Platform work: bosses don’t like the EU Directive

Marco Veruggio

On February Europe made a step towards the “presumption of employment”, but platform lobbies will try to soften the most unwanted effects of the Directive before the approval procedure is completed. The dispute affects millions of workers, who have been struggling for years, to improve their pay and conditions.

On the 2nd of February the European Parliament (EP) approved a report on the proposal made by the European Commission for a directive on platform work, which aims to introduce a legal “presumption of employment relationship” and to increase the transparency of algorithms. It deals with millions of workers, such as food delivery couriers, carpooling drivers, but also microworkers who sit in front of their PCs all day long and earn few cents per click by moderating social media contents or training algorithms to recognise images.

“Presumption of employment”

After months of hard negotiations, a compromise reached by the MEPs under the guidance of Elisabetta Gualmini (Democratic Party, Italy) got 376 votes in favour to 212 against. Among the objectives set out in the document are the struggle against the mis-classification of gig workers as self-employed, the protection of basic rights, such as sick pay, annual leave and wages regulated by laws and contracts, the ban on letting algorithms decide by themselves on working conditions and the requirement to share more information with the authorities of member states.

Nevertheless, to find out exactly what that vote means, we have to be aware of the tortuous paths of the EU law-making process. The directive released by the European Commission at the end of 2021, like all EU directives, requires some objectives, but ultimately it will be up to the member states to implement them in their national legislations. The text approved by MEPs, therefore, is just the negotiating stance of the EP vis-a-vis the Commission and the Council (formed by the relevant ministers of the member states) during the so-called “trilogue process” – informal tripartite meetings which will be held before the discussion in the Council. The time needed for the approval process is two years. Then the national Parliaments shall take action. If something goes wrong, the procedure provides for a second hearing in the Parliament and the Council and, if necessary, a conciliation committee. In other words the report approved by the EP is all but a final measure and this gives platforms room for manoeuvre in order to soften the most unwelcomed effects of it. 

A statement released by the platforms before the 2nd of February raised concerns on “the impact this proposal could have on riders, restaurants and the wider EU economy”. According to the statement “A recent study by Copenhagen Economics predicted that EU-wide reclassification could lead to up to 250,000 people deciding to stop doing delivery work as they would no longer have the flexibility they seek”. That is the employers’ opinion at least. Indeed, “A recent survey of 16,000 couriers across the EU found that flexibility was the number one reason they choose to work with platforms”.The platforms point out as a negative example Spain, where the so called Rider Law has been dealing with this issue since 2021: “In Spain, where status reclassification has been promoted against the expressed wishes of riders, representatives of these riders estimate that 8,000 individuals are now out of work.” 

Ludovic Voet, confederal secretary ot the ETUC, the European Trade Unions Confederation, whom we asked to explain the position of trades unions, spoke of  “misleading arguments, such as the one stating that a presumption of employment relationship entails the reclassification of all workers – including genuine self-employed workers – as employees, something which is not true”.

The pitfalls ahead

The dispute between employers and workers representatives is focused on this very point. The directive would introduce the presumption that platform workers are employees, but through which mechanisms? In the European Commission proposal, the legal presumption would be triggered when two out of five “control criteria” listed in Article 4 (determining remuneration, imposing rules, supervising the performance of work, limiting autonomy of workers on work process and their opportunity of having their own customers) are met.

“In the directive as proposed by the European Commission”, pointed out Voet, “the procedure to make this provision operational would need to rely on individual action: The worker would therefore need to assess the relationship between him/her and the digital labour platform and start a proceeding if it is deemed that at least two of the criteria are satisfied”. This is an unacceptable request, as the ETUC “oppose any legislation whose enforcement requires a procedure by the worker against the digital labour platform to challenge the self-employment status, as this would ignore the vulnerability of these workers to undertake any legal action and would equally have an effect of discouragement for workers in the exercise of their rights”. 

The amendments approved by the EP represent a compromise among the more pro-business MEPs and those more sensitive to the need to protect workers’ rights. They also established that “National authorities are to apply the presumption when they consider that there might be incorrect classification of persons performing platform work”. But an anonymous representative of platforms told Euractiv site that “212 votes against the mandate was no great success for Gualmini and spoke of a rather divided house, that might leave less room for manoeuvre during the trilogue negotiations”. The European Peoples Party (EPP), in particular, appears to be divided and more than half of their elected representatives voted against the report.

Leïla Chaibi, French MEP for La France Insoumise, Jean-Luc Melenchon’s party, one of the most active in defending workers’ rights in this case, seems to be quite pessimistic and mentioned that the position of the Swedish chair of the European Council is expected to be unfavourable. “We already know that their text is going to be less ambitious than the Parliament’s report, and even of the Commission’s proposal”, she said in an interview. “An agreement should be reached in March: we don’t expect it to be great, but our strategy is to stall negotiations until the Spanish Presidency takes office in July”. But even the Spanish Presidency won’t be able to change the balance of power inside the Council, as “there is a block of states that are really against the Directive, such as Sweden, the Baltic countries, and France”, said Chaibi. The real problem, observed Ben Wray, coordinator of Gig Economy Project, interviewed by Paris Marx in the podcast “Tech won’t save us” at the beginning of March, is that “for workers lobbying on MEPs is easier than lobbying member states”.

