Sharing Economy

The EU is after gig economy: what does this mean?

Recently, the European Commission published draft legislation, planning to regulate the employment status of gig workers across the bloc. There have been multiple attempts of defining worker rights and status at the country level, with contradicting court decisions, and it seems like the EU commission wants to take matters into its own hands.

Sharing economy is a platform-based type of exchange that allows individuals and groups to share their services peer-to-peer. Platforms only act as intermediaries and facilitators, instantly connecting the supply with demand, but not everyone sees sharing economy platforms in this way. Ride-hailing and delivery services have come under fire for treating drivers and delivery workers as contractors. The EU Commission and a few member states such as The Netherlands say that they should be given the employers’ rights.

This EU initiative has received different reactions. While unions found a reason for celebration, ride-hailing and delivery platforms rally against it. Uber and Delivery Platforms Europe, the group of food delivery platforms, voiced their concerns about the impact this initiative will have on consumer choice and the thousands of jobs it threatens. Changing the business model may not be feasible for all the companies, as it could force them out of some EU markets. According to a recent study, up to 250,000 couriers could quit if legislation reduces flexibility around working hours and schedules. This has already happened with Deliveroo and Spain. After a new Spanish “Rider Law” entered into the force in August, the company had to cease all operations and 8,000 couriers ended up losing their jobs.

The contractor status gives drivers flexibility and the chance to choose their working hours. In our fast-changing world, that is especially appealing. Furthermore, with the increased risk of getting laid off as a result of another lockdown, engaging in the gig economy lets Europeans diversify their income sources. They can work for different ride-hailing apps simultaneously, which would be impossible in the case of full employee status. It also allows those drivers to mix various engagements and find which one works best for them. A 2018 study of Uber drivers in London demonstrated that flexible schedule, along with autonomy was the main benefit for them, while another study found that being an independent contractor is associated with “greater enjoyment of daily activities, a decrease in psychological strain”.

Delivery drivers are no different, two-thirds of respondents of a study by Copenhagen Economics name flexibility as the main reason for working as a courier and over 70% of them wouldn’t be willing to switch to fixed-schedule work.

For workers, the draft legislation would mean a loss of flexibility to decide their working hours and the ability to work for several platforms simultaneously. For European consumers, these changes would mean a hike in sharing economy services prices, which they have been relying heavily on during the pandemic. This can lead to decreased demand for food delivery services, and in the light of current lockdowns and restrictions, the restaurant business also ends with the short end of the stick.

One size doesn’t fit all: some prefer using traditional taxi services, others are more comfortable with ride-hailing apps. Just because taxi drivers are faced with substantial licensing fees that drive up the cost of the service, doesn’t mean we should overburden ride-hailing platforms with the same regulations and restrictions. If European governments want to create a level playing field, they should make things easier for taxi drivers and gig workers, as happened in the case of Estonia. The Estonian government legalized the sharing economy “at a time when a large part of the world is finding protectionist reasons to prohibit the sharing economy” and lessened previous regulatory burden on taxis. The Estonian government didn’t try to cover employment status and rightly so, as according to recent polls 76.4% of platform workers in Estonia use the gig economy to supplement their income.

Consumer habits have changed and even after the pandemic is finally over, it is likely that we will keep ordering food from the comfort of our own homes. These platforms provide unique value to millions of consumers around Europe. If we transfer the exact rules and regulations traditional services are faced with —as the EU Commission intends to do—we risk losing everything that makes the sharing economy unique and attractive. Consumers are the ones who will have to bear the burden of restricted choice and increased prices.

Toronto takes on MADD: Good luck with that!

November 30, 2021
By David Clement
In Recent Media, Ride-sharing, Sharing Economy
1 comment

The freeze on new ridesharing licences couldn’t come at a worse time

Last week Toronto city council suspended the issuance of all new ridesharing licences until the city approves and rolls out a driver safety program. This suspension, which will significantly limit supply, does nothing for consumer safety but does run the risk of jeopardizing public safety.

The motion, pushed by councillors who have opposed ridesharing access at almost every turn, addresses a problem that is the council’s own creation. Almost 18 months ago, the city decided it would move forward with a rideshare-driver training program, but then sat on its hands and never approved a vendor. (In Toronto, transactions that don’t require government sign-off are getting rarer and rarer.) And now, Catch-22, Council has decided to suspend new permits because drivers haven’t taken the safety course. Whose fault is it that the city approved a training program without any plan for implementing it? Not drivers’ fault and certainly not consumers’ fault.

