2.1 Extent of the phenomenon and general regional trends

There is no unified statistics measuring the extent of work through online labour platforms. In its absence, researchers rely on a range of survey data and various estimates of registered users of platforms, financial flows, and performed tasks, as reported by the platforms. Table 2.1 reviews existing estimates. It shows that Ukraine and the Russian Federation systematically ranked first in Eastern Europe in terms of the financial flows, number of executed tasks on online platforms, and number of “digital freelancers” over the 2013-2018 period. Serbia and Macedonia were ranked first in the world by the percentage of digital workforce relative to the total country's population and the total workforce.

Table 2.1 Ranking of countries in terms of employment in online labour markets

Source: Own compilation based on the data reported in these sources. OLI, 2019: data from 5 leading English-Speaking platforms; Graham et al., 2015: data from 1 English-speaking platform; Kuek et al., 2015 and AnalyticsHelp, 2018: number of platforms not indicated; English-speaking platforms only.

Note: The information refers only to online work through online labour platforms.

One important feature of online labour markets is that they do not have geographical boundaries. Yet, cultural and linguistic boundaries seem to be very important. In fact, the existing analogue cultural differences translate into differences in the types and the functioning of digital labour markets. As a result, workers in the region access three types of platforms and markets: national (local), regional (strongly shaped by common language, such as Russian or Serbian), and international (mainly English-speaking).

These three geographical dimensions of online work are depicted in Figure 2.1, which takes the viewpoint of a country of origin of online workers, such as Ukraine or Belarus. It shows the complexity of online work in the sense that the geographical location of a platform, a client, and a worker, do not necessarily coincide. In this figure, the thickness of each arrow approximates the workflow (number of tasks or financial flow). However, to the best of our knowledge, no data exists to estimate precisely the amount of these flows. Figure 2.2 depicts also the three geographical dimensions of online work from a viewpoint of a platform.

Both figures show that the national digital labour markets are specific to a country and are mainly oriented towards satisfying national work demands. The national (local) dimension is mediated mainly by locally-based platforms, operating in local languages, and matching locally-based clients and workers. In addition, it is mediated by platforms based outside the country, but which also match locally-based clients and worker.

2.2 Profiles of Eastern European workers on online labour platforms

The emergence of online work sparked interest in studying the profiles of digital workers by specialists from a variety of disciplines. Existing studies, whether qualitative or quantitative, allow to draw a relatively uniform portrait of Eastern European digital online workers.

This section is based principally on five large scale surveys of platform workers, conducted at the national level in Ukraine (Aleksynska, Bastrakova, Kharchenko, 2018), Serbia (Andjelkovic, Sapic, Skocajic, 2019), selected Eastern European EU-member states (Pesole et al., 2018 and Piasna and Drahokoupil, 2019), and on the largest regional platform in Russia (FL.ru: Shevchuk and Strebkov, 2015, 2018; Strebkov, Shevchuk, Spirina, 2015, 2016). The Russian survey has been conducted in four waves, allowing not only to have a snapshot of the workers’ profile, but also trace its evolution. Surveys’ findings are also summarized in Table 2.4.

All five surveys show that digital workers are generally young. On average, online workers are in their thirties, and younger than the average offline workers. They are also over-represented in in the 25-29 group (Serbia) and 18-26 group (Russia). Some additional evidence from Poland (Owczarek 2018) shows that Polish online workers are over-represented in the 18-24 group.

There is a relative gender parity in online work in Ukraine, Serbia, and Slovakia. Initially male-dominated, Russian freelancers workforce now almost reaches a gender parity: the share of women rose from 33% in 2009 to 46% in 2019. In contrast, in Croatia, there is just one woman for every three men working online.

Online digital workers in most of the Eastern Europe are generally high-skilled. The overwhelming share of Russian freelancers has at least some university education (83% in contrast to 30% of all Russian workers). The share of Russian freelancers with completed education has been growing, indicating professionalization of freelancing activities. Ten percent of freelancers have two university degrees, an MBA or a doctoral degree. Most frequently found areas of specialization are STEM degrees. In Ukraine, 73% of online workers have basic undergraduate degree or completed higher education, and 2% have a doctoral degree. The situation is similar in Serbia, Croatia, Romania, and Lithuania. There is also a higher share of workers with ISCED 5 and above level of education in EU Eastern European countries, as compared to the general population.

Initially overrepresented by the IT professionals, the pool of online workers is now much more diversified, and includes a whole range of occupations. Still, three types of occupations dominate the online freelance market: IT (including software and technolo¬gy development), working with texts (content writing, rewriting, translating, editing), and creative and multimedia industry (including design, work with photos and videos: ibids). There is a strong gender segregation in online occupations: in all countries, IT sector is strongly dominated by men, while working with texts is strongly dominated by women. This occupational segregation goes hand in hand with the market orientation: if IT freelance from Eastern Europe is known internationally, on the local and regional markets, it is work with texts and graphical design that presents the dominant sphere of activity. As a result, more women are found in the local markets, and more men are found in the international online market.

