The Real Impact Of Regulating The Gig Economy: An Expert Interview With Piotr Smolen

Industry Trends, Interview

07 September, 2022

The Real Impact Of Regulating The Gig Economy: An Expert Interview With Piotr Smolen

Karolina Kulach

Karolina Kulach

Senior Content Marketing Expert

The gig economy (a.k.a. digital platform work) is rapidly changing the contemporary business landscape. The pandemic and a disrupted economy have accelerated this transformation.

Over 28 million people in the EU are currently working via digital platforms. Now the big debate is over the working conditions of platform workers. The EU wants to regulate platforms like Uber, which may affect up to 4.1 million employees.

In this interview Piotr Smolen, CEO at Symmetrical and an expert in gig economy payroll technology, discusses:

  • The implications of regulating digital platforms for employees and employers (controversies, challenges and potential solutions)
  • The role of technology and how it can empower the gig economy
  • The future of the platform economy and how you can prepare your business for what’s ahead.

Click the links below to go directly to the section of your interest:

Interview with Piotr Smolen: 10 questions
Regulating the gig economy in the UK & Europe: a few essential facts
The EU Directive: what comes next for the gig economy?

Regulating the gig economy: interview with Piotr Smolen

As of today the gig economy remains largely regulated. The complex and fluid nature of platform work poses challenges for policy-makers, businesses, and employees. Nothing is black and white.

Still, it doesn’t mean that companies should stay passive and do nothing to improve the well-being of gig workers. Quite the contrary.

Businesses can make the gig economy work for them and their employees.

In the following interview, Piotr Smolen discusses the most pressing topics in regulating digital platform work.

10 questions, 10 answers: let’s dig in.

#1. Regulating the gig economy seems to be necessary. But at the same time it raises controversies. Why is it so?

Piotr: Correct. The attempts to regulate the gig economy pose numerous challenges. Unfortunately, there’s no “one-size-fits-all” approach, especially due to the great diversity in the profiles of gig workers.

The truth is that not all gig workers dream of becoming staffers, but prefer being contractors working for several platforms. Having many jobs often gives them more stability than having only one. After all, they can lose it at any time.

As a result, the legislation could bring more legal clarity, but also disappointment.

Platforms are skeptical, too. Some platforms may have to change their business models or even leave a particular market or region. This is what happened in Spain.

Still, the failure to regulate digital platform work will have a negative impact on employees, employers, and society as whole. That’s why we need a sustainable model.

#2. What will be the real impact of the EU Directive for gig workers?

Piotr: The EU proposal predominantly impacts the ride-hailing and food-delivery industries, mostly companies like Uber, Bolt, or Glovo. The directive affects employees, consumers, restaurants, lawyers, and the wider economy.

As I’ve already mentioned, not all employees want to go through a contract. Some of them like their current flexibility and wages.

Platforms also say that workers should be able to choose their own form of employment. The EU proposal will make it impossible for many gig workers to work for more platforms or to decide their working hours. It may also put thousands of jobs at risk.

According to a recent study, conducted by Copenhagen Economics, up to 250,000 couriers could quit if legislation limited flexibility concerning working hours and schedules.

On top of that, we can expect higher costs for employers and of course higher costs of services (where consumers expect lower prices, e.g. Bolt). It’s not really clear who’s going to cover the additional costs associated with the new rules.

Furthermore, there’s the risk of black market practices. Gig companies may stretch the rules and compete unlawfully with firms that do comply.

But despite all this, we need to figure out how we can make the regulated model sustainable long-term.

Gig economy: delivery man with a clipboard and boxes

#3. If it’s so problematic, why not leave the gig economy as it is, i.e. barely regulated?

Piotr: Authorities seem to be unsure about how to regulate the gig economy. However, it’s important to sort it out. Otherwise, we run the risk of creating a system that resembles a modern servant economy with underprivileged social groups.

Furthermore, digital labor platforms work across borders. Thus, we need to set international labor standards. As to the EU itself, different member states shouldn’t have completely different regulations. This can negatively impact the single market and increase the number of court cases.

The bottom line: the lack of regulations simply makes things even more problematic. It can also lead to unscrupulous employment practices and legal cases.

The failure to regulate digital platform work will have a negative impact on employees, employers, and society as whole. That’s why we need a sustainable model.

Piotr Smolen, CEO at Symmetrical

#4. Which areas in digital platform work need improvement from the legal and employment perspectives?