The freeze on new ridesharing licences couldn’t come at a worse time — just as the Toronto Transit Commission (TTC) announces it is reducing service routes due to staff shortages, mostly because it can’t persuade its employees to get vaccinated. Now, with driver shortages looming in the ride-share industry, consumers can expect to face higher prices and longer than usual wait times.

Restricted ridesharing combined with disrupted public transit is a recipe for increases in drunk driving and motor vehicle collisions, as the academic literature on ridesharing’s effect on impaired driving shows. In Houston, for example, researchers at the University of Texas concluded that “rideshare volume had a significant negative correlation with the incidence of motor vehicle-associated trauma, and this was most evident in those younger than 30 years.” Analyzing 24 million Uber rides, they found that access to ridesharing reduced motor vehicle collisions by 23.8 per cent — a remarkable reduction that should be celebrated from a public safety perspective.

Economist Jessica Lynn Peck found that in New York City the introduction of ridesharing services reduced motor vehicle collisions involving impairment by 25-35 per cent, with the highest reduction taking place in densely packed Manhattan. This well-established negative correlation presumably is why Mothers Against Drunk Driving Canada (MADD) issued a statement in opposition to the City’s motion: “MADD Canada fully supports the implementation of the mandatory training program, but believes the decision to halt rideshare drivers’ licences until that program is in place will have a negative impact on Torontonians.”

Other research finds that ridesharing “leads to a significant decline in arrests for both physical and sexual assault.” This is likely why 81 per cent of femaleriders say that safety is their primary motivation in using ridesharing, which allows digital tracking of the driver and sharing one’s route with a family member or friend in real time. Restricting access to ridesharing will tend to push women to less safe alternatives.

As Ontario continues to open up from the pandemic, Toronto’s city council is putting public safety at risk and doing so, ironically under the banner of consumer safety. More and more Ontarians are going out to restaurants, bars, clubs, and that will only intensify as the holidays approach. From a consumer and public safety perspective, increasing the options available to consumers for travel is the right policy direction. Unfortunately, city councillors don’t see it that way, and Torontonians will be worse off because of it — some of them worse off in the worst possible way.

Originally published here

Sharing Economy Index and its results – SHARING ECONOMY SERIES, PART 4

October 15, 2021
By Anna Arunashvili
In Blog, Sharing Economy, Sharing Economy Index
0 comments

Welcome to the CCC’s sharing economy series. In this series of short blog posts, I elaborate on what the sharing economy is, present the main findings of the Sharing Economy Index, and look at potential future regulations surrounding these services.

The Consumer Choice Center recently published the Global Sharing Economy Index 2021, which evaluates 50 cities around the world based on the availability and accessibility of sharing economy services. The index is a one-of-its-kind compilation of applications you can use to improve your city experience and analyses how regulated these services are in each city (whether you need a special permit to operate an Airbnb business or if there are additional taxes levied on the guests).

In the early years of Uber, to become a driver you only needed a car, driving license, and simple registration on their website. As driving Uber did not require special permits or taxi licensing, which can be quite expensive to acquire in certain countries, it allowed Uber to offer the same services at a much lower cost.

However, according to the index results, as of today, out of 50 cities, there are only a few ones left that don’t require a special permit. In France for example, in order to operate Uber, you have to get a VTC card first (VTC is a French acronym for private chauffeur services that are different from taxis), and registration for the exam will cost you around 200 euros. Becoming an Uber driver might be more complicated now, but it remains a lucrative business and a big competition to traditional taxi services. Which, as we already saw in the previous blog post, isn’t something that taxi drivers are very happy about.

Another shared service discussed in the index, e-scooter, is an affordable and quite fun means of transportation, available in 43 out of 50 cities. Recently, most cities have been trying to regulate e-scooters by banning them from sidewalks, setting speed limits, or introducing a fine system for parking at the wrong locations, as in the case of Norway. Some cities, like Athens, went as far as permanently banning e-scooters altogether, only allowing private ownership of electric scooters.

Interestingly enough, Eastern European countries enjoy more freedom when it comes to sharing economy services. First place in the ranking was shared by post-soviet cities Tallinn and Tbilisi, where not only all the discussed services are available, but they are also less regulated. On the other hand, Western and Central European countries seem to have taken more restrictive approaches, therefore limiting consumer choice. For example, as if covid wasn’t already destructive enough to sharing economy services, Amsterdam decided to ban Airbnb in its historical centre, a decision that was fortunately overturned by the court.