2.3 Working conditions of Eastern European workers of online labour platforms

Unless stated otherwise, this section draws again on the results of large scale surveys of platform workers (Serbia: Andjelkovic, Sapic, Skocajic, 2019; selected Eastern European EU-member states: Pesole et al., 2018 and Piasna and Drahokoupil, 2019; Russia: Shevchuk and Strebkov, 2015, 2018, 2019; Strebkov, Shevchuk, Spirina, 2015, 2016; Ukraine: Aleksynska, Bastrakova, Kharchenko, 2018). Some of the findings are summarized in the remainder of Table 2.4.

2.3.1 Working hours and work-life balance

The average hours devoted to the online work usually do not exceed standard work-week hours. In the majority of cases, they fluctuate around 30 hours a week, reflecting the fact that for the majoirity of workers online freelance is a complementary activity. However, all studies with available information note an important dispersion, and even a polarization of working hours. For a small fraction of those workers for whom online freelance is their main activity, working hours can easily span over 60 hours a week. Many freelancers systematically work on week-ends and holidays. In Russia, half of on liners work over 45 hours, with one third stating that they work every Sunday and on public holidays, and one third stating that they work 6 days a week including on Saturdays. In Ukraine, employment of 6 or 7 days a week characterizes 26% of the respondents, with one seventh of the respondents working on every day of the week. Evidence from other European countries (Croatia, Hungary, Lithuania, Slovakia, Romania), suggests that, if the average hours devoted to online work are rather short, 12% of onliners, for whom this work represents the main activity, work over 60 hours a week.

In addition, online workers often report working on atypical hours, such as early in the morning, late in the evening, or at night. This happens for several reasons. For many, this is because day hours are occupied by either a regular employment, or by studying, or by family responsibilities. For some, this is also because they engaged into too many projects, or because they have clients located in other parts of the world and that require communication in different time-zone hours. Two-thirds of Russian online workers regularly work between 6pm and 12pm, and 30% work between 12pm and 3am. Similarly in Ukraine, 62% of online workers usually work from 6pm to 10pm, and 30% work between 10pm and 5am.

The situation with atypical hours of online workers is so striking in some countries that researchers even coined a term of “autonomy paradox” (Strebkov and Shevchuk, 2019). It consists in a scenario, in which online workers who are able to schedule their time in a flexible manner actually work disproportionately during the night. This has an adverse impact on their satisfaction with work–life balance and with life, and leads to an emotional exhaustion (ibid).

2.3.2 Earnings

Earnings from online work are the main motivators for uptaking these activities. The reviewed studies uniformly show that, in Eastern Europe, earnings from online work have so far been quite attractive, whether as a complementary, or as a main source of income. For example, in Russia, earnings of online freelancers from all activities are higher than the average earnings of Russian salaried workers using Internet for work. In Serbia, the average gross income of onliners is almost twice as high as the average gross salary in the country. In Ukraine, average gross online earnings (for an average 30h work-week) are above the gross minimum monthly wage in the country. In all countries, workers for whom online work represents the main source of income have the highest online earnings. These results explain why the majority of workers in these three countries report being satisfied with the online work.

The highest earnings are enjoyed by digital workers performing IT tasks. This is due to the technical skill requirements, but also due to the fact that the clients for this work are more often located abroad. Additional evidence suggests that those working exclusively for foreign clients earn, on average, 20% more than those working with local clients only (Kommersant.ru, 2018, Russia: Paypal - Netfluential survey).

The requested hourly rates for IT work are also among some of the most transparent and easy to track. This is because workers usually display their hourly rate in their profiles on international platforms through which the majority of such work is performed. The requested rate is not always the one that the worker will systematically receive. Clients may negotiate it, or propose a project-based type of pay. Nevertheless, on some platforms, such as Upwork.com, the displayed rate in the worker profile is quite a good approximation of what is actually received, as the latter would fluctuate around that number. A review of IT worker profiles on the major platforms (Topsdev, 2015) allowed obtaining average requested hourly rates by the workers’ country of origin (Figure 2.6). It also allowed obtaining paid hourly rates by the clients’ country of origin (Figure 2.7). These figures show that the highest average hourly rates were requested by Estonians and Montenegrins.

Hourly rates requested by Belarusians, Romanians, and Macedonians have declined between 2014 and 2016. This possibly reflected a very rapid take off of these markets in the same period. In other words, the supply of workers increased, but the amount of available work did not increase at the same pace. At the same time, there was an inflow of IT workers with heterogeneous skills, including with less specialized skills as compared to the first entrants into the market. This further depressed the average requested rate, as the decrease was driven by these new workers ready to perform easier tasks.

Figure 2.6 Average hourly rates requested by IT digital workers in Eastern Europe, USD

Source: Own compilation based on Topsdev, 2015; 2017.

Rates in other countries of origin rose, as did the rates offered by the majority of IT clients. It is notable that the rates in countries with the largest market shares of performed IT tasks (Ukraine) and requested IT tasks (USA) are the same. At this stage, it seems that the market witnesses a search of its equilibrium, which is being incessantly modified by new entry of workers and clients from different countries, by penetration of the digital modes of work into new spheres, and by sophistication and diversification of tasks and worker profiles.

Despite these generally attractive earnings possibilities, actual online earnings also feature a significant gender pay gap. The analysis of the factors behind this gap shows that it reflects gender segregation into different occupations (Aleksynska, Shevchuk, Strebkov, forthcoming), unequal sharing of domestic responsibilities, especially childcare, and poorer skill match of women (Shevchuk, Strebkov, Davis, 2015), who tend to specialize in easier tasks.

