“Up Union. The EU is extremely fond of social

Topic: EconomicsTheories of International Trade
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Last updated: November 19, 2019

“Up to now only employees wereconsidered by law as vulnerable who would need protection. Most self-employedthough are not protected against the usual risks of a working life. Half ofself-employed in Germany have no old age security and don’t pay anycontributions in any kind of pension scheme. Many don’t have a health insuranceeither which is supposed to be compulsory.

The lack of social security forself- employed is not a new phenomenon but it has gained more public attention withthe digital economy and crowd working” (union representative, Germany). As you could see in the graph of Change in the nature of employment, 56% of independent workers are engaged in thegig economy to earn a supplemental income. So, we can presume that this is notthe “main” job these individuals execute, from which they have access to socialprotection. Afterwards we have to presume that the other source of income comesfrom a standard employment model job.

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But if this is not the case, and for the44% that use the sharing economy as a primary income, it is important to ensuresocial protection for independent workers. Social rights and social protection for workers have always been a veryimportant issue for the European Union. The EU is extremely fond of socialrights, no matter the job an employee is performing. The European Commission, one of the main institutes of the EU, publisheda document in 2017 entitled “the EuropeanPillar of Social Rights”, which purpose is to establish common principlesand rights on equal opportunities, fair working conditions and job access. Thedocument contains 20 key principles for delivering new and more effectiverights for European citizens in the 21st century economy. The 3 mainobjectives are: –       Equal opportunities and access to the labourmarket-       Fair working conditions-       Social protection and inclusionSome of the principals are : Gender equality, Active support toemployment, Secure and adaptable employment (Regardless of the type andduration of the employment relationship, workers have the right to fair andequal treatment regarding working conditions, access to social protection andtraining), Wages (Workers have the right to fair wages that provide for adecent standard of living), Healthy (Workers have the right to a high level ofprotection of their health and safety at work), safe and well-adapted workenvironment and data protection, Social protection (Regardless of the type andduration of their employment relationship, workers, and, under comparableconditions, the self-employed, have the right to adequate social protection),Health care (Everyone has the right to timely access to affordable, preventiveand curative health care of good quality).1Even in the case of freelancers and independent or flexible workers, theEU doesn’t look away.

The European Commission intends to give the same rightsfor both full-time, permanent workers as well as short-term ones. That way theyget rid of social inequalities that might surface from social protectiondifferences among these two statuses. Regardless the status of the worker orthe duration of employment, everyone has the right to a fair and equaltreatment and access to social protection, even if the employee is not activeat a company in this kind of economy.The Commission is supporting the gig economy, because it creates newjobs and opportunities for workers – as long as it does not negativelyinfluence self-employed parties. If the Commission would not try to regulatethis growing economic model, independent workers would suffer severeconsequences of not having the same social rights than the traditional workers.Therefore, the protection of the Commission is necessary because new jobrelated to new technologies are often outside of the regular social protection.

Regulatory frameworks cover employment protection, employment contractsand other areas like taxation and social security. But all these concepts aredifferent between the Member States, and sometimes even within the MemberState, because there is the possibility of variations in terminology anddefinitions. “Different notions in different areas of law, however, do notnecessarily result in major differences with regard to the content “2The problem however with this legal framework that the Commission isbuilding around the firms is that the new regulations could be very similar tothe system that is currently in place for more traditional businesses. The EUcould thereby change the very nature of the sharing economy and threaten thechanges of the uberization. Because with increasing social protection for theindependent workers comes increasing costs for the uberized companies. As aconsequence, the workers would lose their flexibility and the freedom to choosetheir work hours, this would be the worst possible scenario for the peopledepending on this flexibility. Uber, Deliveroo, Airbnb and all the otherbusinesses would turn more and more into traditional businesses.In the case of Uber, an employee status for drivers would change thecompany’s working arrangement: Uber would be further obligated in accidentscaused by drivers, the company would need to screen their workers more closelyand in the end, they would only have a few full-time drivers instead of a lotof freelancers or part-timers.

Uber is not the only company creating job opportunities to coordinatepeer-to-peer exchanges and if Uber would be a transportation instead of atechnology company with drivers that are employees and not freelancers anymore,would Airbnb be a hotel chain? And what about the other businesses working withsharing platforms? Would they survive a shift in the employment status?When it comes to social security, it also depends on every country andhow the laws determine what benefits you are entitled to and how much youreceive. In the US for example, social security is funded through primarilypayroll taxes, which are taxes imposed on employers or employees. In Europe,access to health care a national responsibility. In France, contrary to the US,the social security system is funded through contributions. If you are anemployer, employee or self-employed you need to pay more social securitycontributions. The employer must declare the new employee to the SocialSecurity authorities.

In the sharing economy however, the status of the workersis not the same than for the traditional business. With them being classifiedas independent workers instead of employees, it is unclear that the law appliesfor these workers. A reform of the social security system to accommodateplatform workers would be a reasonable idea. The already existing socialprotection systems could be revised to apply to this increasing number of workersand to this increasing range of non-standard forms of work.Some Member States have already tried to solve some of the problems, andcountries like France have already a relatively well-developed system of socialinsurance for the self-employed.

Independent workers do not benefit from the nationalsocial security scheme. However, they can register themselves with thesocial security system for non-employees. That is, social securitycontributions are not triggered when a freelancer is hired. As for work-relatedaccidents and illnesses, independents workers are not entitled to anyobligatory insurance arrangement, but they can subscribe to optional socialsecurity insurance or to a private scheme.The central concept of this chapter is the protectionof the workers, some of them are not complaining about their workingsituations, others are, and because of these complaints governments are puttingan effort into the future of social protection. It is not enough for the EU andgovernments to established a set of regulations and laws, but they need to finda balance in order for the gig economy to survive. It is a complex anddifficult subject that the administrations are facing with this new way oforganising work.

Both at the national level and at EU level the problem ofclassification of contracts has been tackled, but the question of how toprotect the flexible workers without harming the economy or harming theflexibility is still up for discussion. 1https://ec.europa.eu/commission/priorities/deeper-and-fairer-economic-and-monetary-union/european-pillar-social-rights/european-pillar-social-rights-20-principles_en2http://www.europarl.europa.eu/RegData/etudes/STUD/2017/614184/IPOL_STU(2017)614184_EN.pdf

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