Extending social security to workers in the platform economy
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As the world of work is evolving, shaped by global trends such as digitalization, automation and globalization, as well as socio-demographic changes, social protection systems will need to adapt to changing contexts and demands. Social protection systems around the world face challenges to provide full and effective coverage for workers in all forms of employment, including those in “new” forms of employment. While some emerging work and employment arrangements may provide greater flexibility for workers and employers, they may lead to significant gaps in social protection coverage. The organization of work on digital labour platforms has raised considerable concerns regarding inadequate social protection coverage for workers engaged on such platforms.
This module stresses specific challenges for the extension of social security to workers in new forms of employment, particularly platform workers, and explores some policy options, based on international experience and guided by ILO social security standards.
- How to provide adequate coverage for workers in all forms of employment, including those in new forms of employment?
- How to prevent the informalization of formal employment, and ensure that workers in “new” forms of informal employment can transition to the formal economy?
- How to ensure a good financing mix for social protection systems, based on a combination of contributions and taxes?
- In many cases, new forms of employment are found in "non-standard" forms of employment. Much of the work is part-time and temporary, with blurred lines between genuine self-employment and dependent self-employment.
- Many workers, but not necessarily all, have lower job and income security, poorer working conditions, coupled with significant deficits in social protection coverage, as compared to workers in standard forms of employment. An ILO report finds that only around 40 per cent of respondents reported that they had health insurance. A very small proportion of respondents (less than 20 per cent) on online web-based platforms reported being covered for employment injury, unemployment and disability insurance, or for old-age pensions or retirement benefits (both public and private pension plans.
- Where social protection coverage exists, it often stems from the workers’ previous or additional jobs, or through family members, which raises questions about the new economy freeriding on the traditional economy with regard to the financing of social security.
Adapting legislative frameworks and ensuring compliance
- Adapting legal frameworks, e.g. by removing or reducing legal minimum thresholds on working time, earned income or duration of employment (see chapter 4)
- Instituting policies that can help clarify the nature of the employment relationship, prevent misclassification and clearly establish rights and responsibilities of platforms, requesters and workers (in line with Employment Relationship Recommendation, 2006 (No. 198)
Adapting and simplifying the administration and financing of social protection, harnessing the potential of digital innovation
- Using simplified tax and contribution collection mechanisms, more flexible contribution collection schedules or flat contributions or broad contribution categories as well as developing electronic and mobile registration and payment systems, coordinated data systems, smart cards as well as other emerging technologies, such as artificial intelligence and big-data analytics (see chapter 5 and chapter 6)
Adapting schemes to workers with multiple employers
- Developing effective mechanisms that facilitate labour market transitions and ensure the portability of rights and entitlements
- Streamlining administrative procedures including the simplification and facilitation of electronic access to registration, consultation and contribution payment mechanisms, as well as unified social security numbers (see chapter 5)
Developing mechanisms to deal with situations of complex or unclear employment relationships, for example through alternative financing arrangements
- Determining contributions based on alternative reference values (other than workers’ earnings)
Establish coordination mechanisms and clarify the applicable legislation and institutional arrangements
- Clarify the applicable legislation and institutional arrangements to ensure social protection in the case of cross-border arrangements.
Strengthening the role of workers’ organisations
- Exploiting the potential of intermediary bodies to fulfil some employer functions, particularly with regard to aggregating information and contributions across multiple employers and reducing the administrative burden for workers by liaising with the social insurance institution.
- Social Protection for Workers in New Forms of Employment (video)
- Ensuring social security for digital platform workers (International Social Security Review)
- ISSA Good Practices: Formalizing enterprises and workers in the gig economy in Uruguay
- ILO resource guide: Addressing dependent self-employment in the gig economy
- Collective agreement for platform-based domestic work in Denmark
- Some of the policy measures instituted by countries to facilitate the coverage of workers in the informal economy can provide valuable pointers on how to extend coverage to workers in new forms of employment. However, additional measures need to be taken into account and more needs to be done, so as to realize the right to social security for all. While there is no “one-size-fits-all” solution, social security can be extended to platform workers by adapting policy, legal and administrative frameworks. Digital technologies also open up a wider range of potential solutions for extending social protection.
- Strengthening and adapting social protection systems for the future of work requires a combination of different social protection mechanisms, with appropriate financing mechanisms available through contributions or taxes. Non-contributory social protection schemes are essential to guaranteeing a social protection floor for all, in line with Social Protection Floors Recommendation, 2012 (No. 202).
- Complex questions arise when a person works through a platform only on a sporadic basis or works through multiple platforms. For example, how should social security mechanisms be adapted so that even infrequently used platforms are required to contribute a fair share? How should multiple platforms share the costs? While these and other questions await comprehensive resolution, they not as novel or complex as they may first appear. There are a number of countries that have successfully extended social protection to intermittent and casual workers or those with multiple jobs (see module on workers in creative and cultural sectors for example).
- Report of the Global Commission for the Future of Work
- Research Paper: Innovative approaches for ensuring universal social protection for the future of work
- Issue Brief: Innovative approaches for ensuring universal social protection for the future of work.
- Journal article: Ensuring universal social protection for the future of work
- ILO brief: Universal Social Protection: Key concepts and international framework
- OECD/ILO report: Tackling Vulnerability in the Informal Economy
- WIEGO Podcast: The Future of Work and the Missing Middle