Policy Responses to New Forms of Work

Chapter 2. What do countries mean by “new forms of work”?

This chapter provides an overview of the forms of employment that tend to capture most of the attention in the policy arena in the countries surveyed, as well as the nature of the policy debate that surrounds them.

Most of the policy discussion reported in the questionnaire concerned specific contract types that diverge from the “standard employment contract”. The most commonly cited forms of work were self-employment and platform work, followed closely by fixed-term and temporary work. Many countries also mentioned variable hours contracts and other casual work (Figure 2.1).

Figure 2.1. Which “new forms of work” receive the most policy attention?

Note: Based on 39 responses to question (i) (“What forms of employment are being discussed in the policy arena in your country?”) and question (ii) (“What topics/issues related to new forms of work capture the most attention?”) Chile, Cyprus, Germany, Korea and the United Kingdom did not respond to either question.

Source: OECD/EC questionnaire on “Policy Responses to New Forms of Work”.

The questionnaire allowed countries to discuss any forms of work currently capturing considerable policy attention in a national or subnational context. While some of these forms of work are not necessarily new, it is possible that they are being discussed with renewed focus in policy debates due to their prevalence among new business models, namely as platform or “sharing economy”1 firms.

2.1.  Self-employment, misclassification and the “grey zone”

When asked what forms of employment tend to capture the most attention in the policy arena, most countries mentioned self-employment, generally in the context of challenges related to worker classification.

The specific issue of “false” or “bogus” self-employment or employee misclassification was raised by approximately half of the countries that mentioned self-employment. This describes cases in which firms and/or workers misclassify what should otherwise be an employment relationship as a relationship between a firm2 and an independent contractor. Such misclassification may be due to genuine error, but it may also be deliberate in order to avoid taxes and regulations. Portugal, for example, reported that there had been much public debate about bogus self-employment and that the government had taken steps to make it easier for workers to challenge their status.

Other countries referred to the challenge of classifying the status of workers that fall in between the traditional definitions of dependent employment and self-employment, particularly in the case of own-account workers (self-employed workers without employees). Countries specifically mentioned characteristics of the working relationship that might pose challenges for classification, such as economic dependence of the worker on a single client or the firm having control over how the work is performed. Workers with these characteristics are described later in this report as being in the “grey zone” between dependent employment and self-employment. Certain types of platform work (discussed in the next section) were also described as posing challenges for classification.

A number of countries mentioned the importance of ensuring the correct classification, since this can determine a worker’s access to rights, benefits and protections. The Irish response noted some of the consequences of false self-employment, including a loss of tax revenue, and for the workers themselves, reduced entitlements to social protection, absence of employment protections and diminished collective bargaining rights. The Netherlands suggested that tax deductions for self-employed were a factor driving growth in dependent and false self-employment, and mentioned concerns about whether such workers were adequately protected in terms of labour law and social protection.

In addition, as discussed in later chapters, self-employed workers may face barriers to lifelong learning and other professional development services, and are typically expected to take responsibility for ensuring their own safety and health at work.

2.2. Platform work

Platform work also captures policy and media attention in many countries. This describes transactions mediated by an app (i.e. a specific purpose software program, often designed for use on a mobile device) or a website, which matches customers and clients, by means of an algorithm, with workers who provide services in return for money. Platform work can differ along several dimensions, including the relationship between the worker and the platform. A distinction is often made (as in a forthcoming OECD publication on measuring the platform economy (OECD[2])) between services performed digitally (i.e. micro tasks, clerical and data entry, etc.) and services performed physically or on-location (i.e. transport, delivery, housekeeping, etc.). The French response to the survey noted the great diversity in the nature of work mediated by platforms and the resulting difficulty in dealing with platform work within the traditional legal framework.

Platform work can be challenging to classify, according to many respondents – echoing the more general discussion on worker classification. In many cases, platform workers are classified as own-account workers for legal, tax and social protection purposes, even though the nature of some work performed may not be fundamentally different from traditional activities performed within an employment relationship. This can have the effect of excluding platform workers from rights, benefits and protections available to employees, as discussed in the previous section. The Spanish questionnaire response explained that new technologies and more flexible ways of working had reduced the requirement for direct management of the work. They noted that this change in the nature of the labour relationship could increase the risk of misclassification, enabling employers to evade their responsibilities.

Many countries noted concerns about working conditions in platform work, in particular how to ensure job and income security (e.g. through a minimum wage), access to benefits, overall career development, and rights to collective bargaining (mentioned as a priority area by the Italian government).

At the same time, many countries acknowledged opportunities associated with platform work, namely: its advantages in terms of flexibility and autonomy for workers, its ability to provide an additional source of income and opportunities for self-employment, and the contribution that platforms make to economic growth. The Icelandic response said that the general attitude regarding on-demand work via apps and platforms was positive, but noted the importance of ensuring that previously earned labour market rights were not lost.

Given the diversity in the nature of work that can be mediated by platforms, some types of platform work attract more attention than others in the policy arena. A number of countries noted particular public debate in relation to platforms in the sector of passenger transport. In Portugal, it was reported that media attention was focused on the topics of income insecurity, workers controlled by algorithm rather than by an employer, excessive working hours, and the right to disconnect. Other concerns regarding passenger transport platforms did not directly relate to labour market issues. The Romanian response noted concerns about fair competition while the French response mentioned the potential for social conflict.

2.3. Fixed-term and temporary work

In 18 countries, fixed-term and temporary work were cited in their responses to the introductory questions on which forms of employment were receiving most policy or media attention. Economic precariousness, income security and working conditions were the issues most commonly mentioned in relation to these types of contracts.3 Canada noted strong growth in full-time temporary employment since 1997, particularly in the health, education and service industries.

