Governments must step in to regulate platforms — or workers will lose it all
This week, I invited the co-founder and director of The Family, a pan-European investment firm, Nicolas Colin, and writer and speaker on the future of work and consumption, Laetitia Vitaud, to guest-curate my weekly newsletter Exponential View.
Laetitia wrote one of my favourite pieces of the last couple of years, an analysis of why Taylorism can’t apply to cleaning. Nicolas is well-known for his work exploring what a new worker safety net should look like in the entrepreneurial age.
Below is an excerpt from their thoughtful essay on the future of platform work — full essay available here.
Platforms and worker empowerment, by Laetitia Vitaud and Nicolas Colin
In the Fordist era, salaried work was a “bundle”, with many benefits attached. By contrast, self-employed workers, some of whom use platforms regularly, often lack the empowerment, social protection, and decent wages that once became the lot of workers in Fordist manufacturing industries.
The future of platform work depends on our collective capacity to secure a new bundle for self-employed workers. If we succeed, platform work will indeed rise and become more of a norm in the labour market. If we fail, its promises will never be fulfilled, and we will pay the price in the form of less work and less economic development.
Some tech companies have been trying to offer more of a bundle (insurance and other benefits) to the workers using their platforms. But they have been prevented from going too far in that direction by the risk of having these workers reclassified as employees. They wish to be competitive in the labour market with a more attractive bundle. But converting to traditional employment doesn’t meet the needs of either these companies or most of the self-employed workers who use their platforms.
The fact is that self-employed workers think less in terms of a full-time job or a career. They value their freedom and autonomy above everything else. In many cases, they don’t want to reproduce the characteristics of the traditional employer-employee relationship. They would rather remain free to switch to other platforms and maintain other activities outside the purview of platforms.
In a way, these workers are to traditional work what the proponents of free love are to traditional marriage. They value empowerment over stability. They want the new bundle to bring more, not less, freedom. And so this is the challenge we need to tackle: fostering the rise of platforms while empowering the workers using them.
Social protection and the competitive edge
There has long been a relationship between social protection and competition. That was Henry Ford’s epiphany: hiring and retaining a well-trained and productive workforce would be his company’s key competitive advantage. Higher wages and social benefits became tools to heat up competition in the labour market.
But when it comes to social coverage, competition inevitably goes both ways. Firms can try and attract the best workers by offering better social benefits, as Uber is trying to do with the insurer Axa. But they can also cut these benefits to lower their production cost and offer customers lower prices, which leads to what Michael E. Porter describes as damaging “wars of attrition”.
This is precisely the reason why Fordist corporations once welcomed the enforcement of mandatory social protection at the level of industries and nations. If social benefits were mandatory within their industry, it meant that firms needn’t compete by cutting those benefits from their workers, hurting engagement and productivity in the process.
The reason this trend has been reversed is that there is less and less competition in the labour market. In the US as in the UK, most workers have no choice but to be employed by a few dominant firms. What’s more, with the threat of automation, these firms have more bargaining power over workers, leaving them less interested in offering more benefits or leveling the social playing field. Competition doesn’t translate into more social benefits today. See, for example, how Google’s shadow workforce — contractors — carries the giant on its back, all while not being treated as well as full-time employees.
This is a warning signal when it comes to platforms. Because they are driven by increasing returns to scale, markets tend to get concentrated fast. And if the “winner takes most”, there won’t be a long-term incentive for platforms to compete with better social benefits, nor will there be demands for levelling the playing field with an industry-wide Safety Net.
In other words, the familiar dynamics of social attrition could play out in the world of platforms just as they have been playing out in the ageing Fordist economy. This is why governments must step in and regulate platform work — not by curbing it down, but by supporting its rise while better covering workers.
If you enjoyed this excerpt, you can read the full essay here.