(Bloomberg) — The European Union’s years-long effort to regulate workers’ rights in the gig economy is facing a key vote by member countries on Friday that could derail legislation opposed by many in the industry.
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The vote on the provisional deal, following a previous attempt that was rejected in December, comes with little time to spare before European elections in June. Failure to pass the bill would likely set the effort back years.
The European Union has been seeking to define the employment status of millions of people who get work from online platforms, an issue which has seen businesses and unions battle in courts around the world. The gig economy can include food delivery workers, taxi drivers, cleaners and freelancers.
Last year’s effort to pass the regulation fell apart after failing to get sufficient support from EU members. That version included bloc-wide criteria to define when a worker should count as an employee and qualify for benefits like sick pay, while the latest proposal allows individual countries to decide.
EU officials and industry representatives have been trading barbs ahead of the vote.
Nicolas Schmit, the commissioner for jobs and social rights at the European Commission, the bloc’s executive arm, said in an interview that platforms trying to stop the rules were seeking to “preserve the status quo” and are in some cases undercutting worker protections.
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MoveEU, an association of ride-hailing platforms that represents companies including Bolt and Uber Technologies Inc. within Europe, criticized the agreement and has called on EU countries to reject it.
The regulation “would lead to uncertainty for national labor systems and hundreds of thousands of professional drivers while greatly hindering operations for ride-hailing platforms,” MoveEU Chair Aurélien Pozzana said in an emailed statement.
Not all gig economy platforms have been critical of the plan, with a spokesperson for Just Eat Takeaway.com NV calling the deal positive, even as the company waits for further details on the text of the proposed regulation.
The policy has been controversial since it was first put forward by the European Commission in 2021. The initial proposal would have cost the sector as much as €4.5 billion ($4.8 billion) annually, according to the bloc’s estimates at the time.
A commission analysis in 2021 found it’s likely that about 5.5 million workers of an estimated 28 million who used digital labor platforms in the EU are wrongly classified as self-employed.
Delivery Hero SE Chief Executive Officer Niklas Oestberg said the latest attempt “doesn’t create any clarity for anyone,” in an interview with Bloomberg this week.
“I’m not really sure what the legislation is made for or why it’s there because it basically says the countries can do whatever they want,” Oestberg said.
Many unions are backing the latest deal even after it was weakened. It is “the lowest common denominator that could maybe guarantee a minimum floor of rights,” said Ludovic Voet, confederal secretary of the European Trade Union Confederation.
The regulation also impacts how workers can be managed by digital platforms. It sets limits on the use of algorithms, banning the firing of employees based on a decision made by an automated system.
In the absence of EU action, many countries have already implemented regulation on platform work, including Spain, France and Greece, according to a recent analysis from the European Centre for International Political Economy.
The legislation will also need to be approved by the EU parliament if it is backed by member states in Friday’s vote.
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