“We unfortunately see the false narrative of digital labour platforms being defended by many member states.”, Voet confirmed to us. “For example, the Czech Presidency of the European Union presented in December 2022 a proposal of mandate which rendered the presumption of employment relationship and the eventual reclassification of workers as employees very complicated, with the setting up of a system of 3 out of 5 criteria to be met and to be demonstrated by the worker himself or the labour inspectorate to activate it. Besides this, Member States were given power of discretion not to apply the presumption ‘if it’s manifest that the presumption would be successfully rebutted’ by the digital labour platform”.

The Czech proposal was rejected thanks to the opposition of some member states. In October the Labour Ministers of Spain, Netherlands, Belgium, Italy, Luxemburg, Denmark, Portugal, Slovenia and Malta wrote to the Presidency to demand “a more ambitious directive on workers’ rights”. Interestingly Italy, after Meloni’s government was officialy sworn in, has changed its position and voted in favour of the Czech proposal.

Few days ago Euractiv has published some advances of the last compromise proposed by the Swedish Presidency: the reclassification into full-time employment would be triggered if a minimum of three out of seven criteria, which point to a subordination link between a platform and a worker, were to be met. Furthemore the “discretion” for national authorities not to apply the presumption, proposed by the former Czech Presidency, would be narrowed down.

The discussion is far from being over, when even the most advanced proposal, the one approved by the EP and welcomed by the ETUC, contains unresolved issues. Voet pointed out two of them: “the precarious and vulnerable position of undocumented third country nationals, who are overrepresented among platform workers” and exposed to the risk of being deported if they invoke the provisions of the directive and the “need to extend the right to information, consultation, participation of workers, and to collective bargaining with regards to algorithmic control to all workers, including traditional companies” and to apply the legal presumption to other non standard forms of employment. In other words the discussion unfolding in the EU bodies should be an opportunity to consider broader rules being applied to work organisations drastically changing under the pressure of technological innovation. 

28 million workers

The authors of Digital Labour Platforms in Europe. Mapping and business models (2021) listed 516 platforms operating in the EUs’ 27 countries (March 2021), a business still relatively small (14 billions euro), but fast growing – it was 3 billions in 2016. There are 28 million workers involved (many of them are part-timers with multiple jobs), 70% are low-skilled. Whereas in 2019, 7 out of 11 billion euro revenues (more than 60%) ended up in workers’ pockets, it was just 6 out of 14 (a bit more than 40%) the following year. In other words, revenues increased by 3 billion, but workers lost one billion, although they had to do their job under the harsh conditions of the pandemic.

Indeed companies, by making use of self-employment get an opportunity to keep the cost of labour low. 92% of the platforms mis-classify their staff as self-employed and 93% of their revenues come from this supposed self-employed staff, although the authors of the report argue that three quarters of the workforce enjoy limited autonomy, especially in carpooling and food delivery services.

According to Fairwork Foundation, a London-based NGO, 4 out of 6 most well known platforms in France (Deliveroo, NaoFood, Stuart and UberEats) and 3 out of 5 in Belgium (Deliveroo, Top Help, Yoopies) pay their workers less than the minimum wage. In spite of the Rider Law in Spain workers earn less than 3 euros per deliver, so they have to work 12 hours a day to make ends meet. In Germany the need of addressing the issue of low wages and organising the workforce, prompted the idea of Payday, a sort of solidarity fund, which should help worker organisers to do their job without being penalised by the loss of shifts.

Even some Amazon drivers can in all respects be counted among platform workers. The Seattle-based giant has been using “self-employed” couriers for several years to receive “delivery opportunities”. Via Amazon Flex app you only need to have a driving licence and hold a vehicle. According to Amazons Lezte Meile, a research by Rosa Luxemburg Foundation and DGB (the German TUC), Amazon resorts to “self-employed” couriers for peak loads and shifts not covered by contractors. 

In Germany, those “self-employed” couriers must open a business, pay social insurance and have a licence. Given that they often cannot afford to comply with all those requirements, authorities can fine them and, in the case of foreign students, even revoke their visas. Sometimes they receive 3-4 hours work shifts weeks in advance, on other occasions they are told to be at such place and time and routes are assigned to them only one hour before the shift starts. They earn 25 euros per hour and work a maximum 4 hours per shift, 6 days a week, so that their monthly income can reach to 2.600 euros, from which insurance and business costs must be deducted. According to “When you deduct the mentioned costs and you manage to complete your tour in 3 hours, you have 10€ left per hour. But if you take longer, your hourly wage might be even less”. 

