Sharing Economy in Poland Is Yet to Come

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Transport and accommodation are the two services most commonly associated with the sharing economy. However, the catalog of such services is much bigger. People allow strangers to put up tents on their lawns, grow vegetables and fruits on their land, lend their gowns for a party, offer workspace or room for a meeting.

These are but a few examples – this list is continuously growing. All this happens thanks to the development of digital technologies which reduce the costs of the search for those interested in the exchange of goods and services of various kinds. New technologies also facilitate innovative reputation systems, which made it much easier to trust strangers.

Polish Prime Minister Mateusz Morawiecki mentioned this phenomenon in one of his speeches, pointing out “the benefits of a sharing economy: higher productivity of the economy, cleaner environment, better use of natural resources, and savings for our budgets. All this is possible today thanks to technology.” Thus, he correctly linked the development of sharing economy with the digital economy.

At the same time, PM Morawiecki presented a very narrow definition of the sharing economy, claiming that “it is a departure from focusing on one’s own needs for the benefit of the community and the common good.” It has a little to do with reality.

For a given activity within the sharing economy, it does not matter whether its motive is profit or not. Almost always we can see there some individual, not collective, benefit which provides the incentive to provide or use the service.

For example, when we use the BlaBlaCar (a platform worth over USD 1.6 billion) to commute from Warsaw to Lublin, we contribute to the cost of fuel and receive transportation. The drivers save money. Two (or more) strangers, who found and trust themselves with the help of digital technologies, both benefit. In addition, if an alternative were solo rides, we reduced the number of cars on roads.

The proliferation of the sharing economy is an incentive to measure the phenomenon itself. One of the attempts to assess the popularity of these services in the world is the Sharing Economy Index, prepared by the Swedish think tank Timbro.

The authors of the report, based on an analysis of over 4,500 services, selected almost 300 from all over the world that qualify as sharing economy. Interestingly, some research was carried out by analysts recruited on Upwork, one of the platforms of the sharing economy for the so-called freelancers who want to undertake a variety of tasks for a fee, without a permanent association with one employer. The index was created on the basis of research on sharing economy platforms in terms of Internet traffic and scraped usage-data.

As the index authors conclude, “sharing economy services can be said to reduce transaction costs, ease market frictions and redistribute risk to supplying and demanding peers by facilitating transactions that either make use of underutilized capacity [e.g. of goods or time], or that would not otherwise have existed.” Some say that sharing economy can only exist when the service provider is the owner of what he/she shares.

However, even if an Uber drivers use a rented car, they still share their time with us, and at the same time, the car is used effectively, often around the clock. Besides, in this transaction both parties place trust in each other, what in the 21st century is facilitated by the Internet, mobile apps, and GPS.

Poland ranked 92nd  in the Timbro Sharing Economy Index of over 200 countries and territories. The top is occupied by the countries where tourism is an important sector, while accommodation is offered within the sharing economy.

The tourist boom also explains the first place of Iceland. In Poland, there is still a high potential for the development of the sharing economy, not restricted just to tourism. This depends on the further development and popularity of digital technologies.

In the report of the Civil Development Forum “E-development: Digital technologies and the economy” it was pointed out that many of the regulations currently in force were created for traditional enterprises; thus they do not match the digital reality and require changes.

Also, the tax and social security system operating in Poland, based on the traditional employer-employee relationship, does not fit into the world of online platforms combining the service providers of the sharing economy directly with their clients.

Many problems that were once supposed to be solved by government regulation (such as protection against an unfair taxi driver or determining a standard for a place to stay) are today solved by private platforms. They make it easy to find customers and service providers quickly via the Internet, provide mechanisms to assess the credibility of strangers, internal quality control systems and compliance with specific rules.

It can even be said that the platforms of sharing economy services are based on numerous regulations, which form private regulatory systems replacing governmental regulations.

In recent months, various ideas concerning new regulations for transport or accommodation services occurred in the Polish public debate. This happened in response to the popularity of such platforms as Uber, Taxify, or Airbnb. Fortunately, no bans on services within the sharing economy have been introduced in Poland. Such bans are the worst possible solution, one that destroys the benefits that the sharing economy brings to customers and the economy.

According to the estimates presented by Airbnb, people using their accommodation services in 2017 spent over EUR 800 million outside the platform itself during visits to the Visegrad Group countries, including EUR 208 million in Poland.

Bans on the sharing economy services weaken competition, which is good for consumers because it not only reduces prices but also increases the quality of services – also among those that do not belong to the sharing economy but offer a similar type of service.

Unfortunately, many politicians believe that the existing provisions (regulating, for example, taxis or hotels) should be extended to the new services of the sharing economy. It would be less drastic than to ban them, but such an approach eliminates many benefits provided by modern online platforms.

Moreover, what is needed are changes in the existing governmental regulations which were rendered obsolete by digital technologies. Taxi drivers and hotel owners, acting for many years according to the regulations of the pre-digital era, are often lobbying for the expansion of the old provisions.

However, it is a departure from some of the governmental regulations in these sectors that would facilitate the development of these groups and help them to compete with the sharing economy services.

The conclusions from the Timbro’s report are also important for the economic policy pursued in Poland. First of all, the authors show that the popularity of sharing economy depends on the level of economic freedom. Sharing economy platforms are sometimes presented – also in Poland – as tools to avoid taxes or dodge regulations.

It turns out, however, that the higher the level of economic freedom, – and therefore the smaller burdens for economic activity (i.e. less need to bypass regulations) – the larger the sharing economy. In popular rankings measuring economic freedom, Poland still occupies distant places. Therefore, there is still much room for improvement.

The second important factor is the rate of growth of the Polish economy. The wealthier countries have also the most extensive access to broadband Internet – an essential element not only for the development of sharing economy but more broadly for the digital economy and e-government.

Therefore, more economic freedom in Poland would be helpful both for catching up with the wealthier Western countries and for further development of the sharing economy.

The resistance against new business models based on new technologies makes no sense. Instead, the old regulatory provisions must be changed and made more flexible in order to facilitate adaptation of various sectors to the new digital reality.

The article was first published (in Polish) by Polska The Times

Marek Tatala