Features of labor behavior in the era of the platform economy

The development of platforms dictates new rules to the market, especially to the labor market. Each employee can find a client on his own terms, and the client, in turn, from a huge range of offers can choose what suits him.

Photo by Glenn Carstens-Peters on Unsplash

The rapid development of education, culture, and economy led to the formation of new needs in the labor sphere. Each generation comes to the economy with its own features of labor behavior.

The most important value is freedom. Freedom to manage themselves and their time has become an important criterion for many in choosing a job. Moreover, full-time employment for one employer does not guarantee high earnings. Self-employment enables to increase your income level many times faster. Thus, receiving orders through platforms gives people the opportunity to set independently the characteristics of their work: intensity, profitability and time planning.

Why have platforms become so attractive for people who want to receive additional income?

Let’s start, perhaps, with how the self-employed were limited before the development of platforms:

  1. Customer acquisition, mainly due to word of mouth.
  2. Often, the self-employed were forced to hold on to their anchor client, who paid and/or recommended the most.
  3. Territorial binding to local customers and their social circle.
  4. There was no possibility of rapid income growth.

And all this together affected negatively the motivation for improving the quality of work and expanding the line of services.

The emergence of platforms gave an expansion of the market both for the self-employed themselves and for companies.

Starting capital is not required to work on the platform, and anyone who wants to earn extra money or who needs it can quickly onboard.

Regulation of the work of the platforms made it possible to ensure the completeness of the information for all its participants, providing guarantees of equal access to the platform. All this is enshrined in service standards, right of complaint and service quality assessment (rating system). Thus, working through the platform is quite safe for all its participants.

Everyone seems to be winning.

Companies can select a contractor to perform work or services on suitable terms and without being involved in labor relations and relieving themselves of a number of duties that these relations imposed.

People can also find a specialist on the platform who can resolve their issue for an acceptable fee and in a reasonable time.

And a person who wants to receive additional income can determine independently his work schedule and intensity of work, choose who to work with and with whom not, and the most important thing is profitability. People seek to increase their income, generally, in order to bridge the temporary gap between need and basic income. Perhaps the most striking example are mothers on maternity leave who are happy to place small orders on platforms.

The state also did not stand aside. The platform economy has helped significantly to reduce the percentage of unemployment in the country and bring many specialists and the service market out of shadow. The state, in addition, controls and monitors the work of the platforms themselves, for the self-employed as an experiment, a tax regime is provided that ensures the receipt of tax on the income of the self-employed into the budget. Thus, the self-employed pay a single monthly tax of 4% if they work with people, and 6% when working with individual entrepreneurs and companies. 37% of the proceeds of this tax are credited to the Compulsory Health Insurance Fund, 63% – to the regional budget. There is no mandatory payment to the Social Fund, but the self-employed can voluntarily pay contributions there.

Obviously, the growth of the platform economy will continue. For many, platform employment has become the main source of income, while social and pension protection is extremely low. People themselves take minimal care of their future in retirement or in cases of disability, the state should not be blamed either, since there is no source of formation for paying pensions and benefits to such citizens.

In my opinion, joint work in this direction will remove this negative moment in the regulation of the platform economy. Indeed, during their existence, the platforms have shown great prospects for all market participants.

A self-employed employee must now improve his level of legal and financial literacy, be socially savvy in order to think about his health and pension. But, unfortunately, there is still little tangible progress in this direction.

To summarize, platform employment is no longer an emergency need in case of job loss, but a promising and professional job, which can become both the main type of income and a source of additional income. And in the future, this type of employment will scale and develop. However, when deciding to work “for yourself”, it is necessary not only to think about your needs in the moment and sense of freedom, but also to take responsibility for forming a financial cushion to meet your needs in the future.

By Julia Chentsova, lawyer, entrepreneur, founder of JTLconsulting

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