In recent years, the gig economy has dramatically reshaped the nature of work across the European Union. Platforms like Uber, Deliveroo, and Upwork have provided flexible opportunities to millions who prioritize autonomy in their professional lives. However, this model is now facing significant threats due to new European Union legislation that could alter the landscape of gig work.
EU countries have recently agreed to reclassify many gig workers as employees, which potentially impacts up to 43 million workers. The initial proposal dates back to 2021 and stipulated that workers meeting at least two of five specific criteria would be presumed employees rather than independent contractors. As employees, they would be entitled to various benefits, including sick pay and social security. After opposition from France and Germany, a revised agreement now leaves the decision about workers’ status to national laws and collective bargaining, though companies must still prove that their workers are not employees.
While the EU aims to safeguard gig workers through its proposed regulations, these measures may lead to unintended consequences. By reclassifying gig workers as employees and enforcing rigid contractual obligations, the EU risks stifling innovation, reducing opportunities, and increasing unemployment—ultimately harming the very workers it intends to protect.
How EU Regulations Could Disrupt Gig Workers’ Income and Freedom?
The rise of the gig economy, especially during the COVID-19 pandemic, has reshaped how services are delivered. Gig companies have allowed workers to offer their services with unprecedented flexibility, creating a new class of digital labor. This shift has prompted substantial debate concerning labor rights, especially about job security, access to benefits, and fair wages. In response to these concerns, the EU parliament has adopted new rules to classify gig workers as employees.
In fact, most gig workers operate as independent contractors and are free to choose how much, when and where they work. While traditional employment with regular hours may appeal to some, many gig workers prioritize flexibility and control. Flexibility allows them to juggle multiple jobs, devote time to their families, or pursue education without the constraints of a typical 9-to-5 job. Indeed, research shows that gig workers highly value the flexibility of independent contracting. A study by the freelance platform Malt found that 62% of highly educated freelancers in Europe are satisfied with self-employment and have no desire to return to full-time jobs. They resist being classified as employees because it would give employers more control over their schedules.
Furthermore, EU labor regulations have significantly raised the cost of hiring employees compared to outsourcing to independent contractors. Employers face added expenses such as social security contributions, taxes, collective bargaining obligations, paid leave, and compliance costs. Employee status would also require companies to pay minimum wages and overtime, increasing liabilities and leading to more restrictive hiring practices. MoveEU, an association representing European ride-hailing platforms like Bolt and Uber, strongly opposes the proposed regulations. According to MoveEu Chair Aurélien Pozzana, these rules create uncertainty for the national labor systems and disrupt operations for ride-hailing services.
In the United States, California’s effort to reclassify gig workers as employees was reversed by a voter referendum, leaving most gig workers to continue functioning as independent contractors. Meanwhile, in Europe, the discussion takes a more ideological tone. Leftist parties and labor unions advocate enhanced protections for gig workers. For example, in Spain, a law treating gig workers as employees led to Deliveroo leaving the market, costing 8,000 jobs. Labor unions oppose self-employment because it undermines their ability to organize workers. Self-employed individuals don’t need union representation or engage in strikes, so unions support laws that push workers into traditional employment to grow their membership and collect dues.
Beyond personal freedoms, the economic impact of this move could be severe. The initial proposal is estimated to cost the sector up to €4.5 billion annually. This shift would impose higher costs, regulatory burdens, and operational challenges on platforms connecting gig workers to customers. As a result, platform offerings would shrink, reducing opportunities for gig workers and driving up consumer prices. This move would not only harm the very workers the EU aims to protect but also stifle competition, curb innovation, and weaken the European economy.
Conclusion
The EU’s new regulations represent a well-intentioned but potentially harmful intervention in a thriving sector of the economy. By reclassifying gig workers as employees, the EU risks disrupting this dynamic market, imposing unnecessary costs on businesses, and limiting the freedom of individuals to choose how they work. A more effective approach would be to let the gig economy evolve with minimal interference while ensuring that workers are informed about their options and remain free to choose. This would maintain the flexibility and benefits that drive the sector’s success.
Photo by Carl Campbell
