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Entrepreneurship and Employment in the Age of Giganomics

Entrepreneurship and Employment in the Age of Giganomics

KEY CONCLUSIONS

 

Regulation needed for increasingly popular platform employment

“In many sectors, the platform economy has led to the whitewashing of economic activity and has created opportunities for legal earnings and the generation of income for many groups that are traditionally vulnerable, for which occasional casual employment is important and there are low barriers for entry into this segment: these include young people, women with children, often in the case of remote employment, people with disabilities, and people of pre-retirement and retirement age, for whom there are often age stereotypes. If we look at the balance between benefits and costs, we will see that all players are interested in some sort of regulation,” said Oksana Sinyavskaya, Deputy Director of the Institute for Social Policy at the National Research University Higher School of Economics.

“We are clearly trying to enshrine attributes of traditional labour relations in the regulatory framework. We see that certain enterprises are withdrawing from traditional legal relations to self-employment in order to minimize costs. It’s clearly quite profitable at this stage. If we don’t create a regulatory tool that would not allow for abusing this right today and switching employees to self-employment at ordinary enterprises, we will reach the figure of 17–20 million, which is totally understandable. [...] If now, in 2021–2022, we don’t create an understandable and transparent regulatory and legal framework that governs relations with the correlation of relevant features to traditional labour relations, then, we believe this growth will be about 10–11 million by 2030,” Minister of Labour and Social Protection of the Russian Federation Anton Kotyakov said.

“Certain agencies have big plans for regulation [of the activities of employment platforms]. Sometimes they are attributable to the need to maintain competition, but we are always trying to find a balance,” Minister of Digital Development, Communications, and Mass Media of the Russian Federation Maksut Shadayev said.

 

The use of digital platforms improves the quality of self-employed services

“In real life, in 90% of cases, the provider and the consumer don’t have access to a full-fledged high-quality service. If you don’t turn to a digital platform today, it’s quite difficult to find a trusted provider. There are a lot of fraudulent companies, or it’s not at all clear how to search for certain types of services in a certain city. And it’s the opposite for the provider. […] The platforms on the service market in this example are the only way to make a service good for both parties and whiten this market,” Yandex Group Managing Director Tigran Khudaverdyan said.

“Us, Ozon, taxis – all these guys are getting deep into transactions and trying as thoroughly as possible with all their algorithms, data, and power to penetrate deep into the essence of the service itself and make it as transparent as possible for the consumer, and thus high quality. For us, this is trite, so we don’t say it. But the fact that we are standardizing a huge number of industries and making our services predictable is a super important value,” Skyeng Managing Partner Alexander Laryanovsky said.

 

PROBLEMS

Self-employed workers lack social guarantees in case of illness and the inability to accumulate pension savings

“Self-employment does not provide pension savings. People don’t build up a pension when they stop working. We clearly understand that today people working within the platform and as self-employed workers don’t have any social guarantees. They don’t have any additional social support if they lose their earnings while on sick leave or in the event of an accident at work. This is a fairly wide range of grounds in this case,” Minister of Labour and Social Protection of the Russian Federation Anton Kotyakov said.

“Voluntary insurance is not likely to work because self-employed people generally don’t have a very large income, and they are unlikely to choose to start saving now so that they can get this money back in decades. Eventually the state’s time will come,” Ozon CEO Alexander Shulgin said.

“For workers in the platform economy, the lack of regulation and their status as being self-employed, which in most countries is legally the most common form, means there is some kind of lack of guarantees in the event of illness or insurance for certain risks. For platforms the lack of regulation is also a risk, because there is the risk of court rulings and the retroactive recognition of these relationships as labour relations with the ensuing social consequences,” said Oksana Sinyavskaya, Deputy Director of the Institute for Social Policy at the National Research University Higher School of Economics.

 

SOLUTIONS

Self-employed people need incentives to obtain voluntary health insurance, including through digital employment platforms

“The platforms are likely to incentivize providers to include this voluntary insurance, and these incentives may vary. The incentives will develop somehow, but for now it’s not actually clear how. This is true. But at the very least a clear mechanism will be created so that if a button is created that needs to be pressed, then different minds will then think about how to provide incentives, including economically, in order to press the button,” Yandex Group Managing Director Tigran Khudaverdyan said.

“There is no such magic button. […] We need to not only provide incentives for the provider and employee, but also for the platforms. [...] In many respects, the competitive environment will force the platforms to move into some kind of co-financing: equally or unequally – it doesn’t matter. But they will be interested in creating additional guarantees for their providers within the competitive environment in order to attract a high-quality provider,” Minister of Labour and Social Protection of the Russian Federation Anton Kotyakov said.

“I think we can look for a solution in the form of voluntary insurance models, possibly packaged ones. At some stages, there will be demand for payments due to the birth of a child and a guarantee that you won’t lose income by stopping to provide services for a while. [...] As they get older, people begin to think and perhaps will buy insurance points shortly before retirement age,” said Oksana Sinyavskaya, Deputy Director of the Institute for Social Policy at the National Research University Higher School of Economics.

 

For more, see the ROSCONGRESS.ORG Information and Analytical System.

 

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