Figure 2.7 Average hourly rates offered by clients of IT tasks, Top 10 countries of origin, USD

Source: Topsdev, 2017.

2.3.3 Work autonomy

In several Eastern European countries (Croatia, Hungary, Lithuania, Slovakia, Romania), as well as Russia and Ukraine, flexibility and autonomy offered by platform work are among the main motivations to do this type of work.

Despite this, some workers find that they do not have full autonomy in their work. The limits on their autonomy can come either from a platform or from clients. Platforms may deliberately or intentionally require regular presence (by featuring most frequently present workers in the search function). They may also require a certain way of communicating with a client, or installing special software to track hours of work and work progress.

Clients, in their turn, may also monitor how work is executed. For example, 45% of Ukrainian online workers report that clients give detailed instructions on how to complete the work, and 42% report that clients directly supervise work execution and control work processes. The forms of control vary, and include requests for being available during certain work hours either frequently or all the time (36% of online workers find themselves in this situation) or even outside of regular work hours (21%) ; providing screenshots of the executed work (27%), or having to install special software on their computers making such screenshots on request of their clients. Control is usually executed using standard Windows software (Excel, Microsoft Project), Google sheets, but also special platforms’ software (time tracker, team app), or other programs, tools, and websites, such as Viber, Skype, Time Doctor, Teamviewer, Harvest. Often work progress has to be reported through regular emails.

In addition to this, some workers find themselves somewhat dependent on a platform or on a client. Dependency on a platform stems from the fact that the ratings obtained on a platform are not portable from one platform to another, and that a worker needs to spend ample amount of time on one platform in order to build his or her reputation. Dependency on a client may arise if a worker does not have many clients, and most of the income is generated from the work with one client only. Also, some workers report that they receive fixed daily, weekly or monthly remuneration, rather than a project-based work. This situation is observed for almost 20% of Ukrainian online workers, and around half of workers in Croatia, Hungary, Lithuania, Slovakia, Romania. Coupled with limited autonomy, such situations may result in a disguised employment relationship,8 either with a platform, or with a client. In Ukraine, it is estimated that up to a half of online “freelancers” are in a grey zone of dependent self-employment or disguised employment. While no estimates are provided, concerns over this issue are also raised in other Eastern European countries (Pesole et al., 2018). Nevertheless, the vast majority of online workers considers themselves as genuine self-employed.

2.3.4 Informality and social protection

Work relations through online digital platforms remain largely informal. In Ukraine, three quarters of online workers report working informally. They are not registered with the authorities as self-employed, and are not paying social security contributions. 45% are convinced that no registration is necessary. The rate of informality is higher among online workers than in the rest of the Ukrainian economy. In Serbia, two thirds of online workers are informal. On the largest Russian-based platform, only 12% of freelancers regularly relied on written contracts with their clients. This is the only feature of the Russian-speaking digital labour market that remained unchanged over the past decade.

As a result, online workers may face a risk of absent or inadequate social protection. This situation is reported in surveys of Ukraine and Serbia, and is stated as a concern for other Eastern European countries. Many of these workers, in fact, remain in wage employment in addition to their online work in order to benefit from social protection provided by the wage employment. Such behavior, however, creates challenges to the sustainability of social security systems and to the adequacy of protection that they offer.

3.1 Extent of the phenomenon

In addition to performing work online, digital technologies also allow finding work online but performing it offline. This includes two main types of activities:

• Finding offline work through online platforms and mobile apps that serve as job advertising boards for either one-time or regular activities that may be diverse in nature. Examples include kabanchik.ua platform (similar to taskrabbit.com), where examples of tasks range from assembling a piece of furniture, providing plumber services, printing business cards to babysitting.

• Finding and performing offline work through local app-based platforms that serve as intermediaries connecting clients and workers, usually in one type of occupation, such as personal transportation or food delivery services. The difference with the online platforms mentioned above is that worker and client remain connected through the app while the work is executed offline. Among other features, the app has a monitoring role; for example, the time of the tasks’ execution is not only counted but may also result in various bonuses or penalties for the worker, awarded by the app.

In both types of activities, workers and clients have to be geographically close to each other. In other words, both types of work are defined mainly by their local dimension. However, the ownership and management of some of these platforms and apps may be foreign-based, adding the regional or international dimensionality to regulatory issues.

These two types of work are also to be distinguished from the concept of the collaborative economy. Unlike actual work, activities in the collaborative economy include unprofessional ad-hoc ways of complementing income, for example, though own car sharing, or own apartment rental, or selling own possessions online. Even if individuals proposing such activities gain some income from them, such income is not considered as income from work. In other words, such income is neither a salary of an employee nor a profit of a self-employed resulting from work. For this reason, collaborative economy is not systematically examined in this paper. It is to be noted, however, that some of the activities of the collaborative economy (ex.: AirBnB rental or reselling of items through Ebay and similar sites) became professionalized over time, blurring the boundary between collaborative economy and the world of work.

