[STANDPOINT] Refrain from starting with regulations that will hurt consumers!

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The European Union has forgotten again that regulation is not a cure-all and wants to hit young people, consumers, and working immigrants. At issue is a planned directive to regulate work done through digital platforms. The EU doesn’t understand that new technologies are also new forms of earning, used by accountants, taxi drivers, food suppliers, builders, and programmers, among others – and wants to force them into the anachronistic framework of the 8-hour job. Modern forms of earning will, in effect, be deprived of the main assets that make them attractive: flexibility and accessibility. The new Polish government should oppose this kind of regulation.

 

What is the problem, according to the EU?

Now we normally reach for services offered through online platforms. Hundreds of thousands of Europeans take rides daily through platforms such as Uber and Bolt. People increasingly order food without leaving home via Uber Eats, Eat, or Glovo apps. According to EU authorities, more than 5.5 million people in the EU provide services with the support of digital platforms.

The flexibility of this service provision means that for many people, this kind of activity is a supplement to full-time work, a form of improving the household budget, or a method of smoothly entering the labor market without being bound by a formal contract. In practice, one is not an employee but a person providing services with the platform’s support and is, therefore, in principle, exempt from the regime of the Labor Code. The minimum wage, the right to vacation, pay during illness, or unemployment benefits do not cover persons offering services on the platform. This is being criticized by some EU policymakers, who believe that people working this way are platform employees and have no chance of decent working conditions.

As a result, the EU has proposed the introduction of the Platform Labor Directive, the main idea of which is to introduce a presumption of an employment relationship. The presumption is to apply if a person’s employment (e.g., driver, courier) meets two of the five criteria indicated in the directive. For the time being, their content has yet to be agreed upon. Still, preliminary findings suggest that it is mainly a question of labor organization: whether the online platform supervises the performance of the person in question, sets top-down rules for their remuneration, etc. Member states will have to introduce a presumption in national law, with the possibility of expanding the list of mentioned criteria with their regulations.

According to the Warsaw Enterprise Institute, this is a misconception. New forms of employment need appropriate regulations, but not of the kind proposed in the Directive.

 

Why is the EU wrong?

The platform’s work benefits those providing services with their help, companies, and consumers. The main advantage of such work is thus precisely the flexibility so disliked in Brussels. Thanks to companies offering platform work, European consumers save hundreds of millions of euros a year, and immigrants find opportunities to enter the labor market and quickly integrate into society. Students – the second-largest group providing services on platforms – can work up to the cost of their education. In short, you work as much as you want.

The Warsaw Enterprise Institute warns of the adverse consequences that the directive may bring for business and citizens. Consumers are at risk of a reduction in the quality and speed of ordered deliveries and rides. Due to rising employment costs, platforms will hire fewer couriers, drivers, or other freelancers. This, in turn, will significantly increase the length of deliveries and rides, especially during peak hours (e.g., lunchtime and weekends). Service prices will also increase as employers naturally shift some additional employment costs directly to the end user, the consumer. On the social level, introducing the directive may mean an outflow of labor migrants from Poland and/or their passive professional presence in Poland. In an era of demographic crisis, getting a labor force is a significant challenge facing the entire EU. Courier work is largely temporary work that attracts labor migrants. The introduction of the legislation is heading towards far fewer migrants choosing to work, as they will not be able to provide flexible and short hours. It could also be worse: groups of migrants who assimilate well through work may lose it and become recipients of social benefits, thus a cost to the taxpayer. Notably, well-recognized platforms providing transportation or food delivery services account for about 50 percent of the platform labor market. Platforms also include apps such as Fixly or Tutlo, where English teachers and builders offer their services, and platforms that bring together IT specialists, accountants, or consultants – they all favor the gig economy model of market activity. The directive could uncontrollably affect the automatic and forced reclassification of those providing services through sole proprietorships or employed under civil law contracts. This lack of clarity, as well as the potentially wide-ranging impact, will negatively affect the competitiveness of the Polish economy and raise the risk of doing business in Poland.

 

What has to be done?

It largely depends on Poland’s stance on whether the Directive enters into force in its current form. The new Polish government should withhold its support for the Directive and pressure the European Union to rethink its new regulations on the issue of platform work. The content of the Directive should be critically evaluated, considering the realities of the self-employed. This is also an opportunity to present Poland as a constructive and ambitious co-author of EU legislation. We offer for consideration the development of policy recommendations that would prompt digital platforms to develop programs to support those providing services with their help, which can increase their security without taking away their flexibility. Some platforms already offer such programs. Let’s think about how to popularize this practice without resorting to costly regulation, which is also part of the policy of strangling European innovation. Europe needs creative ferment, not the tightening of a bureaucratic corset.

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