrive in the Fourth Industrial Revolution
Workers in platforms
Why is this important?
Moving towards platform economy is changing the way people work. Platforms enable more flexible and efficient matching of labour and tasks, provide new ways of working (e.g. Uber) and offer ways to monetize existing assets (e.g. Airbnb). Simply talking about platform entrepreneurs or gig workers leads to a narrow view of the diversity of the workers in the platforms of tomorrow.
Things to keep an eye on
Working through global platforms is a problem especially for governments: how to make sure taxation and welfare works? From the worker’s point of view the interesting question is whether it is possible to earn a decent living from a platform, or will platform economy lead to a polarization of wages: some top experts can earn huge amounts, while a majority is competing at very low salaries.
Selected articles and websites
Voices of workable futures
Independent work: Choice, necessity, and the gig economy
The situation of workers in the collaborative economy
Here’s Why The Freelancer Economy Is On The Rise
Artificial Intelligence
Artificial intelligence has made tremendous progress over the last decades, moving from beating humans at games towards a wide range of fields. In 1999, IBM’s big blue defeated the world best Jeopardy champions, and 17 years later Google bested the world’s champion “go” player. Recently, Big Blue was employed to develop an antiviral to attack the Zika virus with great success. The new “macromolecule” was effective against not only Zika but multiple other viruses as well. LTP news estimates that “AI is going to change every endeavor of human activity from Medicine to Government to Manufacturing, Law, Finance and beyond. By 2025, AI Will Have a 5-Trillion-Dollar Direct Impact on the Workforce“.
Why is this important?
- AI replaces jobs, and platforms enable this: platforms act as the mediator between the AI and the user, and offer the interface and central place to ask for e.g. law advice.
- AI provides new services. This is especially the case for healthcare, where improved pattern recognition can detect tumors, or evolutionary algorithms can design new medicine. Add to this the possibility to turn code into biological products via synthetic biology, and the range of services expands.
- AI provides the boost that data analytics needed to make sense of the data collected and created via platforms. Platforms enable the recording of every transaction, which results in vast amounts of data, which can be useful also outside the interests of marketing.
Things to keep an eye on
The range of application areas of AI will expand, covering new industries, such as financial analytics, advising, insurance and law. Bank of America estimates the market for AI-based analytics to grow to 70 billion dollars by 2020. At the same time, artificial intelligence is becoming more and more ubiquitous; people use AI-based services everyday without realizing it. As a counter trend to the hype and excitement over the potential of AI, concern about its malevolent potential has also been raised, ranging from AI causing mass unemployment (most probable) to unleashing “a global propaganda war that sets governments and populations in opposition”.
The Finnish government recently released its action plan for enhancing the innovation ecosystem around intelligent robotics and automation in Finland, with a focus on security, privacy, user centricity and service design. Currently, the main innovation hub around AI and robotics in Finland is Airo island. A good example of a Finnish company applying AI is Zenrobotics, which makes recycling robots based on machine vision. The Finnish “Curious AI Company” is focusing on the development of advanced artificial intelligence and is now trying to apply its unsupervised machine learning to various pilot areas. Finns also take part in the discussion around AI, see for example the predictions on AI by Jarno M Koponen.
Selected articles and websites
A Government resolution to promote the development of intelligent robotics and automation
The next AI is no AI
AI and Communication: Machines That Can ‘Hear’ and ‘Understand’ Voices
Siri creators unveiled a new AI platform that seems to blow Siri out of the water
New Infosys AI tool could transform the way companies maintain complex systems
The AI Revolution: The Road to Superintelligence
New AI security system cleverly combines machine learning and human intuition
DimensionalMechanics raises $4.7M for enterprise artificial intelligence platform