Many people in Europe would like to start a business but never take the first step. The collaborative economy, with its much lower entry thresholds, can help people test the waters. For the unemployed, it can be an opportunity to put their skills to use. And it can put services and products within reach of people who normally cannot obtain them.
Furthermore, by encouraging more asset-sharing and more efficient use of resources, the collaborative economy can also contribute to a more sustainable development of the economy.
The collaborative economy is rapidly taking root in the EU. Growth over the last three years has been spectacular, with revenues almost doubling from 2014 to 2015. And it’s not just the well-known examples such as Uber and Airbnb: many other imaginative people are discovering new niches, such as time banks that bring communities together, allowing the exchange of skills and services.
This fragmented approach to new business models creates uncertainty for traditional operators
But once individuals start getting involved in activities normally carried out by established businesses, the distinction between occasional and professional activity starts getting blurred.
National and local authorities are responding with a patchwork of different regulatory actions. This fragmented approach to new business models creates uncertainty for traditional operators, new services providers and consumers alike and may hamper innovation, job creation and growth.
If licensing requirements, legal liability or tax obligations are unclear, fewer people will take the plunge. And if consumers do not trust these new business models, they will not use these services.
We cannot afford to find ourselves in a situation where our single market is fragmented along 28 national or even more different local rules. Where every local regulation has to be examined by the courts. Where we lack predictability and consistency. We need a coherent approach if we want our dynamic European start-ups active in the collaborative economy, to flourish, scale up and benefit from the single market. We need to find ways to embrace these new business models, or they will grow somewhere else.
At the same time, the collaborative economy cannot be a parallel, informal one. Taxes have to be paid, safety must be ensured and social and consumer protection must be upheld. Existing companies complain about distortion of competition. Operators of the collaborative economy, on the other hand, claim they are denied market access. Clearly, some regulation is needed, but as with traditional businesses, regulation must be imposed for sound reasons, such as safety or public security.
Protecting established businesses from competition is not a good reason. We need the vision to see the collaborative economy as an addition to, not an alternative to, traditional operating models and apply regulation accordingly. If framed correctly, the collaborative economy can provide numerous new job opportunities and support growth.
There are many questions to be answered. Should people who occasionally provide a service invariably meet the same requirements as people who do it full time? And what does “occasionally” mean? Platforms are at the heart of the collaborative economy, but what is the status of a platform? What are its liabilities? When do people offering services through platforms become employees?
Imaginative authorities are finding ways to answer these questions and allow the collaborative economy to flourish without undermining standards. Estonia has led with the transport sector. We need to make sure everyone can learn from these and other examples. Given the uncertainty faced by market operators and public authorities, and building on some of the best practice across the EU, we are now providing guidance on how to apply existing EU legislation to the collaborative economy.
For example, we are clarifying that European law already stipulates that entry requirements for service providers should be exceptional and proportionate, for example to protect public safety. And that applying the same rules to someone who provides a service once or twice a month and to a full-time professional may not be appropriate.
We encourage member states to assess national or local rules in the light of this guidance, to enable a balanced development of the collaborative economy.
As any disruptive innovation, new business models can create tensions and challenges that need to be answered. But the collaborative economy should not be seen as a threat to traditional businesses. Properly handled, the collaborative economy will create more jobs and help more people take part in the economy.
With these first European guidelines for this dynamic and fast-evolving sector, we want to ensure that those benefits can be reaped.
Jyrki Katainen is vice-president of the European Commissioner responsible for jobs, growth, investment and competitiveness, and Elzbieta Bienkowska is European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs