A study contracted by the EU Policy Lab in the context of the project A vision for the ‘sharing economy’
By Willem Pieter de Groen, Ilaria Maselli and Brian Fabo from the Centre for European Policy Studies
Despite growing numbers of workers who use online platforms to be “matched” with people and businesses who pay for their services, there is a lack of evidence about the scale and the employment impacts of this so called “on-demand” or “gig” economy that is also often described under the heading of the “sharing economy”. As part of our foresight project “A vision for the EU ‘Sharing Economy'”, we asked CEPS to carry out this study that provides a unique snapshot of the dynamics in the digital market for locally provided personal services. It is based on a case study of ListMinut, a Belgium platform with 14,113 identified workers and 9,459 posted tasks.
A one-night stands market?
The findings suggest that the intermediation carried out by the platform is currently inefficient. Only a limited share of the tasks is being completed and just a small part of the workers registered with the platform have actually completed a task. One could fear that the on-demand economy will trigger a race to the bottom of remunerations and conditions but the average earnings per hour on ListMinut are in most cases above the minimum wage and even the median wage in the offline market. However, the limited number of hours remunerated are making it no alternative to a conventional job. The maximum amount reached by a single worker during the two-year sample period is 5,663 euros. But the majority of the workers who completed a task received only between € 1 and € 100. Moreover, 95% of workers did not earn a single euro. Thus the digital labour market created by this platform might be best described as a “one-night stands market”.
There are four possible explanations for the low earnings. One is that the platform is simply too small to be able to provide individuals willing to work more with a sufficient number of tasks to generate the equivalent income of a full-time job. Another possibility is that being a complement and not a substitute for a full-time income is the real nature of the on-demand work. The other explanation could be that the platform is only used to get in contact with potential new demanders that might generate more tasks outside the platform. And finally, its relative lack of success in matching workers with potential employers can be due to the competition of the “titres-services” system. The state-subsidised voucher system was introduced in Belgium in 2004 as a reaction to the increase demand for household services. It promotes better working conditions for the workers engaged in these activities and has at least partially pulled out the sector from the shadow economy. Although hourly remunerations are roughly the same as those on ListMinut, the standard labour contract offered by the “titres-services” agencies constitutes a better package for a person looking for a stable employment, even if part-time. It includes social security, such as sickness and maternity leave, pension and unemployment benefits.
Who are the workers registered with the platform?
The in-depth analysis of ListMinut reveals that the supply of work is dominated by young workers. The cohort below 30 constitutes 69% of the workers and 54% of those that undertook at least one project via the platform. This could reflect the fact that they are digitally native, as well as their difficulty in finding a job in the regular labour market. The same cannot be said for female workers: the supply is equal to male workers but the demand less so. This might be a consequence of the fact that the most demanded services via ListMinut are typically male-dominated: such as bricolage, transport and gardening.
Further research will be needed to better understand the economics of the on-demand economy, as well as its consequences for the labour market. More in-depth studies of other platforms would be desirable, especially to test if the conclusions from this case study on ListMinut hold also for other platforms. A survey of the European digital workers would also be useful, especially in light of the fact that the few surveys conducted so far focused only on the US labour market. Case studies and surveys could compensate for the lack of official statistics. Moreover, the on-demand economy is still evolving and changing, which requires repetition of research over time to test whether the findings still hold.
The full text of the study is available.