Even in the light of current efforts from governments to regulate this sector, we can say that the sharing economy is here to stay. People have come to appreciate and get used to the comfort and convenience these services bring to our everyday lives. So no matter what new restrictions the governments around the world come up with, we can leave it to the creativity and entrepreneurial spirit of this industry to fight back and readjust.

A Europe without the sharing economy: scary tale or real future?

October 5, 2021
By Maria Chaplia
In Recent Media, Ride-sharing, Sharing Economy
0 comments

The latest legal challenges to Uber are yet another example of policymakers giving sharing economy platforms an unnecessarily hard time despite the flexibility and independence they offer both workers and consumers.

Uber’s fight for existence in Brussels is a win-or-lose moment for the sharing economy in the European Union. The clash comes at a time when steadfast legislative and court actions across the bloc aim to reclassify platform workers as employees and upend opportunities for contractors. Unless the worrying trend is reversed, European consumers will find themselves cut off from innovation and choice.

The current Brussels Uber ban is based on an archaic 1995 law that prohibits drivers from using smartphones. While it should be a great shame for all of Belgium that such a law has remained untouched till today, it is also hardly surprising. Brussels’ taxi lobby has long been unhappy with the emergence of ridesharing, and these restrictions play to their benefit.

Uber began operating in Brussels in 2014 and had to continuously resist the system and fight back through costly court appeals and restrictions to survive. In 2015, the Belgian commercial court banned UberPOP — a traditional peer-to-peer service — by ruling in favour of Taxis Verts, a cab firm, just to name one example. Since then, Uber drivers have had to get a special licence to operate, which made the service more expensive and less accessible.

However, consumers in Brussels still enjoy the services of Uber. Over 1200 residents of the EU capital signed a petition against the smartphone ban, arguing that “there is no valid and digital alternative to the platform in Brussels at the moment”. On the supply side, there are currently about 2000 drivers using the Uber app. The fact that the Brussels government is selectively enforcing an old law only now, after multiple attempts to get rid of Uber, shows that the company crossed the Rubicon of success, and it has become too inconvenient and competitive to the taxi lobby.

Recently, in Brussels, there have also been calls to reclassify self-employed drivers as employees. This witch hunt after the gig economy mirrors the recent Dutch court ruling about employment benefits for ridesharing drivers and Spanish “riders” law, which concerns the status of delivery workers. Under the pretence of providing security and stability, these interventions threaten the very nature of the sharing economy and are oblivious to the drivers’ needs and flexibility.

Sharing economy platforms give their contractors flexibility and independence, and that is exactly what those choosing to ride share or deliver food are seeking. By surveying 1,001 active Uber drivers in London, a 2018 study by the University of Oxford and Lund University found that they joined the platform because of autonomy, scheduling flexibility, or improved work-life balance that the sharing economy provides. Moreover, the flexibility was so valuable to them that they would only accept fixed schedules on the condition of significant earnings increases.

Being an independent contractor is linked with “greater enjoyment of daily activities, a decrease in psychological strain, and a greater ability to face problems”, according to a study at the Paris School of Economics. In pursuit of “better” labour standards, it is easy to forget that value is subjective, and that one size doesn’t fit all. Drivers who make a living through platforms make a conscious choice in favour of flexibility and autonomy, and their freedom to do so must be preserved.

By providing value to thousands of consumers and giving platform contractors a chance to plan their time better through alternative work arrangements, the sharing economy makes our lives easier, better, and more exciting. But some European policymakers are giving the sharing economy in the EU — and especially ridesharing — a hard time, which it doesn’t deserve. It’s time for that to stop.

Originally published here

Sharing economy under threat – Sharing Economy Series, part 3

September 29, 2021
By Anna Arunashvili
In Blog, Ride-sharing, Sharing Economy, Sharing Economy Index
0 comments

The pandemic isn’t the only obstacle sharing economy platforms have had to face for the past several months. Governments around the world have introduced new regulations that have been detrimental to consumer choice. Compared to the time when the platform economy was only starting its way into our daily lives, ride-hailing apps today are subject to many more restrictions. Some of these new interventions include employee classifications, social security, parking requirements, or outright bans.

One of the main aspects of ride-sharing that governments are trying to redefine and regulate is the relationship between service providers and drivers. Uber and other platforms treat drivers as contractors, rather than employees, but to some such an approach is unfair.