In 2018, a Eurobarometer survey addressed the question of services provision through local-based online platforms and apps, though without making a strong distinction about their economic nature (and hence covering both work and non-work activities in the collaborative economy). The results of the survey allow having a glimpse of the general developments of these activities in the EU Member States. Note that, because collaborative economy is included, these figures are greater than the actual work performed through platforms and apps. The survey shows that 23% of the EU residents have ever used services offered via platforms and apps, though only 4% use them on a regular basis (EU, 2018).9 In Eastern European countries, among those who have used online apps and platforms to access various services, the vast majority used services in the transport sector (over half of respondents) and accommodation. Food-related services, including food delivery, were experienced by about a third of Eastern European respondents (Figure 3.1).

Figure 3.1 Share of users of online apps and platforms, by type of service

Source: Own computation based on Flash Eurobarometer 467, 2018.

Note: Respondents: population aged 15+. Multiple answers were possible.

The survey also shows that about 6% of Europeans have offered services via online platforms, including both unpaid activities and work (ibid). In Eastern Europe, Latvia is a clear leader. Slovakia, Slovenia, Romania, Hungary, and Croatia exhibit levels of services provision in the collaborative economy that are higher than the European average (Figure 3.2). If in Latvia the outcome is largely driven by the transportation related activities, the outcome in Slovakia is mainly due to food-related services.

These estimates are relatively comparable to those found in other EU-wide surveys. For example, Huws et al. (2019) also indicate that, in Europe, the highest levels of income generation through local-based apps and platforms for offline work are in Central and Eastern Europe, notably in the Czech Republic, Slovenia and Estonia.10 The highest percentage of workers operating through local-based apps and platforms for offline work was found in the Czech Republic: in 2019, up to 28.5 per cent of respondents aged between 18 and 55 did such work at least once a week.

Pesole et al. (2018) report findings similar to the Eurobarometer estimates for Croatia, Hungary, and Romania. Figures for Lithuania, in contrast, differ: it is this country that comes as an Eastern European leader in offline work mediated by the platforms according to Pesole et al., 2018.

Taken together, the statistical picture on the state and the growth of collaborative work obtained at the European level goes hand in hand with a discernible increase of mentioning of these issues in public discourse at the national level.

Figure 3.2 Share of individuals who have offered services via online platforms and apps

Source: Own compilation based on Flash Eurobarometer 467, 2018.

Note: Respondents: population aged 15+.

Compared to the development of online work, the development of offline work mediated by platforms and apps started somewhat later. It is not before the 2010-es that the first mobile apps for work were popularized. In some countries, local mobile apps developed ahead of foreign ones. In some others, changes to the traditional ways of work were brought by foreign companies, such as notably Uber (for transportation), and most recently Glovo (for food delivery). These major platforms, however, appeared with time lags in different markets, and they are not evenly present across countries (Table 3.1). This in part explains country-level variations in the extent of the digital work mediated by the apps.

Table 3.1 Examples of international, locally-operating, apps-based platforms in Eastern Europe, as of 2019

Source: Own compilation based on the information provided on international and local websites of each respective company.

This table also shows that, judging by the foreign presence, the most dynamic markets for work via apps were Romania and Ukraine, closely followed by Croatia, Czech Republic, Baltic States, Poland, Russia, and Serbia.

Indeed, national commentators note that in Romania, there has been a real upsurge of novel practices led by international mobile apps and platforms. Ride-hailing is led by Uber and Bolt (former Taxify), as well as a Romanian app, Clevertaxi; bike delivery is pioneered by Foodpanda and more recently, Glovo. In addition, there is at least a dozen of local apps for work in various sectors (Roşioru, 2019).

In Ukraine, there are several apps in the transportation sector, with the local Uklon, international Uber, and regional Taxify and Yandex being the largest market players. International, regional, and local apps flourish in the delivery sector, accommodation and care. Popular are also online platforms for offline work, such as Kabanchik.ua. The latter is a local analogue of the American TaskRabbit: it is a marketplace for matching clients with workers eager to perform any small works and running errands offline. In the delivery sector, Glovo app is increasingly reinforcing its positions: between December 2018 and March 2019, the company’s turnover increased tenfold; half a million Ukrainians installed the app, and roughly 5000 workers were providing delivery services in 2019 (Movchan, 2019).

In the Czech Republic, the growth of work through digital apps is prominent, and is largely driven by the entry of Uber into the country (National Training Fund, 2017; Euro, 2017). Over twenty different apps and platforms operated in different sectors by 2017. In the accommodation sector alone, there were at least five players in addition to AirBnB, including Flipkey, HomeAway, House Trip, Vacation Rentals, and Vrbo.

Poland is estimated to be Uber’s third largest EU market (The Krakow Post, 2017). Here, several other transportation and small parcel delivery apps have also flourished. Examples include local JadeZabiore and BananaCar, as well as local versions of international MyTaxi and Bolt (Sienkiewicz, 2019). There are also several Polish-market oriented platforms that only match clients and workers, but work is performed offline. Those include Oferia.pl (with over 220.000 registered workers as of 2019) and Sir Local (Sienkiewicz, 2018).

In Serbia, Uber is not present, but there is a local prototype CarGo, operating in a similar spirit.

