In recent years, there has been a significant growth of an interest in the gig economy built upon the premise of online platforms that connect customers with service suppliers. Platform work brings more opportunities to traditional businesses by closely connecting suppliers and customers and reducing transaction frictions.

COVID-19-induced lockdowns only advance the spread of delivery via platforms, since some sectors (such as ride-sharing) have expanded their operations into delivery of meals and produce from local restaurants and stores, to which access is restricted due to nation wide lockdowns.

In addition, platform work offers more means of prosperity not only for those seeking more work-related flexibility and additional income, but also for those who directly suffered financial losses due to the lockdowns.

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KAROLINA MICKUTĖ & ŽILVINAS ŠILĖNAS THE PILLAR OF SUSTAINED BUSINESS DURING COVID-19 - THE PLATFORM ECONOMY

The breakthrough of the gig economy was preconditioned by the laxity, or even absence, of regulation, i.e. more freedom to create and act.

However, there are growing concerns at both the European Union (EU) and national level on whether to impose more encompassing and rigid regulations on platform work. There are ongoing considerations on the possibilities of expanding labor regulations on platform workers and platforms, along with additional restrictions such as national language requirements for ride-sharing service drivers.

The best way forward is to at least maintain the regulatory status quo of platform work, to foster competition in the sector among platform operators, and to establish efficient and easily accessible dispute resolution mechanisms.

Due to the nature of platform work, it is most prudent to create conditions for the sharing economy to further develop and ensure a regulatory environment that would meet the flexibility needs of platform work. In contrast, an increase in regulation and imposing labor standards on platform work is not only unfounded, but may also have detrimental effects on the sector, consumers, and national economies as a whole. 

The Upraise of Debates on Regulating the Sharing Economy

The EU has long had an enthusiastic approach to the benefits of platform work. It is regarded as a source of job and economic growth.¹ Further, it is hoped that the collaborative economy will lead to new opportunities and new routes into work and may serve as a point of entry to the labor market². This not only benefits local workers seeking additional income, but also foreign workers in terms of their integration into the labor market.

Platform work increases the efficiency of the matching process, which may help to alleviate problems such as frictional unemployment and skills mismatches. It may also offer new work opportunities to graduates and immigrants, and act as an income supplement for individuals transitioning into periods associated with low earning potential³.