The EU and the sharing economy. Guidelines to maximize its potential.

The EU and the sharing economy.  Guidelines to maximize its potential.

costThe topic of the sharing economy is gaining more and more attention at global level. Many institutions, governments, experts and also the private sector are increasingly questioning about its impact and how to regulate it in order to not suffocate its development and favor the achievement of its full economic potential, by promoting a flexible environment for innovation. The issue is quite controversial since there is no certainty about its future development and direction. Some underline how it opens to the hope of a better tomorrow, windfall of benefits and economic growth; others point at how it will replicate capitalistic models and reproduce current inequalities, amplifying them.

The Cost of Non-Europe in the Sharing Economy.

Recently, the European Parliament has drawn up a detailed report analyzing the economic, social and legal challenges of the European Sharing Economy, highlighting both the benefits achievable through European action and the cost of the lack of action in this field. The report, The Cost of Non-Europe in the Sharing Economy: Economic, Social and Legal Challenges and Opportunities stresses the importance to identify clear criteria for a good definition by analyzing and compuonding the existing definitions. Thus, it defines the sharing economy as “the use of digital platforms or portals to reduce the scale for viable hiring transactions or viable participation in consumer hiring market (i.e. ‘sharing’ in the sense of hiring an asset) and thereby reduce the extent to which assets are under-utilized”.  The research estimates the potential economic gain related to a better use of capacities (otherwise under-used) in €572 billion in annual consumption across the EU-28. The costs that the sharing economy can replace go from €1.100 per year in Bulgaria, to €14.600 in Luxemburg, while in Italy the amount is €7.200. Yet, the research warns on how this esteem is just potential since some barriers could prevent the full achievement of benefits and reduce the value of potential increased use to up to €18 billion in short-term and up to €134 billion in the medium or longer term, depending on the scale of regulatory obstacles.

By date, many EU Member States have looked for legal solutions, (in Italy e.g. the Parliamentary Intergroup for Innovation has just presented a legislative proposal open to comments till the end of May). Yet, the necessary balance between technological innovation and fair competition seems to be not already reached, since some solutions tend towards an excessive regulation, others to excessive simplification. In general, two approaches can be identified among the Member States: a more top-down governmental control and a bottom-up regulation or self-regulation through reputation. The report supposes that a mix of the two will probably be the best solution. The regulatory frameworks of course might support or inhibit the growth of the sharing economy, and related obstacles identified are: 1. outright or effective bans on sharing economy platforms; 2. regulatory costs which deter self-employment; 3. regulatory costs which deter marginal transactions; 4. inconsistencies or idiosyncrasies in intellectual property rules.

Apart from the regulatory frameworks the research recognizes other six barriers. One is related to the digital access and skills, but with the growing smartphone penetration it will rapidly lose importance. Also the physical barriers to participation in the sharing economy are significant, even if conquerable by new business models. Third point are the consumer preferences for ownership, followed by labour market obstacles, such as low mobility, sticky wage demands, technical or social skills mismatches, that will inhibit the growth of the sharing economy. Another key challenge is the need to establish trust, achievable through different strategies such as insurance, prior scrutiny before participants in the market start using the platform and ratings after the use of the platform. Finally, tax and other policy choices (not intended to affect the sharing economy) might still affect its growth in each economy.

To overcome these barriers and realize the economic potential of the sharing economy, the document questions the next steps that have to be taken at EU level, giving some recommendations, resulted from a deep analysis of the national interventions (in particular for the cases of accommodation and transportation). First of all it is necessary to define at European level what constitutes a professional activity exercised on a sharing economy platform and what does not, establishing clear criteria to determine to which legal category digital platforms belong. Second, to improve regulations applied to sharing economy platforms, setting common rules and acting progressively starting from sectors that clearly need for a new legal framework (e.g. passenger transport). Third, to mitigate social exclusion, in terms of reputation, tolerating a degree of social exclusion (laissez faire approach), or establishing a right to a reputational Year Zero, or regulating reputational scoring so that only socially desirable exclusions occur, or also creating community platforms where reputation can be rebuilt. Next recommendation is to deal whit the potential market power of sharing economy platforms, avoiding thinking that all the platforms will become monopolies and proposing specific suggestions (such as relying upon market forces and innovation to undermine market power, or developing the Single Market to maximize the size of the market…). Last point is to apply labour market regulation to sharing economy platforms, without altering them to include sharing economy providers, but considering people working for providers as self-employed and encouraging platforms to supply other benefits besides cash remuneration. This point includes sharing economy service providers in the scope of the general rules applicable to self-employment. Lastly the document touches also other fields where policy adaptations might be required to contribute to maximising the potential of the sharing economy: data protection rules, manufacturing sectors, planning, and intellectual property rules.

This document clearly focuses on the platforms levels, giving us back a comprehensive picture of the current state of development of the sharing economy in the EU-28, and analyzing how Member State are dealing with it. It suggests the importance to know the phenomenon and to let it fully integrate in the society itself, balancing the creative freedom for business with the necessary regulatory protections. The research marks out the path to follow, even if the future direction of the sharing economy itself remains uncertain, by suggesting Member State the courses of action and to avoid dangerous veers of the phenomenon. The great penetration that the sharing economy is having is imposing to reflect about it in an integrated and structured way, not only at national level but overall at European level. The document does not deal with other aspect of the sharing economy, more socially oriented and related to bottom-up processes, but it can be seen as a kind of guidelines that tries to give precise indications to extract the maximum potential from the sharing economy, gain from the recirculation of goods and the sharing of services.

 

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All’inizio dell’anno il Parlamento Europeo ha presentato il rapporto The Cost of Non-Europe in the Sharing Economy: Economic, Social and Legal Challenges and Opportunities, in cui analizza le sfide economiche, sociali e legali che la Sharing Economy Europea si trova ad affrontare, misurando le potenzialità dell’economia della condivisione e proponendo le problematiche ad essa connesse. A fronte, infatti, di una stima di €572 miliardi di valore potenzialmente raggiungibile in Europa attraverso pratiche di condivisione, il rapporto mette in luce la necessità di regolarla per superare una serie di barriere che ne potrebbero ostacolare lo sviluppo e impedire di raggiungere le cifre calcolate. Il lavoro è estremamente dettagliato ed offre a tutti gli stati membri suggerimenti e raccomandazioni che si pongono da vere e proprie linee guida per realizzare il massimo potenziale dalle piattaforme della sharing economy.