Remarkably, owners of foreign apps come both from the same region and from outside of the region. For example, among some most widely used apps, Bolt (Taxify) is an Estonian transportation app, which has first tried out its operations in the Eastern European market before moving to the rest of the world in an Uber-type expansion. In several Eastern European markets, Bolt is the main Uber’s competitor. Similarly, Yandex.Taxi is now an internationally company. It originated in 2011 in Russia, two years ahead of Uber. It is present in all fifteen former Soviet Union republics, as well as a number of Eastern European countries. Hopin is a Slovak transportation app, which started its services in 2012, ahead of Uber. It operates in Bratislava, Košice, Michalovce, Poprad, Humenné (Slovakia), Prague, Ostrava (Czech Republic), Ljubljana (Slovenia), and Kyiv (Ukraine). It is also the only app that complies with all the legal regulations in the transportation sector, at least in Slovakia. A Ukrainian platform for offline work Kabanchik.ua recently created a local-market version for Belarus and for Kazakhstan.

Importantly, countries have varied greatly in how governments and local markets reacted to the appearance of different apps and their proposed business models, which either restrained the spread of work through apps, or accelerated its expansion. In the case of Uber and other apps in the transportation sector, for example, there was a whole spectrum of responses (Table 3.2). Some countries, such as Bulgaria, adopted Uber ban very early on, sending a strong signal to the market players that digital apps not respecting existing laws should not be allowed to operate. Some others, such as Belarus and Hungary, amended existing laws to bring Uber and Uber-type companies under the scope of existing regulation and to be able to require compliance with it. Yet some others, such as Estonia, introduced major legal changes to liberalize the traditional market to fully embrace apps-mediated mode of work beyond professional services. In Russia, Uber lost the market war to the local player Yandex.Taxi; with Uber.Eats being completely driven out of the market (see Box 3.1). This defeat was partly a result of the government support to the local player in the form of a “Google tax law”, which required foreign companies selling e-content via the Internet, including Uber, to pay an 18% value added tax. But in all cases, digital technologies seem to have disrupted the existing modes of work. They allowed non-professionals to step into traditional sectors (sometimes increasing the extent of the informality of those sectors), augmented competition (sometimes unfairly), and changed the old rules of the game.

Table 3.2 Uber Transportation Application: Examples of Experiences from Selected Eastern European countries

Sources: own compilation based on national sources. Bulgaria: Duncan et al., 2016. Slovakia : Sedláková 2018; Reuters.com., 2018. Hungary: Budapest Business Journal, 2017. Croatia: Pavlic, 2017. Romania: Roşioru, 2019. Czech Republic: Reuters, 2019. Poland: Reuters, 2019. Russia: Vedomosti.ru, 2018; Vox.com, 2017. Belarus: Avtobiznes, 2017. Ukraine: Samojlenko, 2018, AIN, 2019. Estonia: National Training Fund, 2017. Lithuania: OECD, 2018b. Latvia: OECD, 2018a. Serbia: Bjelotomic, S., 2018; Stojković Attorneys, 2018.

Box 3.1 Uber in Russia

Sources: Vedomosti.ru, 2018; Forbes, 2017.

3.2 Profiles of Eastern European workers operating through mobile apps and online platforms for offline work

The profile of workers operating through mobile apps differs substantially from the worker profile of digital freelancers operating online. Four key factors contribute to this difference.

First, most popular digital platforms for offline work, as well as mobile apps, emerged in the traditional sectors of activity, such as transportation or care. The pool of individuals working through apps thus included first and foremost those workers who were already present in these sectors, whether formally or informally. Most of them had a relatively low level of skills. At the same time, given that workers switching to apps were somewhat more technologically savvy than others and open to trying new technologies, they came rather from a mid-range of the skill distribution. The apps did not change the nature of the work per se (i.e., drivers still had to drive), but only helped matching the existing demand from clients to the existing supply of work. This meant that principally new skills acquisition was neither possible nor required. This was also different from online work on the online platforms, which, in addition to being concentrated in intellectually- and creativity- demanding sectors, in many instances came hand in hand with principally new types of tasks (ex: demand for IT development) or new modes of work (ex: competitive programming).

Second, some apps allowed non-professionals to step into the existing market. For many of them, work via apps represented secondary work and an additional source of income. This had an effect of flattening the skill distribution of workers operating through the apps.

Third, because apps had very low requirements on who can do the work (at least initially, virtually anyone could sign up with very little formal checks), there was also a self-selection into these kinds of jobs of those individuals who otherwise had limited employment prospects. This included not only workers outside of the legally defined scope of the profession (such as licensed drivers in case of transportation apps), but also for example migrant workers, including without proper visas or work authorization. For instance, anecdotal evidence from Poland shows that there is a high share of Indian and Ukrainian workers working for UberEats. Some of them entered the country on student or tourist visas, and Uber does not check whether they have work authorization (Szostak, 2019). In the Russian capital, anecdotal evidence suggests that the majority of drivers working through apps come from Central Asia (Radio Freedom, 2018).

Finally, work through mobile apps and local platforms for offline work is performed locally, and does not give access to better-paying clients located abroad. As such, it is not attractive to workers speaking foreign languages and having high level of technical skills, who prefer to utilize them on international online labour platforms.