Drivers’ inability to set fares, penalties for cancelling rides, and customer engagement restrictions are among the main reasons why drivers can be seen as less independent than believed. However, on the other hand, contractor status gives drivers more flexibility and the chance to choose their own working hours. They can work for different ride-hailing apps at the same time, which would become impossible should full employee status be given to drivers.

Uber has been involved in many legal battles to protect drivers’ independence. Recently, the supreme court of the UK ruled that Uber drivers should be granted employee status and benefits that the status entails, like paying minimum wage and paid annual leave. This will likely increase the ride fare around the country.

This is not the first attempt at restricting Uber though. After protests of London black cab drivers, the transport regulation body TfL was pressured to introduce new restrictions on Uber. Some of these restrictions included a 5-minute wait between rides, which would have affected the delivery of service and, as Uber claimed, taken money out of drivers’ pockets. A petition against this restriction was signed by over 130,000 people and, fortunately, TfL decided to drop it.

Brussels took a different yet equally restrictive path. The Belgian capital recently has even gone as far as banning app-based taxi systems, the essence of ride-hailing itself. This comes after pressure from the traditional taxi drivers, who were urging the government to regulate app-based ride-hailing that was becoming harder and harder for them to compete with.

Drivers who continue to accept trips via their smartphone face a risk of getting fined or having their license revoked. While Uber hasn’t been explicitly banned, countries like Denmark and Hungary have made it impossible for Uber to operate there and have practically forced the company out of the market.

Across the ocean, the state of California has also been debating over the drivers’ status. Passed in 2020, Assembly Bill 5 (AB5) was meant to reclassify independent contractors as employees. According to the bill, ride-hailing and delivery services platforms would be required to offer multiple benefits to their drivers. This would have cost Uber and Lyft billions of dollars and increased the cost of ride-sharing services, making it increasingly unaffordable compared to traditional taxis.

Ride-hailing and delivery services platforms wanted to be exempt from granting worker-level benefits to their workers and threatened to suspend their services in the state of California. For example, it costs almost 2x more to catch a traditional taxi from LAX to Hollywood and with no more ride-hailing available, consumers would be left with fewer and more expensive options.

Proposition 22 was included in the November 2020 election ballot and passed with around 57% of California voters. This proposition allowed drivers on these apps to maintain their independent status with certain qualified benefits. But the California court recently ruled Proposition 22 unconstitutional, so it seems like the legal battle is far from being over. It is very likely that other states will follow the example of California which will put the fate of the ride-hailing in jeopardy.

Overall, even though ride-hailing services have made life easier and cheaper for consumers around the world, governments keep yielding to pressures mainly from traditional taxi industries and introducing regulations and restrictions that could potentially lead to the suspension of ride-hailing services.

The cases of the UK, Brussels and California discussed in this blogpost demonstrate a dangerous precedent for countries and cities around the world. If this trend continues, soon ride-hailing will no longer be any different from traditional services and the essence of the sharing economy will be lost. And, of course, consumers are the ones who will have to bear the burden of restricted choice.

Sharing economy in COVID-times – Sharing economy series, part 2

September 20, 2021
By Anna Arunashvili
In Blog, Home-sharing, Ride-sharing, Sharing Economy
0 comments

The current pandemic has had a huge impact on the delivery of sharing economy services. As was discussed in the previous blogpost, online platforms have demonstrated exceptional adaptability and have gone above and beyond to make sure consumers continue to see value in using them.

While some sectors of the sharing economy, like ride-sharing and home-sharing, have suffered immense losses due to strict lockdowns around the world, others have increased their profits and proved to be invaluable. For example, delivery apps became an essential part of our everyday lives. With restaurants being closed, the fear of virus transmission, and difficulty of travelling due to transport restrictions, we found ourselves relying on delivery services.

To avoid human interaction at the delivery point, Doordash, an online food delivery platform, like many others, introduced a contactless delivery option that can be requested both by the customer and the deliverer. According to Statista, in the second quarter in France, restaurant delivery users increased by 24% compared to pre-pandemic numbers. In the US, delivery companies also reported growth in their revenues. Combined revenues from the four major delivery companies, Uber Eats, Doordash, Postmates, and Grubhub, from April-September 2020 was double the amount during April-September 2019.

Professional car-sharing services experienced a huge drop in demand during lockdowns, but once people started to get back on the move rather than opt for public transportation they placed more trust in car-sharing services as it entails low risks of virus transmission. Share Now increased their hygiene measures, and they have been cleaning and disinfecting their cars four times more than usual. Peer-to-peer car-sharing platforms, like Turo and Getaround, have also bounced back from pandemic-related setbacks. To reassure people into using their services again they eased cancellation policies and introduced additional cleaning measures.

