False freelancers problem goes beyond the labour market


Following a trade union complaint, the Labour Inspectorate of the Spanish government has just officially registered 4,056 delivery people who were working for Amazon as false freelancers in Madrid and Barcelona. In addition, it is demanding the U.S. company pay 6.16 million euros in unpaid contributions. 

This is one more in a long list of cases and settlements in Spain that have been determining that technological platforms abuse the concept of self-employment. The most important is the Supreme Court ruling last  September 23 which established that ‘riders’, in the terminology used in the sector, should be considered workers. 

In regard to a lawsuit filed by a Glovo ‘rider’, the court ruled that the individual and company had a relationship in which “the defining notes of the labour contract, in particular those of being under the direction and in the employ of another” coincide in reference to working for others. Glovo is not only a mere technological intermediary, as these technology companies usually say, but rather, according to the Court, “does the work of coordinating and organizing the productive service”. 

A crack in the European model

Workers’ rights are a fundamental aspect of the EU’s socio-political model.  And yet, the problem of the vague limits of labour relations in the so-called ‘gig economy’ goes far beyond just work. This is also a business issue, as companies that resort to false freelancers, with their lower labour costs, create unfair competition for those who do indeed hire without trying to exploit the ambiguity of the new working relationships. 

Therefore, there is a risk of tearing the business fabric, with companies that do conform to labour laws ending up severely wounded. And the problem also has a facet related to economic policy: If a significant segment of work activity does not pay the social contributions and taxes it should, sooner or later it will damage the capacity of the entire social protection system. It is a growing but already significant threat: According to data from a study by the European Commission’s Joint Research Centre, approximately 2% of adults in the EU have their main source of income in so-called platform work, and up to 8% earn occasional income from these work alternatives.

In the European Union we believe in open economies: we encourage competition as a means of providing better products and services to citizens. That is why the new alternatives offered by the digital economy are great news, both for employment and for the business fabric as a whole. But they must be done in an orderly fashion, as they have a dark side: development of formulas that undermine equal conditions in competition and, in the long run, the economic and social model that the EU, in exercising its sovereignty, has been building.