Given these factors, unlike online workers, workers of the mobile apps in Eastern Europe have education levels similar to those in the general offline labour market, and sometimes below it (Pesole et al., 2018). They are also on average 10 years older than platform workers, and resemble much more a general workforce profile (ibid; Huws et al., 2019). Some particularities, though, reflect also the particularities of each sector. For example, the transportation sector is dominated by males, while the accommodation and cleaning sector has rather a female face. In food delivery, anecdotal evidence shows a higher presence of young “strong and sporty” men.

This worker profile is not static, however, with several factors contributing to its constant evolution. First, as more apps enter into each sector, and work through apps generalizes further, technologies simply become a mediator of professional activities rather than a generator of new work opportunities. Evidence from the Czech Republic and from Slovenia, for example, shows that the original apps of private properties’ clean-sharing gradually become classical business subjects, such as traditional professional cleaning agencies (National Training Fund, 2017).

Second, regulations play an important role in shaping the worker profile. Interestingly, this is less influenced by general labour laws, and more often by competition laws, tax laws, and the laws regulating activities in each specific sector. For example, Uber and Uber-type applications initially allowed non-professionals to perform tasks similar to the professionalized transportation sector. Regulatory responses throughout the region widely recognized these apps as performing passenger transportation services rather than purely “client matching” services. This created new obligations for the workers using these apps to comply with the regulations on professional licensing, insurance, social security contributions, and taxation. Thus, following the adoption of these regulations, the pool of workers shrank back to include mainly the sector’s professionals and a few former non-professionals who, after experiencing this work thanks to the app, self-selected to join the profession. For example, evidence from Belarus and Hungary confirms that, as a result of legal changes that brought Uber under the scope of existing regulations in the transport sector, non-professional drivers massively left the application (Avtobiznes, 2017; Duncan et al., 2016). As a result, the portrait of a worker operating via an app started to reflect again the worker profile of the transportation sector. Similar changes can be expected in other sectors if the activity of local apps-based platforms if these sectors starts being regulated.

3.3 Working conditions: linkages with institutional factors and business models

If there is one common feature across apps in Eastern Europe, it is that, as in the rest of the world, workers are not considered as employees but as self-employed. As a result, workers face a particularly high risk of informality. This is especially true of those apps and platforms that have been operating in the grey zone, outside of the scope of existing regulations and positioning themselves as “intermediaries” of the “sharing economy” and allowing non-professionals to exercise economic activity through them.

In the absence of formal research, it is hard to conclude whether the emergence of work through apps raised informality levels. Some commentators suggest that it only revealed an already high level of informality, by making invisible economic activity visible. For example, city hitchhiking was not unusual and not formally prohibited in several Eastern European countries; but its extent was revealed by the arrival of the apps in the transportation sector. Others reckon that the digital economy did amplify an already ongoing informalization trend, with the “new business models” promoting the idea that informal may be “normal”. They also amplified the trend towards precarity: after all, apps do not have any promise that there will be work when a worker is making herself available for work, and can unilaterally shut down an account at any time. A “portrait”-type survey of Slovak and Hungarian apps workers shows that, currently, while their earnings may be comparable to an average worker in the rest of the economy, they still face precariousness on other dimensions of working conditions (Kahancová, Meszmann, Sedláková, 2019). The majority of workers do not pay social security contributions and are not covered by social security or private insurance against professional and health risks. However, the vast majority of these workers use work through apps to complement pay from their main job (a universal finding of all studies). As such, they rely on social security protection through their main job (ibid; Pesole et al., 2018).

The situation with informality, however, is also quite dynamic. It is possible that the increased informality is only transitory, as technologies carry a chance for formalization: if they allow for cashless transactions, they can also potentially be used to monitor economic activity by public agents, prevent evasion of taxes and social security payments, prevent fraudulent payment and cybersecurity risks. Here, policy responses may be helpful to indeed ensure that the formalization of the previously informal activities is actually happening.

In addition to informality, employment status determines to a large extent other working conditions. But because work through mobile apps is so sector-specific, working conditions also reflect the working conditions in each respective sector. Moreover, they are strongly shaped by two other, related, factors.

One important factor is the legal environment of each country. Countries differ in whether they have a legal framework and a sufficiently developed judiciary practice in place to determine the existence of an employment relationship. They also differ in the degree of compliance with these laws and the strength of the enforcement bodies (labour inspectorates) overlooking their implementation. This has important implications for workers operating via local-based platforms and apps. The concern is that the way some apps operate creates a situation of a disguised employment relationship, with apps serving a de facto, but not a de jure, role of an employer. Interestingly, the risk that a worker would find herself in a disguised employment relationship seems to be more severe in countries with poorest legislation in the matter of employment relationship, and poorest enforcement. Also, apps that are present in several countries (ex.: Glovo), seem to adapt their business models to have more abusive practices in the weakest legal environments. Slow public reaction to redress the situation, coupled with the demand for cheapest services, augments the longevity of their businesses and hence the duration of the impact on workers.

Thus, a related – and perhaps by far the most important factor shaping working conditions – is the business model adopted by each particular app. The elements of such business models include price-setting and remuneration-setting mechanisms, commissions, direct work or work via intermediaries, monitoring of hours, various incentives to continue working, and rating systems. Unlike online work, it is rare that work via an app can be performed several times, or on a prolonged basis, for the same client. Moreover, clients have little say over remuneration. Thus, in a much more systemized manner, it is an app that exercises control over remuneration, while workers are price-takes in this relationship.