Clashing judgements

Courts to which platform workers and unions have turned to for responses on certain issues, including the nature of their work relationship, fell into the regulatory vacuum the EU is trying to fill. But even the judges’ opinions are mixed.

In September 2020, Spain’s Supreme Court addressed the case of Glovo riders and ruled that given that Glovo “fixes the conditions for the provision of its services, and owns the assets essential to carrying out its services” as well as “uses deliverers who… fulfil their roles within the employer’s professional organisation”, their riders are employees.

Two months later, the Palermo court in Italy did the same: it ordered Glovo to reinstate a worker who had been terminated as a permanent worker and to pay compensation for the months he couldn’t work. Glovo had also to pay an amount equal to the difference between the remuneration received by the worker in the previous period and the minimum wage set by trade workers collective agreements. 

In June that year, Britain’s Court of Appeal dismissed a union appeal made by the small IWGB. The IWGB (Independent Workers’ Union of Great Britain) was refused permission in 2017 for collective bargaining rights for a group of Deliveroo riders on the basis that they were not workers under the terms of legislation on labour relations. It did not give up and announced they would appeal to the Supreme Court.

Few days ago, on March 24, after Deliveroo pulled out of the Netherlands, the Dutch Supreme Court ruled that Deliveroo riders in the Netherlands were employees despite they were recruited as independent contractors with the company, because there was a relationship based on authority and Deliveroo managed their actions via the login system.

Unions are divided too

Even among unions, splits are not lacking. In Britain the IWGB itself condemned the voluntary partnership agreement of May 2022 between Deliveroo and GMB union according to which Deliveroo recognises the GMB’s right to represent workers, but continues to classify them as self-employed.

Something similar happened in Italy. in September 2022 the small union UGL and Assodelivery (employer organisation of food delivery industry), signed a collective agreement, strongly criticised by the biggest Italian unions (CGIL CISL UIL), which challenged the representativeness of UGL, given the small number of its members.

The split among unions threatens to become an additional problem in an industry with very specific features, where new forms of worker organisation have been arising over the past years, often connected internationally. In 2018 the European Trade Union Institute published a report entitled Will trade unions survive in the platform economy. Emerging patterns of platform workers’ collective voice and representation in Europe

Ben Wray, coordinator of The Gig Economy Project, in one of its weekly newsletters, argued that trade unions need to take data and algorithmic management seriously: “A food delivery courier or a private hire driver is also a data worker; they work with data and their labour leaves a data trail. That hardly any gig workers currently think in this way is because there are so few examples of workers accessing and using their data to defend their rights and interests”. In addition, he underlines that “Over 60% of trade union activity on algorithmic transparency and accountability is made up of analysis, awareness-raising and developing strategies/principles. Just under 15% constitutes policy positions and regulatory demands, 12% is union organising and campaigning, and just under 10% is training and capacity-building. Not one example could be found worldwide of a collective bargaining agreement which ‘explicitly reference[s] algorithmic transparency and accountability’”. 

Weak but combative

The ETUI report higlights that platform workers, although fragile and exposed to retaliation by the employers, used their disruptive capacity successfully against platforms over the last years. This effectiveness partly relies on their ability to adopt the same technology they use in their jobs as a tool for collective organising, for instance creating private Facebook groups to share infos related to their work but also to collective actions. However this is not the only factor: the lack of strike regulations helps workers to implement direct action and retaliation by the employers is less effective, as many platform workers have got other jobs. Lastly, collective action proved to be effective in overwhelming the narrative of platforms, relying on the amazing effects of technological innovation and their “democratising power”.

Year after year platform workers learnt to exploit ever more effectively these strong points. Kurt Vandaele, author of the cited ETUI report, also confirmed this: “Definitely, it’s no accident that planned strike actions in app-based food delivery take place on Friday nights or in the weekend, when demand is high for food delivery”. On the other hand the power of workers reflects the vulnerability of some companies. In the food delivery industry, Vandaele told us, “it is waiting for more regulatory initiatives to bring more stability of app-based food delivery sector. This might imply that the business model of some food delivery platforms is futile, also given the cost-of-living crisis. It is also apparent that profits have been rarely been made in the app-based food delivery sector – most of them are still operating due to financial investments by venture capital”, risky bets on the increase of the industry rather than on its profitability.

In conclusion, more traditional unions and grassroots groups have been shown to be able to counterbalance the weakness of a small segment of the workforce, with low “marketplace bargaining power” (due to the strong labour supply) and “workplace bargaining power” as well (due to the glaring asimmetry of power in workplaces). They relied on few favourable conditions, achieved small improvements with their own strengths and attracted broad support. They managed to shake politicians, who in general don’t care any longer about workers’ issues. More than the directive itself, this is what makes the discussion on platform workers within the EU-bodies definitely interesting. 

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