Platform work challenges the Nordic model

Platform work is when customers and service providers are linked via algorithms, which can make it difficult to determine who is the employee and who is the employer. Uber and Foodora are two of the best-known platform companies.

Studies in the Nordic countries and from the ILO have shown that so far, platform work has not had a very big impact on Nordic labour markets. The Nordic study The Future of Work concluded that only 0.3 to 2.5% of the population had worked in the platform economy in the past 12 months.

Greater role in the future?

“Platform work might be niche today, but there are reasons to take this issue seriously because it could have an impact on future labour markets,” said the ILO Director-General Guy Ryder, who had been invited to Helsinki. He presented some of the results from a study where 12,000 platform workers had been interviewed.

Platform work is a bigger deal internationally. In the EU it is estimated that 11% of workers have undertaken such work in one working year, while in some ILO member countries 22% of the labour force has performed some sort of platform work during a working year. 

“We have divided platform work into two groups. Local work, like driving a taxi, cleaning and delivering food. Then there are platforms offering services that can be performed anywhere in the world, like translation, data management or going through online catalogues. A customer in Helsinki can have a service provided by someone in India, China or Argentina,” said Guy Ryder.

The number of platform companies has increased from 142 in 2010 to 777 in 2020. Those offering services locally have increased tenfold in ten years, while those offering services internationally have increased threefold. 

Platform companies are very homogenous, with a few giants like taxi provider Uber in the USA and the delivery company Meituan in China with annual turnovers of around ten billion US dollars each.

“70% of the platform companies’ income goes to the USA and China. 11% goes to Europe,” pointed out Guy Ryder. 

So what is it about the platform companies that worry the labour ministers?

The way in which platform workers are classed will influence whether they can organise, enjoy social benefits like pensions and sick pay, who has the responsibility in the case of accidents and many other aspects.

The map shows the spread of income from the platform economy. India, Ukraine and the Philippines have the largest platform economies, but also the least control – illustrated by the dark blue circle. The colour of the next circle shows hourly wages. Source: ILO

China and the USA largest

Platform companies claim they do not have employer responsibilities except for people who work to keep the platforms running. Only 11 years after starting up, Uber now has 26,900 employees and five million drivers across 69 countries who either own or rent their own cars.

Uber calls the drivers self-employed or driver-partners. Yet in several countries, the company has lost court cases where workers have demanded to be classified as employees since the “independent” work in reality is completely controlled by the platform algorithms.

Handled on a case-to-case basis

“In the Nordic countries, issues of misclassification are usually resolved by labour courts on a case-to-case basis, typically based on an assessment of workers’ dependency and subordination,” said Sigurd Oppegaard from the research foundation Fafo, who presented the Nordic report.

“We have yet to see any court cases on the reclassification of platform workers in the Nordic countries, but in Norway, a government-appointed commission in 2021 recommended revising the legal presumptions in Norwegian labour law to make workers considered employees by default.”

Several of the Nordic countries are sceptical about introducing a third labour market category. According to Sigurd Oppegaard, there are two different narratives in the Nordics:

Either the platform companies are “tamed” or the Nordic labour market models are eroded.

Digital proletariat

“It is not our job to get rid of the platform companies but to regulate them so that their business model is run according to decent standards,” underlined Guy Ryder.

Platform companies also bring new services or reorganise existing ones. The ILO report describes how Amazon with their enormous warehouses faced a big problem because items were duplicated across their websites. By crowd-sourcing 60,000 people to work on removing the duplications, the job was done in two days. The alternative had been for Amazon to hire hundreds of people over several weeks to do the job.

“But let’s not forget that platform work is nothing new. Historically we have seen workers queueing up on the dock in the morning to offload a vessel, or agriculture workers gathering in the town square for a day’s work. It’s the same principle, only new technology,” said Guy Ryder. He ended his speech by quoting Germany’s outgoing Chancellor Angela Merkel:

“The digital economy has the potential to open up fantastic new opportunities in the labour market. But the technology can also create the 20th century’s digital proletariat.”