Canada and Italy both noted the potential of fixed-term and temporary work to act as a “stepping stone” to open-ended contracts, as well as their potential to act as a trap, where an individual simply moves from one low-paid temporary position to the next. Canada’s questionnaire response cited a 2016 study (Busby and Muthukumaran, 2016[3]), which noted that while the share of temporary employment was relatively low, there were signs that this trend was having a greater impact on younger people and on new entrants to the labour market. The Italian response mentioned concerns about the social impact on young people, including the risk that the “trap” of successive fixed-term contracts could exclude or delay young people from certain aspects of adult life, such as accessing a mortgage.

Other challenges faced by fixed-term and temporary workers are discussed in this report, including difficulties in meeting contribution thresholds for social protection schemes, their higher risk of occupational accidents and the lower likelihood that employers invest in their training.

2.4. Variable hours contracts

Variable hours contracts were mentioned by 10 countries. These are typically part-time contracts that include a clause stating that hours worked can vary from one week to the next. The employer and employee may agree upon a minimum number of guaranteed hours, and in some countries, there may be no guaranteed hours (called a “zero hour contract”). Of the countries where zero hour contracts exist (Finland, Ireland, the Netherlands, New Zealand and the United Kingdom), most reported that there had been debate on this topic in recent years.

Some countries where variable hours contracts are permitted described the rationale for such contracts, i.e. enhancing flexibility within the range of available employment contracts, thereby enabling employers to meet variable labour needs. Discussion around the potential introduction of variable hours contracts was also reported in some countries without such arrangements (such as Lithuania and Saudi Arabia).

While variable hours contracts can enable firms to meet unforeseeable and temporary requirements for labour, there were some concerns about the potential excessive and/or improper use of these working arrangements. Concerns of policymakers have generally centred on the impact of unpredictability in working hours on employees’ overall earnings, earnings volatility and their ability to plan ahead.

A number of countries reported discussions on part-time work more generally. Other casual working arrangements were also discussed, such as day labour in the agricultural sector (mentioned by Bulgaria and Romania), voucher-based work for domestic and agricultural services (Greece, Italy and Lithuania), and seasonal work (Canada, Greece and Lithuania).

Box 2.1 describes some recent trends in platform work, fixed term and temporary work and involuntary part-time work (which can include variable hours work).

Box 2.1. New forms of work and recent labour market trends

Chapter 2 of the OECD Employment Outlook 2019 (2019[1]) discusses some recent labour market trends:

• Platform work is described as a “limited phenomenon”, but one that throws a spotlight on the impact of technological progress on job quality. While existing evidence on the size of the platform economy is still scant and imprecise, most surveys covering a range of countries have produced estimates between 0.5% and 3% of the labour force (see Chapter 9 of the 2018 OECD Jobs Strategy (2018[4]) for a survey of the literature). One recent survey of 14 European countries indicates that less than 2% of the entire labour force, on average, mentions platform work as their primary activity (Pesole et al., 2018[5]). While the platform economy may have grown fast, there are signs that its growth may already have started to slow down.

• Between 1986 and 2016, temporary employment rose in half of OECD countries, with a very marked upward trend in some. In countries where the share has fallen, the reduction has typically not been large. Employment through temporary work agencies (TWA) has also grown in most OECD countries. The incidence of fixed-term contracts of very short duration (zero to three months), a category that often concerns policy makers, does not show a clear trend.

• The share of involuntary part-time in total part-time employment has risen in two thirds of OECD countries for which data are available, although there have been declines in some countries. While this increase in will have been partly crisis-related in some countries, in most cases one can observe a longer-term trend. In around half of OECD countries with available data, there has also been a rise in “short part-time” (i.e. individuals working 20 hours per week or less), partly driven by increases in very atypical contracts (including variable hours work).

2.5. Countries with little discussion on new forms of work

For countries where there was no (or negligible) discussion within the policy arena about new forms of work, another question in the questionnaire provided a space for respondents to say why this might be. A small number of countries provided a response to this question.

The Swiss response said that although there were some discussions of new forms of work (classification and taxation of platform workers, the impact of digitalisation on the labour market, and skills for the future), a recent study commissioned by the Swiss government (2017[6]) had found no increase in non-standard precarious employment relationships.

The Hungarian and Czech responses noted limited discussion on this topic so far, pointing out that employers had not been calling for new forms of work and that the traditional or standard forms of work were still dominant. The Czech response said that although there had been some analysis of the sharing economy, they were not aware of any discussion of other new forms of work. Hungary reported limited official or formalised discussion on this topic so far, potentially due to a prioritisation of other ongoing issues.

Israel said that discussions around new forms of employment had only recently emerged due to other priorities such as integrating target populations (such as ultra-Orthodox and Arab) into the labour market. They also reported that some policymakers were reluctant to take action on labour market trends, when these trends had not yet had a significant impact. However, they said they were planning strategically for the future, such as creating training programmes that would equip individuals to integrate into the changing labour market.

Notes

← 1.  Some countries used the term “sharing economy”, which can refer to the matching of assets (e.g. short-term letting of an apartment) with customers, as well as the matching of service providers and customers through online platforms.

← 2.  The contracting/employing entity may also be an individual, but discussions on worker classification in this report refer to a firm for simplicity.

← 3.  A few countries reported public discussion specific to temporary agency work (TWA), which can be complicated further by the multi-party (or triangular) nature of the employment relationships, i.e. between the firm, the employee and the agency. This particular topic is not covered in this study.