As demand for services dropped drastically, many companies had to cut losses. Uber, for example, had to lay off thousands of employees to reduce operating expenses, most of those employees being customer service agents, and had to close 45 offices globally. Lyft, another ride-sharing company and Uber’s biggest rival, had to let go of 17% of its workforce.

To comply with new covid restrictions introduced by the local governments, Uber and Airbnb changed and adapted their processes. Uber made it obligatory to wear masks while riding, and before ordering a ride, you have to confirm you will be wearing a mask during the ride. Airbnb introduced additional safety measures and made it a requirement for hosts to carry out a 5 step cleaning process between the guest stays.

Overall, despite the doom and gloom of the pandemic, the sharing economy managed to survive and continue to innovate. These unprecedented times were more challenging for some than for others. While some services, like ride-sharing and home-sharing, had to lay off a significant amount of their workforce, delivery platforms saw record-breaking demand for their services.

The next blogpost in our series will discuss some of the controversies surrounding sharing economy platforms and how governments are trying to regulate this innovative sector.

The essence of the sharing economy – Sharing economy series, part 1

September 13, 2021
By Anna Arunashvili
In Blog, Home-sharing, Ride-sharing, Sharing Economy, Sharing Economy Index
2 comments

The current pandemic has taken a toll on most areas of economic activity, including the sharing economy. Cancelled holidays, stay-at-home orders, mobility restrictions due to quarantines, and lockdowns resulted in a sharp drop in demand for sharing economy services.

The Sharing Economy Index 2021, recently published by the Consumer Choice Center, examines the impact said restrictions have had on the sharing economy as well as provides an extensive overview of the availability of ride-sharing, flat sharing, and other types of peer-to-peer exchange.

In this series of short blog posts, I will elaborate on what the sharing economy is, present the main findings of the Sharing Economy Index, and look at potential future regulations surrounding these services.

The sharing (collaborative) economy has transformed human interactions around the globe. As a relatively new economic model, the sharing economy is a platform based type of exchange that allows individuals and groups to share their services on a peer-to-peer basis.

One of the most distinctive features of the sharing economy is that it eliminates the need to own assets and allows people to use various items — cars, e-scooters, gyms — for a short time without buying them. For example, the flat-sharing platform Airbnb that has been around since 2008, allows you to rent a room or a whole place to yourself in exchange for a certain fee. Simple registration on their website or mobile app opens access to thousands of places around the world and is a great alternative to conventional hotels.

Another tech giant and San-Francisco native, Uber, offers services such as ride-hailing, food and package delivery and also requires just a simple registration process. Uber has been known to be a cheaper alternative to traditional taxi services and is currently available in 70 countries.

Technology has been the driving force behind these companies. However, platforms only act as intermediaries and facilitators: they instantly connect the supply with demand. All forms of collaborative consumption require the internet to connect providers with potential customers. Platforms offer a safe and easy-to-use platform to link people in need of certain services, assets to those who can provide them.

The trust among users is built through the rating systems. Most platforms encourage review exchange to achieve the best user experience and guarantee safety. For example, for Airbnb, some hosts go the extra mile to make sure their guests enjoy their stay by offering free cleaning services or early check-in. Uber recently released Uber Lite to accommodate those people in developing countries who don’t own the latest smartphones and have an unstable internet connection. Mexico is one of those countries. To adjust to the needs of Mexican people even better, Uber also fought hard to enable cash payments in Mexico city, expanding their service to around 10 million people in the metropolitan area.

Sharing economy provides services that are more affordable and accessible than their traditional counterparts. The main reason for this is the fewer entry barriers. In order to start driving Uber or rent out your flat through Airbnb, you use idle assets already in your possession. In many countries, platform businesses face fewer market entry barriers compared to traditional businesses, too. Often, it only takes a quick sign-up to join a sharing economy platform.

A variety of services — from home-sharing to co-working spaces — has made our lives much easier. Even though the recent pandemic has been quite challenging, we’re optimistic that the sharing economy will continue to expand and provide even bigger benefits for people around the world. In the next blog post, we’ll go into details on what effects COVID-19 has had on the sharing economy platforms and how they responded.

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The freeze on new ridesharing licences couldn’t come at a worse time

The latest legal challenges to Uber are yet another example of policymakers giving sharing economy platforms an unnecessarily hard time despite the flexibility and independence they offer both workers and consumers.

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