The differences in the business models translate into the differences of working conditions across the apps users. In fact, it is because they varied so greatly from one app to another, and from one country to another, that policy responses were quite specific to those apps, to their sectors of activity, and to countries.

Turning to specific examples, Uber systematically practiced the same market-entry behavior in each new market: in order to attract new drivers, it initially set ride rates below the market rates, but subsidized its drivers. Little by little, as the pool of drivers increased, subsidization also went down. The commissions that Uber charges to its drivers, however, did not diminish, and often increased. On average, over 2014-2019, workers of Uber were charged 25% on each performed task. Moreover, in Eastern Europe, workers often do not work directly through Uber apps, but through intermediaries, which also charge commissions. As a result, total commissions may represent up to 40% of earnings. Uber also practices “dynamic price list”: it offers higher rates when there is a particularly high demand for drivers, such as on Friday and Saturday nights.

There are several immediate consequences of this business model. First, over time, earnings of Uber drivers diminished. To earn a decent living, workers have to put increasingly greater hours into this work – to the detriment of their own health and the safety of passengers. Second, because of the dynamic pricing, workers are selecting to work during atypical hours, including at night. The presence of intermediaries can also lead to various types of abuses, including arbitrary additional charges, withholding of payment, and general pressure on any voicing of workers’ concerns.

Evidence from Poland shows that Uber drivers work on all week days, and especially on week-ends, for 12 hours a day. They regularly drive to the center city from neighboring towns, and sleep in their cars before driving again (Szuba, 2018). In Russia, where Uber was merged with the local Yandex.Taxi, according to the Head of the association Forum Taxi, “if drivers were to follow the labour legislation, they would not earn anything” (Radio Freedom, 2018). Workers of this joint app had to work up to 70 hours per week in 2017 – 2018 in order to be profitable. Some migrant workers practice “shift methods”: they share a car in 12-hour shifts for two to three months, before returning to rest in their home countries, and being replaced by other compatriots. This model, however, is not sustainable for local drivers wishing to work on a permanent basis (ibid). Moreover, it comes with a high toll on health and safety. According to the official statistics, between 2015 and 2017 the car accidents involving taxi drivers rose by 35% (Analytic Center of the Government of the Russian Federation, 2018).

But it seems that it is the business models of apps in the delivery sector that result in particularly drastic working conditions of their workers. For example, UberEats, in addition to practicing similar strategies as Uber for transportation, also often requires that workers perform a certain number of orders per week in order to be paid at all (situation varies across countries). Moreover, UberEats intermediaries may decide whether or not to give a contract to the worker, and when and how to make payments to the worker – sometimes delaying payments or giving payments that are below the incurred expenses (Szostak, 2019). Workers are also required to use their own equipment (cars, bikes, bags), which is not reimbursed by the app (Uber Drivers Facebook Group, 2019; Alekseeva, 2019). Usually they are paid for the delivery, but not for the time they need to return, even if the delivery is outside the city. As a result, not only pay for work is meager, but workers may also find themselves in debt towards intermediaries (ex: Poland: Szostak, 2019).

Yandex.Food, which purchased Uber.Eats in Russia, as well as its main competitor in Russia, Delivery Club, have similar practices. In addition, workers of these apps do not have the right not to work because they are sick or want to go on holidays: they may be disconnected, have their rating diminished because of interrupted availability, or even receive a fine because of “absence” or “being late at work” (Petljanova, 2019). Delivery which takes longer time than that calculated by the app results in financial penalties. Anecdotal evidence shows that workers of these apps may be working up to 12-14 hours a day, covering 40 to 60 kilometers per day by bike or on foot. In 2019, there was a case of a death from a heart attack of a 20-year old worker in Saint-Petersbourg during the delivery of Yandex.Food, and another death of a delivery worker of Delivery Club (Petljanova, 2019).

Another example is Glovo, a Spanish courier app that operates in Croatia, Romania, Serbia, and Ukraine. It specializes in food delivery (restaurant pickup), supermarket purchases, and small parcels delivery. Workers can work either with their own transportation, or lease the transportation from the company. They also have to purchase the equipment (delivery bag).

In Ukraine, when the company stepped into the market, it offered hourly pay and a system of bonuses for more than 10 deliveries per week. But once it attracted a sizeable number of workers, it switched to payments per order and per kilometer, with payments disbursed once a week. Moreover, a new system of bonuses was applied, with bonuses available starting from 20 deliveries per week (Glovo website; Dudin, 2019, Movchan, 2019). The app is changing both the rates, and the rules on bonuses, unilaterally, while workers unhappy with such changes are asked to leave the app. Their working hours are regulated by an app: it switches off a user for “one hour lunch break” if work is performed for over 8 hours per day. However, it also decreases ratings of those who take breaks more often. Workers are also given specific instructions about transporting food, and about their clothing (ibids). There is also evidence that the app has access to other apps installed on a worker’s phone. It can thus monitor comments about Glovo made on social media. Upon those, it can unilaterally close a worker’s account, for example, in case of “negative’’ comments on Facebook, as stated in its Terms and Conditions (ibids). But despite all attributes of the employer, the app does not recognize that it enters into an employment relationship with its workers. Thus, workers are responsible for their own insurance, social security contributions, and paying taxes. The company is not checking compliance with these obligations. In some countries, like Ukraine, the app operates in a particularly abusive way, setting hourly rates and bonuses below the minimum wage rate (ibids).

