HOW UBER AND OTHER ECONOMY SHARING PLATFORMS ARE CHANGING THE LABOR MARKET

HOW UBER AND OTHER ECONOMY SHARING PLATFORMS ARE CHANGING THE LABOR MARKET

The so-called ,,uberization of the work’’ is a new trend that will change the employment model, also in traditional business sectors.

 

The technological revolution is behind a new phenomenon on the labor market, which
the New York Times in 2015 called as ,,uberization of the work’’. Basically, the presence of this phenomenon in the labor market is due to the appearance of digital platforms as Uber, Lyft, TaskRabbit or Airbnb. The way in which they operate on the market has its own term –
,,Economy on demand’’ and this part of the labor market has been called “app-driven labor market”. Sharing economy has introduced a whole range of new opportunities for the consumers, but on the other hand, sharing economy generates also new problems, which current legal regulations in many countries in the world cannot cope with.

A NEW TREND IN THE ECONOMY

Sharing economy is currently one of the most dynamically developing phenomenon
in the global economy. It can even be said that this is the hallmark of the Y generation – the one that was born at the turn of the 20th and 21st century. What is sharing economy in general?
This is a new social and economic phenomenon, which assumes a replacement the trend
of possessing goods and resources, with the trend of sharing them. Undoubtedly it is due to the development of the internet and social media. What’s more, sharing economy would be completely impossible without the development of new technologies – without digital platforms that help people associate with other people who are having similar interests or needs. The European Commission (EC) sees this as connecting natural and legal person via online platforms, which enables them to provide mutual services. They use their resources, assets, skills, capital, but without transferring ownership. In June 2016, the EC even issued special guidelines for European Union countries, in which it supports consumers, entrepreneurs and national authorities in “sharing boldly” in sharing economy.

For the first time,  the term ,,collaborative consumption’’ was used in 1978 by Marcus Felson and Joe L. Spaeth in his article in the American Behavioral Scientist. However, the use of the term “sharing economy” for the first time dates to the year 2008. It was then that prof. Lawrence Lessig used it, describing the transaction of borrowing goods and resources, which was in
a opposition to the purchase transactions.

 

335 BILLION DOLLARS IN 2025

The global economic crisis after 2008, the desire to better use the resources, the dynamic development of modern technologies and access to the Internet, were the reasons why shared consumption is currently changing the world. This is happening before our eyes despite the fact that this trend is not fully defined. We can observe the economics of sharing in the case of financial, transport, tourism, hotel and catering services, or in the case of the labor market. In the transport industry, our associations should lead towards Uber and BlaBlaCar. In the tourism industry the most worldwide known companies that are examples of sharing economy are Airbnb, CouchSurfing and HomeExchange. Meanwhile in gastronomy – EatWith, Colunching, Shareyourmeal. There are even guide services like Vayable and Trip4Real. These are, certainly, only selected examples
of platforms that intermediate between service providers and recipients.

In 2014, revenues in the five most important sectors operating in the sharing economy model reached $15 billion. Only a year later it was already 28 billion dollars. Estimates of the PwC consulting company say that in 2025, the value of revenues will reach $335 billion. Certianly, these are only numbers. However, they confirm the growing popularity of a new type of services.

 

BENEFITS FOR THE CUSTOMERS

So how from the concept of sharing economy benefit consumers? Let’s take the tourist industry under the microscope. The most visible benefits include:

  • stimulating the development of tourist products;
  • enriching the tourist offer;
  • increasing the availability of services, selling on a global scale with the help of new tools;
  • enabling the less affluent people to travel,
  • better use of resources such as apartments and cars.

In addition – creating opportunities for tourists to experience exceptional experiences, making friends and making it possible to learn about visited places, and increase the number of jobs.

Applications for sharing the ride, such as Uber, tend to place more people in fewer cars.
As a result, the density on roads decreases. In the long-term, thanks to the reduction in the number of cars, the sharing services are part of the process of recovering cities for people – narrower streets and fewer car parks means more parks and pedestrian areas. And all this takes place while increasing the efficiency of urban mobility.

The concept of sharing economy is closely related to the conviction that we are wasting our resources. In the traditional usage model, even cars are used only for 5% of the time.
In the remaining part of the day they are unused. This aspect is repeatedly emphasized
by enthusiasts of the new trend in the global economy. Sharing economy is also a job placement platform between people who want to provide this kind of work, but they are not able to  do it in the traditional way, and those who need it, but cannot hire an ordinary employee. Positive impact on the labor market is also emphasized by Uber himself – 20% drivers who use the Uber app were previously unemployed.

 

PRICE AS THE MOST IMPORTANT FATOR

All abovementioned examples can allow us to get a good idea how sharing economy works.

What is then the main reason why the customers nowdays are more likely to choose the services within the sharing economy rather that services offering in a traditional way? Various studies indicate the price as the most important criterion (in the IBRIS study commissioned by PwC indicated this criterion of 54% of respondents). For most of the people convenience is also very important – often a single click on your smartphone or laptop separates us from ordering the service.

There is also another vital question – what are we guided by when assessing the credibility of the service provider? For 60 % of us our friends’ opinion is important. In the US, 69%
of respondents surveyed by PwC do not trust companies from the share economy sector until they are recommended by a friend. The price criterion mentioned above indicates also two further issues. On the one hand, there is an increase in competitiveness on the services market, on the other – there are key questions about the effects of the price war and the quality of provided services.

 

THREATS FOR CONSUMERS AND ENTIRE INDUSTRIES

Apart from many benefits that this business model brings, there are, however, a number
of threats that appear. These are: a low quality of the service, no guarantee of the service, difficulty to pursue claims, lack of protection of employees’ rights, non-payment of taxes by service providers, lack of responsibility in the event of threats to health or life of the consumers.

The list mainly concerns problems that a consumer and employee may encounter. On the other hand, from the point of view of the many industries most affected by the growth of sharing economy, there also three important issues: the development of the grey market, distortion
of competitiveness and decrease in the turnover of entities operating in the current legal framework.

A company that caused a lot of confusion in many countries around the world in the context
of allegations of unfair competition is american app-driven company – Uber.  Associations of taxi drivers in many countries filed lawsuits to the courts demanding prohibition of their services. What accusations taxi drivers mainly raised? In a brief – no appropriate licenses, no cash registers in the cars, no clear price list for the rides and the fact that not all drivers pay taxes and social security contributions.

For many years, Uber has struggled with court proceedings in a large number
of countries with various consequences. In some countries, such as in Hungary or Italy, the activity of Uber was considered illegal and unfair competition towards taxi drivers. Lack of legislative clarity in the assessment of Uber activity caused that in this case the judgment was issued by the European court of justice (ECJ). ECJ on 20th December 2017 has ruled that Uber is a transport services company, and to operate it is obligatory to accept stricter regulation and licensing within the EU as a taxi operator. In its ruling, the ECJ said Uber deliver an “intermediation service” and it was stated that “the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of EU law”.  Uber had denied it was a transport company, arguing instead it was a computer services business with operations that should be subject to an EU directive governing e-commerce and prohibiting restrictions on the establishment of such organisations. The decision of the court was ruled after the lawsuit filed by associations of Spanish taxi drivers and will apply across the whole of the EU, including the UK. It cannot be appealed against. What does the sentence mean in practice? EU countries regulate passenger transport markets differently. In each of them, the ECJ judgment means something else f.e. if the regulations in some country state that to provide taxi services you must have a license, Uber will have to obtain a license and adapt to the national administration – not the other way around.

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