Business and Economy
Canada’s platform economy boom is a risk to workers
Digital platforms enable workers to offer their services directly to clients, build their own brand and expand their business networks without the need for a physical office or large initial investments. (Pexels Photo)
Demographic shifts, economic pressures and the rise of digital platform labour have transformed the Canadian labour market in recent years. These changes have shifted the priorities of job seekers. Many now value flexible working arrangements over traditional work structures.
The platform economy exemplifies this shift. Driven by websites and mobile applications, it allows tasks to be arranged and performed for customers in exchange for money. This offers workers flexibility but also exposes them to financial instability and job insecurity. While adaptability is viewed as a positive aspect of job quality, challenges for workers include how to achieve long-term development and career progression.
What should policymakers focus on, and what are the challenges and opportunities for the Canadian labour market as the platform economy grows and workers increasingly seek flexible earning options?
Challenges to job quality
Analysis of key job quality indicators in relation to platform work suggests that it has the potential to upend traditional employment structures in three main areas.
- Quality of earnings: Platform workers, such as ride-hailing drivers or freelance gig workers, often have variable and unpredictable earnings. Drivers may see their income fluctuate based on time of day, location, demand for rides and weather conditions. A driver might earn more during peak hours or special events, but much less during off-peak times. Freelance gig workers, such as writers or graphic designers, can face inconsistent workloads and payments, depending on client availability, project deadlines and overall demand for their services. Earning uncertainly can make it difficult for platform workers to budget effectively, plan for future expenses or maintain financial stability compared with employees who have predictable paycheques in more traditional jobs.
- Labour market security: Platform workers typically lack the job security and financial stability offered by traditional employment. They are often engaged in short-term tasks or projects and are paid on a per-task or per-project basis. Their income depends on the volume and completion of assignments rather than a stable salary. This results in a lack of job security and requires ongoing efforts to secure new work. Platform workers often don’t qualify for unemployment benefits or severance pay, so they have little financial support if their tasks end or they experience a gap in work.
- Working conditions: Platform workers can face challenging conditions without any recourse to help. Delivery drivers might face physical strain. Social media influencers often experience privacy infringements, bullying and harassment, threats or inappropriate messages. While they can report these problems, the support from platforms is often limited compared with structured support offered in traditional workplaces. Unlike jobs with established protocols for ensuring employee well-being, platform work often places responsibility on the individual. As a result, workers may struggle to find adequate assistance and are more vulnerable to online abuse and physical risks.
Acknowledging opportunities
While it is essential to address the challenges of platform work, it is equally important to recognize its potential benefits. During the COVID-19 pandemic, many individuals turning to platform work as a means to generate income demonstrated its value in times of economic downturns.
Platform work can offer increased flexibility, access to a broad client base and opportunities for additional income, particularly in cities with a high cost of living. It also provides entrepreneurial opportunities by allowing individuals to start and manage their own businesses with relatively low overhead costs. Digital platforms enable workers to offer their services directly to clients, build their own brand and expand their business networks without the need for a physical office or large initial investments.
Platform work can also help immigrants trying to gain a foothold in the traditional labour market, but face obstacles due to language barriers, unfamiliar job search methods or difficulties in obtaining required credentials. It allows newcomers to balance flexible work hours with settlement activities, for example, English classes. Flexibility and accessibility are especially valuable for new immigrants who need to establish themselves financially while navigating the job market. Policymakers should seek to understand how these benefits are realized, how they vary among different types of platform work, and how such work can support labour market integration for marginalized groups.
Policy implications
Although platform work currently represents a relatively small segment of the Canadian workforce, it has experienced rapid growth over the past few years and is projected to continue expanding. Policymakers should prioritize the development of a robust knowledge base and reliable data to better understand the evolving nature of platform work and its implications for traditional employment.
Platform work encompasses a wide range of occupations (e.g., Uber drivers, Upwork freelancers, Instagram digital creators, Depop sellers), each with distinct effects on employment and working conditions. It is crucial for policymakers to recognize this diversity beyond tax compliance and tailor regulations to address the specific challenges and opportunities associated with each form of platform work.
The potential misclassification of platform workers remains a significant issue as these workers are often categorized as independent contractors rather than employees. Policymakers should consider updating national employment protection regulations to better address and rectify misclassification, thereby ensuring fair treatment and adequate protections for all workers.
Policy recommendations
To effectively navigate the implications of platform work, assessments based on experience rather than theory are needed to provide an accurate view of this expanding economy in Canada. These evaluations should address both objective and subjective aspects of job quality and their effects on digital and traditional labour markets. Current data predominantly focus on the ride-hailing and food-delivery sectors. More comprehensive studies that cover a broader range of platform work are needed to fully understand its implications on job quality indicators.
It’s also important that policymakers establish clear guidelines to identify the status of workers by the degree of control that a platform’s programming exerts over them. Those genuinely self-employed have considerable independence in their work, while others are falsely given the same status but are heavily restricted — and their pay affected — by dint of a platform’s automated calculations.
These rules should require transparency in management, ensure the fairness and portability of ratings across different platforms (for example, reviews of Uber drivers and Airbnb hosts) and address cross-border tax and regulatory issues. Supporting collective bargaining and extending occupational health and safety protections to platform workers are also essential steps. All these measures would enhance fairness, security and worker well-being.
Platform work offers flexibility, but often lacks security. The concept of “flexicurity” could provide a model for addressing this quandary. By balancing flexible work arrangements with training opportunities and robust social security nets, including unemployment benefits, Canada could enhance stability and support for platform workers by easing the risks springing from income volatility and job insecurity.
To create a fair and inclusive platform economy, stakeholders must collaborate to balance flexibility with worker protections and gather diverse input in decision-making. Instead of treating platform companies as adversaries and risking their departure from the Canadian economy, we should recognize that for many individuals platform work is a preferred option, a supplementary income source, or their only means of earning a living
This article first appeared on Policy Options and is republished here under a Creative Commons license.
