Gig economy

The new ways of working enabled by platforms are referred to with term such as gig economy, on-demand economy or open talent economy. What is common to all of these is that they redefine the relationship between the employer and employee. While connecting supply and demand of work through a platform is nothing new, there is currently a massive growth in the size of the gig economy, fuelled by increasing online access and willingness to do disparate tasks.

Why is this important?

The welfare system, especially in the Nordic Countries, is based on the assumption of a steady employment with one employer. The current legislation and regulation is not capable of dealing with the new ways of working emerging from the platform economy as traditional criteria for what is considered as taxable income or work regulated by labour legislation no longer fits the scheme. Is everyone an entrepreneur in the platform economy or should the platform be viewed as an employer? How can social security and fair working conditions be ensured?

Gig economy proponents highlight the flexibility and freedom that platforms provide for the worker as well as the company. Especially SMEs benefit from the gig economy, as they are often agile enough to recruit quickly and are more prone to experience changing demand. Critics state that the work is unstable, isolating, stressful and devoid of welfare benefits. Gig economy favours highly skilled people with good health and thus may contribute to societal polarization. Furthermore, it is driving wages down globally, as platforms enable outsourcing of a variety of tasks, thus expanding the global marketplace.

Things to keep an eye on

To ensure fair and decent working conditions, a mix of regulation, new practices and worker collective action is required. The big benefit but also the central challenge with gig economy is that it is global. Regulation puts countries at different positions and workers have a tough time coming together and bargaining in a dispersed global network. For new practices and ways of operating, platform cooperatives are worth keeping an eye on.

For a company wanting to benefit from gig economy the focus should be on improving human relation practices. Employing should be swift and there should be a good balance between full-time and temporary workers. Different metrics to gauge employee satisfaction and working conditions should be in place and up-to-date.

Selected articles and websites

What’s After The Gig Economy? The Talent Economy
What the Gig Economy Looks Like Around the World
How The Gig Economy Will Change In 2017
The Gig Economy Celebrates Working Yourself To Death
Harnessing The Power Of The Open Talent Economy
10 Ways the Gig Economy Can Help Small Manufacturing Businesses
LinkedIn Finds Small Businesses Driving Gig Economy
Ukko.fi saa tuhat uutta asiakasta kuukaudessa – “Lainsäädäntö ei pysy mukana”
Mistä on kevytyrittäjät tehty?

Mikko Dufva

Research Scientist VTT Technical Research Centre of Finland Ltd
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5G

Why is this important?

5G – 5th generation wireless systems – improves the speed, capacity and energy-efficiency, and reduces the latency of wireless data transfer. This is important for platform economy, because it enhances the opportunities for mobile and ubiquitous digital services as well as enables the high data transfers required by some internet of things (IoT) solutions.

Things to keep an eye on

Because 5G is currently being driven by mobile video and IoT, it requires new kinds of revenue models. In some applications there are huge amounts of data transfer, while some IoT solutions might require only a few bits per month. Thus there is a direction towards more integrated solutions, where the 5G connectivity is only one part. The drivers of the development of 5G could thus be in automotive, energy or health care industries. Another thing to keep an eye on is how regulation supports or restricts the development in different parts of the world.

Selected articles and websites

Imagining the 5G Wireless Future
Huawei: Automotive and energy industries driving 5G and IoT, not telcos
5G for Europe Action Plan
5G Is Coming, But 4G Isn’t Going Away Any Time Soon
5G Test Network in Oulu

Mikko Dufva

Research Scientist VTT Technical Research Centre of Finland Ltd
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Airbnb’s homesharing clubs

Airbnb has been encouraging people who let their apartment through Airbnb to organise themselves into local ”homesharing clubs”. One main motivation behind this is to fight the increasingly strict regulations set by cities on renting apartments through Airbnb and similar services.

Why is this important?

While Airbnb is especially challenging the hotel industry, perhaps the main motivation for cities to restrict the service is the consequent rise in rental prices in downtown areas as well as losing control on the inflow of tourism. Airbnb has fought against regulations before, but the homesharing clubs are a different strategy, as they engage the local hosts to lobby for more favourable regulation. This is different from the attempts by some Uber drivers to unionize themselves, as this is driven by the platform owner, Airbnb, itself.

Things to keep an eye on

The problems with homesharing are systemic in nature and thus difficult to solve. Letting one’s apartment can provide additional income, but it can also lead to rising rental prices overall. Homesharing clubs and local organisation in general is a good idea, but the key question is whose interests the clubs represent: the platform owner’s, the hosts’ or the community in general? How this tension plays out indicates where the platform economy is heading in different regions: to delaying the inevitable, towards winner-takes-all markets, to locally and communally owned platforms, towards platforms as commons or to some other direction.

Selected articles and websites

Airbnb faces worldwide opposition. It plans a movement to rise up in its defence
Bringing People and Places to the Table
Airbnb hosts protest new rental law outside New York governor’s office

Mikko Dufva

Research Scientist VTT Technical Research Centre of Finland Ltd
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Crowdfunding

Why is this important?

Crowdfunding projects have in the past has been mostly associated with consumer products and not an equity investment. According to Catherine Clifford, of Entrepreneur Magazine, “Crowdfunding is, at its heart, driven by a grandiose, ideological utopian vision of a democratization of finance in which the power of the purse strings is pulled down from the elite circles of legacy hierarchy and put in the hands of the people. It’s born of a rather anti-venture capital ethos”.  But a major change in US  Security Exchange Commision rules has opened the door to equity crowd funding via Reg A+ rules (Read Ruling). Chance Barnett of Forbes estimates that crowdfunding will surpass venture capital: “Just five years ago there was a relatively small market of early adopters crowdfunding online to the tune of a reported $880 million in 2010. Fast forward to today and we saw $16 billion crowd funded in 2014, with 2015 estimated to grow to over $34 billion. In comparison, the Venture Capital  industry invests an average of $30 billion each year”. Crowdfund insider predicts that more and more companies will pursue equity crowdfunding, including new industries such as Agriculture, Sports, Energy, Transportation, and Biotech. Part of this growth is driven by cheap digital tools.

Things to keep an eye on

In Finland, the status of crowdfunding has been problematic, but now the situation is improving, as the government is proposing a new law on crowd funding, which should come into action in July (VNK). The new law clarifies the guidelines and makes it easier for companies to use crowd funding. Nordea has already started a crowdfunding platform for growth companies (Nordea). In addition, a crowdfunding platform for piloting and experiments was proposed in a report to the Prime Minister’s Office (VNK). In the energy sector, there are interesting examples of using crowdfunding for financing new solar power plants, such as the Finnoonportti project by Joukon Voima. Crowdfunding thus is seen to be a tool to fund startup companies aiming for growth as well as enable societal experiments or achieve a shift in the existing system.

Selected articles and websites

Crowdfunding in 2016: Five Predictions
10 Secrets of Highly Successful Crowdfunding Campaigns
An Unlikely Romance Between a Venture Capital Fund and a Crowdfunding Platform Promises to Shake Up Startup Financing
Spurring on the startup industry
Next Generation Crowdfunding Starts May 16. Expect Opportunity and Growing Pains.
How crowdfunding can help save Silicon Valley from its harebrained investors
Proposal: Funding platform for piloting and experiments
Nordea to introduce crowdfunding service to the market

Victor Vurpillat

Global X-Network

Mikko Dufva

Research Scientist VTT Technical Research Centre of Finland Ltd
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