Piotr: The sustainable growth of digital platform work requires improved legal clarity for platforms and better working conditions for gig workers.

There are a number of factors that policy makers have to consider. For example, the employment status of gig workers and their working conditions, including health and safety. Employees should also have access to adequate social protection, training, and professional opportunities as well as collective representation and bargaining.

Of course the cross-border dimension of platform work makes the law-making process more complicated. For instance, in the EU we can expect some contradicting regulations (and opinions) across member states. Yet we still need some uniformity and consistency.

Finally, there are some challenges related to algorithmic management. Using Artificial Intelligence requires a regulatory framework, too.

#5. What do you mean by algorithm management in the gig economy?

Piotr: Digital platforms connecting gig workers to jobs usually use algorithms and automated systems to monitor workers, allocate tasks, organize shifts and set prices.

As a result, many decision-making functions are assigned to AI-driven software and apps. Unfortunately, this automated system may leave some workers unable to understand the logic behind their chores and fees.

However, it’s important that gig workers feel comfortable using platforms and automated systems. After all, they monitor their performance and support the decision-making process in terms of assignments and earnings.

That’s why the EU directive aims at increasing algorithm transparency. The goal is to strengthen human monitoring of automated decisions and ensure they’re correct and fair. Workers will also be able to obtain more information on how they’re being supervised and evaluated.

At Symmetrical we also find transparency important as it increases employee satisfaction. For example, our solution offers employees fully transparent payslips so they understand exactly what determines their salaries, e.g. the number of orders, salary deductions, and so on.

#6. So how to regulate and improve the working conditions of platform workers and maintain the flexibility of this booming sector?

Piotr: As of today there’s no straightforward answer to this question as the gig economy is still a relatively new phenomenon. With platform workers using new apps and digital processes, this new digital engagement opens up unexplored territory in gig work. In a way, we’re learning as we go.

But even today companies can definitely improve the working conditions and well-being of gig workers and improve transparency. Technology can be extremely helpful here.

Consider Uber. The company has been so successful because it delivers a data-driven unified experience. For instance, the Uber app shows drivers what goals they need to accomplish (and how). This model shows the importance of simplicity in managing gig work.

Thus, despite all the uncertainty, one thing is certain. Companies employing gig workers will need software and digital apps that simplify complex processes. There’s no doubt about it.

The gig economy is still a relatively new phenomenon. This new digital engagement opens up unexplored territory in gig work. In a way, we’re learning as we go.

Piotr Smolen, CEO at Symmetrical

#7. What’s the role of automation in the gig economy?

Piotr: First, businesses can expect some rapid changes so they need the right technology to keep up. Second, the gig economy needs only apps and solutions that simplify processes.

Think about payroll. It’s one of the most important aspects for HR departments to deal with when hiring gig workers. In the case of flexible work, high-volume recruitment and global hiring opportunities, more complex and volatile hiring and payroll operations are inevitable.

Flexibility and efficiency are essential. Unfortunately, most payroll solutions are not ready for this change. Therefore, at Symmetrical we offer a simple automated payroll solution that allows you to hire at scale and pay people on time.

Our app benefits both employers and employees thanks to easy management of workers, contractors, documents, payroll events, and payments as well as better onboarding conversion rates and a candidate-friendly hiring experience.

#8. Regulating the gig economy in Spain is an important lesson for the rest of Europe. What were the consequences of implementing the riders’ law?

Piotr: Indeed, before other European states contemplate similar laws to regulate the gig economy, policy makers should learn from the mistakes made in Spain.

According to the riders’ law, gig companies like UberEats were supposed to provide employee status for their riders. Instead, most delivery companies in Spain worked hard to avoid the law. Some of them outsourced and tweaked their apps to avoid making changes to their business models.

For instance, UberEats fired 3,000 self-employed workers so they didn’t have to hire them. It replaced contractors with agency and outsourced workers. Deliveroo decided to leave Spain entirely.

Glovo attempted to create a new “independent contractor collaboration model” to provide the flexibility and autonomy that many employees value. But the result was not as expected.

Some organizations have complained that the law doesn’t go far enough. They demand higher sanctions so that it’s not cheaper for companies to break the law than comply with it.

#9. How about the impact of the gig economy regulations on the black market?

Piotr: The black market and the position of undocumented migrant workers is also problematic. In Spain, there are around 18,000 active accounts and many more riders.

It’s common for undocumented migrants to “rent” accounts from those with the right to work or through dubious businesses. Riders can also rent accounts from other riders who advertise them on Facebook groups. All this drives the black market.

