Will platform companies fit into the Nordic model?

These are not new questions, but they become increasingly important as digitalisation accelerates and new forms of employment become ever more common. The future of work demands innovation also when it comes to labour law and social insurance models.

It is a fact that other employment forms than open-ended full-time contracts have become increasingly frequent. According to the European Commission, more than half of the new jobs that have emerged in the past decade have been so-called atypical or non-standard employment relationships, i.e. part-time work, on-demand work, fixed-term employment and so on.

The number of ‘dependent self-employed workers’ increases too, pointed out Mark Keese from the OECD during the recent conference on the Future of Work in Stockholm. These are people who are said to be self-employed, but who really are employees because they are working under the same conditions as regular employees. The OECD’s numbers show a sharp increase from 2010 to 2015, including in Sweden and Norway, albeit from low starting points. 

Another tendency is the increasing number of people who multitask. They might be hired by more than one employer, or combine employment with running their own company or add to their income on digital platforms like Uber, Foodora and Hilfr. For some of them, multitasking is necessary in order to make ends meet. 

The tendencies are set to continue

These tendencies look set to continue. The platform economy is expected to contribute to a continuing increase in the number of self-employed people and temporary work. The point of engaging someone who is self-employed rather than employing a worker is that the commissioning party does not have to worry about the duties that come with being an employer. Self-employed people are not covered by collective agreements, have no employment protection and are not covered by working hours or working environment regulations, to mention but a few examples.   

It is therefore not so surprising that those commissioning work would love to classify those who will be carrying out the work as self-employed, and that for instance Uber in no way wants to admit that the company is the drivers’ employer.

Technology also drives the development towards on-demand work/zero hours contracts among ordinary employers, Samuel Engblom, Policy Director at the Swedish Confederation of Professional Employees TCO, told the conference. It makes it easier to calculate when, during the week/24 hour period/day, the demand for a company’s services will peak, and then call in the exact number of people that you need at any one time at very short notice.

According to Mark Keese, four policy objectives are particularly important in order to adapt labour law to the new labour market:

• Providing better guidance for how to classify workers;
• Reducing incentives to take up new types of work;
• Reaching a better balance in the burden of proof between employee and employer when determining whether someone is an employee or not
• Ensuring fair pay for work.

Insufficient social security protection

The development also means that more people do not have adequate social security protection. This especially concerns employees with atypical employment and people who are self-employed. Social security schemes have primarily been made for employees on open-ended full-time contracts, and have not been revised to match the development towards different forms of employment. One typical example is the self-employed who are often not allowed to take out occupational injury insurance or unemployment insurance. Others, for instance people in non-standard employment, are formally covered by the social security schemes, but in reality they struggle to fulfil the criteria which would allow them to benefit from the insurance.

The problem has caught the attention of the European Commission. Recently, it proposed that the Council of Ministers should adopt a recommendation on how member states should modernise their schemes for unemployment benefits, sickness and health care benefits, maternity and paternity benefits, invalidity benefits, old-age benefits and benefits in respect of accidents at work and occupational diseases;, so that they offer ‘adequate’ protection. This means, according to the Commission, that it should be provided sufficient and timely to uphold the standard of living, to provide adequate compensation for lost income and to prevent the insured party from ending up in poverty.

Will ‘the Nordic model’ prevail?

One question which indirectly relates both to labour law and social insurance is whether the social partners can play the same role in the regulation of the labour market in the future as they do in the Nordic countries today. Will trade unions and employers’ organisations be able to adapt to the new reality? Will there be a shift in the centre of gravity between collective agreements and legislation? Will ‘the Nordic model’ as we know it prevail? 

Right now, some 30 researchers at the Fafo Institute for Labour and Social Research working on the research project ‘The future of work: Opportunities and challenges for the Nordic models’ are studying these issues, as well as the challenges the development brings to labour legislation in the Nordic countries. The project is funded by the Nordic Council of Ministers, and is due to finish in 2020. The researchers hope to be able to present ideas for how legislation can be developed and reformed, and for how to revitalise the Nordic model’s ability to reconcile growth, efficiency and equity in working life. 

The first collective agreement with platform companies

It seems too early to be discarding the Nordic model in any case. In April this year, the cleaning platform Hilfr entered into a collective agreement with the Danish trade union 3F, the first in its kind to cover a platform company.

As part of the agreement, Hilfr takes on employer responsibilities, and cleaners become employees after 100 hours of work via the platform – unless they themselves choose to continue as ‘freelancers’. They will be paid at least 141,21 Danish kroner (€19) an hour, and have the right to sick pay, holiday pay and a pension. The agreement also includes rules for how long notice Hilfr or the cleaner have to give in case they want to end the employment. 

The collective agreement has been praised as proof that the Danish model for labour market relations will be usable also in the future labour market. But it has also faced criticism from representatives of the agency work business, who argue that it goes against both the law and the Danish model, leaving the cleaners in a judicial no man’s land. According to labour legislation you cannot decide for yourself whether you should be treated as an employee or as being freelance – if you fulfil certain criteria you arean employee, whether you want to or not.

3F stresses that the collective agreement for now remains a pilot agreement running from 1st August 2018, and that it will be assessed by the social partners after twelve months. 

Perhaps the platform companies are slowly beginning to face up to the demands that they be responsible for the working conditions within their businesses. Uber’s spokesperson in Denmark, Kristian Agerbo, recently said that Uber, which has been absent from the Danish market for one year, wants to ‘regain Denmark’s trust’. 

“We have acknowledged that in order to return, we also need to take a new approach to our activities and find solutions to the questions surrounding taxes and working conditions for the drivers who use our services,’” Agerbo wrote to the Danish web magazine Altinget on 17th May. 

It remains to be seen how that will happen.