Sharing economy, platforms and security

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The human beings have always needed and searched for shelter and security against social risks such as poverty, sickness and old age.

Our modern solution for security in this sense has been the welfare state. In this context, the government, the employers and the employees have had their own rights and responsibilities. More detailed institutional setups of the welfare state have varied between countries.

However, the sharing economy and the platforms (Uber, Airbnb, TaskRabit etc.) as an essential part of it, challenge present ways to organize security in our societies. Rights and responsibilities are under reconsideration.

Pressures on security

Work is an important source of security. In addition to earning money for the livelihood, by participating to the working life we earn social security (e.g. unemployment and pension benefits). However, sharing economy may lead to increasing uncertainty in the working life. There might be less steady jobs available.

Platforms are not employers. Therefore, they do not have similar responsibilities than the employers have. These responsibilities include e.g. contributions to the social security schemes. They are also forced to follow legislation and rules related to occupational safety and health.

Employees lack collective power. Since the platforms are not employers, there is no role for the trade unions which have been essential advocates for security. This means that sharing economy weakens the employees’ ability to claim for security.

Governments can not guarantee security. Sharing economy may lead to erosion of the tax-base and therefore smaller resources for providing security. Another aspect regarding the role of the governments is that governments lack means to control platforms, because they are global operators not necessarily following national legislation.

At least in the near future, there will be ”normal” jobs available. But in the longer run, it is crucial how substantial role these platforms are taking in different areas of the economy. The more the people are dependent on the platforms, the bigger are the risks related to security.

Ideas how to build security 

Presently, there are no final solutions to problems concerning security. However, there are some ideas.

The governments have to guarantee some sort of last resort security to their citizens. Therefore, some version of the basic income is obviously needed. Many countries (also Finland) are piloting basic income-systems.

It is worth asking whether it would be possible to introduce some kind of global “security account” for the contractors working on the platforms. In a way, this would be a global social security-system. It sounds like a distant dream, but so were these platforms too, not so long time ago.

An important question is, which could be the incentives for the platforms to provide security to their contractors? My guess is that in order to be legitimate, the platforms have to develop some kind of ”ethical” or ”responsible” dimension.

In addition to these ideas, three more points are worth mentioning.

First, when there is more uncertainty in the labor-markets, the interplay between social security and labor-market is crucial. Second, the individuals have to take more responsibility concerning their security. Third, international cooperation is needed because the platforms are global.

In conclusion, the system which provides shelter and security for the citizens is vulnerable to changes in economic and social context. For decades, the solution for providing security has been the welfare state, basing heavily on national arrangements as well as rights and responsibilities for the government, employers and employees.

Sharing economy and the rise of the platforms creates the situation where this strategy does not necessarily work any more. In order to provide security for the citizens, we possibly have to renew our systems providing security.

The text is based on my comment in #Slush16 session ”Governing the Platform” organized by Demos Helsinki