So what will happen to undocumented migrants if the law is applied?

Some companies may want to take advantage of the fear of some riders. They may deploy unethical tactics, such as firing workers, subcontracting jobs, or reprogramming their algorithms to reduce rates.

#10. Regulating digital platform work is indeed challenging. So what’s the future of the gig economy?

Piotr: From a legal perspective, we can expect a long legislative process, especially at the EU level. Each member state is likely to apply the guidelines differently, i.e. in line with its national legal and judicial system.

However, we’re talking about one of the most important transformations in the world of work. That’s why we need legal clarity, transparency, and sufficient consistency.

The reality is that the gig economy is growing fast. This process is unstoppable. If digital platform work continues to expand so rapidly, it can overtake the traditional job market.

For this reason, get ready to hire more platform workers. Furthermore, consider the upcoming changes in legislation. New regulations will give gig workers more rights and will allow them to become payroll employees.

Remember that it may be challenging to keep up with a dynamic job market, especially in the case of high-volume hiring and flexible workforce. That’s why you shouldn’t wait to prepare your business for the future. You need to be smarter than your competitors!

On a final note, I’m certain that automated solutions will be essential for employers. In fact, they already are. Having the right technology and software will be extra important for HR, payroll and finance teams. They must be ready to welcome more platform workers … and put them on payroll!

The gig economy is growing fast. This process is unstoppable. So get ready to hire more platform workers. Having the right technology and software will be extra important for HR, payroll and finance teams.

Piotr Smolen, CEO at Symmetrical

Regulating the gig economy in the UK & Europe: a few essential facts

In February 2021, the UK Supreme Court made attempts at regulating the gig economy.

The Court ruled that Uber drivers must be considered “workers” rather than self-employed. Workers are a middle classification between employee and self-employed. They have certain protections, such as a minimum wage and paid leave (but not unemployment benefits).

In December 2021, the European Commission proposed legislation on improving the working conditions for gig workers. The EU law would set minimum requirements across the bloc, which national lawmakers might decide to develop further.

Thanks to the EU Directive, EU-based gig workers would be reclassified as employees. In effect, they would enjoy the same labor rights as other traditional employees. For this, gig workers have to meet certain criteria related to determining the remuneration, overseeing performance, restricting the possibility to work for other companies, etc.

The remaining could be recognized as genuinely self-employed.

Gig workers classified as employees would gain the right to:

  • A minimum wage
  • Safety protections
  • Insurance against workplace accidents
  • Healthcare
  • Paid leave
  • Old-age pensions
  • Unemployment benefits
  • Collective bargaining.

Regulating the gig economy in practice: Spain

In August 2021, Spain became the first European country to significantly regulate the gig economy. The Supreme Court declared that riders were not self-employed workers but rather employees.

The so-called riders’ law was the Spanish government’s response to protests against low wages and job insecurity in the gig economy.

The law requires that delivery companies:

  • Directly hire their riders
  • Stay transparent about how their app’s algorithms affect working conditions and hiring and firing decisions.

Unfortunately, the above-mentioned law backfired as companies were reluctant to implement it. Many employees, in turn, got paid less and had to work more hours. This made riders confront their employers.

The EU Directive: what comes next for the gig economy?

Spain is not the best example of how to regulate the gig economy. Yet the EU Directive gives some hope for the future.

The EU Directive should bring more legal certainty and transparency thanks to:

  • Closing existing loopholes and ending fake self-employment
  • Promoting the establishment of industry standards
  • Ensuring workers can keep the same profile, including its ratings across different platforms
  • Promoting accountability in algorithmic management
  • Recognizing the basic rights of gig workers so they don’t have to go to court against massive opponents such as Uber.

The EU has set a deadline of 2025 for the rules to be written into national law books. This should happen before the gig economy becomes too big to handle.

Is your payroll solution ready for the gig economy?

Symmetrical is the first payroll solution you won’t hate. We enable fast-paced companies to onboard at scale and run their payroll invisibly. To run your payroll hassle-free, contact our experts to learn more!

Sources

Improving the working conditions in platform work
The EU’s plans for improving gig working conditions
New EU rules could turn 4.1 million gig workers into regular employees
5 things to know about the EU’s gig worker plans
EU launches bid to regulate gig economy
New Protections for Gig Workers
Inside Spain’s failed plan to fix the gig economy
Spain had a plan to fix the gig economy

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