As a result, in order to gain meaningful living, workers have to work very hard and put substantial hours into this work simply to break even. This comes with a very high toll on health and safety. For example, in Ukraine, it is estimated that the average time to make a delivery with Glovo is 45 minutes. To complete 100 deliveries, for which one can get the greatest bonus, a courier must work 75 hours a week - 11-hour shifts everyday without a day off. This is under the conditions that orders come smoothly, which almost never happens. In reality, workers need to spend 14 hours a day, seven days a week to get the maximum bonus. The fact that no bonuses are paid for less than 20 rides per week also mean that it is not profitable to work for the app as a part-time activity (Movchan, 2019).

Workers are complaining about being mistreated by the company. They also report extreme tiredness from this work, despite the fact that most of them are 20-30 year-old men. There is also a reported case of a Glovo courier death in a road accident, possibly because of the pressure to deliver fast and not being attentive. The courier’s family did not receive any compensation (ibid).

Given this, it is clear that policy responses need to address the issues of working conditions simultaneously on several levels: clarifying workers’ status in employment vis-à-vis the apps, regulating working conditions regardless of the status in employment, and addressing the informality and professionalization issues through tax, social security, and competition laws. The next section examines country-specific examples of such responses.

4.1 Collective responses: challenges of representing and organizing digital workers

Traditionally, one of the first steps towards creating regulatory responses for any new type of work has been worker organization, representation in new or existing trade unions, and collective bargaining. However, the development of digital markets has so far faced challenges of both organization and representation worldwide (Johnston and Land-Kazlauskas, 2018).

The key challenge, first and foremost, includes the fact that most of the digital workers, whether those working online or offline, are classified as self-employed. As such, they fall outside of the scope of existing labour laws regulating employment relationship. Usually, they legally cannot be part of a trade union. Collective bargaining agreements often cannot apply to them, and they do not have a clearly attributable employer who would serve as a collective bargaining counterpart. Another key challenge is practical. It is related to platform fragmentation and dispersion of workers across different platforms, sectors of activity, and types of performed work. Most of the digital workers do not know each other, and their interaction is virtual at best. Furthermore, as many digital workers perform a variety of activities, sometimes in different sectors, it is not always clear which trade union could best represent their interest.

These challenges are common to all countries worldwide, including Eastern Europe (Akgüç et al., 2018; ESDE, 2018). For example, in Poland, until very recently, self-employed or those working under civil contracts officially could not be a member of a trade union (Sienkiewicz, L., 2019). The situation may be changing following up the Constitutional Tribunal’s judgment of 2015, which ruled that the limitation of trade union membership to employees is unconstitutional, and that any worker who is not an employer, can be a trade union member. The ruling is yet to find its way into the legislation regulating trade unions’ activities (ibid). In Slovakia, trade unionists argue that the “structural obstacles” within their traditional organizations prevent digitals workers to join the unions (Sedláková 2018).

Throughout the world, three main response strategies have been played out. They included addressing worker misclassification actions; where possible, extending collective agreements to all workers in the sector regardless of their employment status; creating new alternative organizations of digital workers (Johnston and Land-Kazlauskas, 2019). The role of existing traditional trade unions has been paramount in this regard.

However, recalling the regional context can help nuancing why these strategies have been very modest in Eastern Europe so far and why, unlike Western Europe, trade unions have not been very active yet with respect to digital workers. The first reason is the general weakness of trade unions. Since the collapse of the communist regimes, trade unions have been largely seen as a legacy of the past. Trade union membership has been continuously declining (Figure 4.1). Looking at most recent available data, the regional trade union density rate is just below 20%; it is below 10% in Hungary, Lithuania, and Estonia. In some countries, it is also particularly weak or inexistent in traditional sectors of accommodation service or transport – precisely where the digital work is spreading (Hungary, Slovakia: Kahancová, Meszmann, Sedláková, 2019). In some countries, such as Romania, trade unions were further weakened through legislative changes adopted during the crisis (ETUI, 2019). Limited number of trade union members, limited capacities and funds, contrasted with the high investment necessary for organizing a dispersed and fluid pool of digital workers, mean that collective responses to digital work remain limited or inexistent.

Figure 4.1 Evolution of Trade Union Density Rate (in per cent), Selected Eastern European Countries

Source: ILO STAT.

Another reason is that, with the persistence of informal employment and the rise of various forms of non-standard employment in the post-crisis decade in some countries (Kahancová, 2016, Meszmann 2016), work though apps is largely seen as a general continuation of the informalization and precarization trend. This is partly due to the fact that this work enters mostly into labour market segments that are already flexible. As such, it is not necessarily seen as something novel in the society, but rather as a simple mediation by technologies of an already existing situation (Kahancová, Meszmann, Sedláková, 2019 witness this in Slovakia and Hungary; Owczarek, 2018 observe the same phenomenon in Poland). Hence, it does not necessarily provoke an out-cry neither in the society, nor among tripartite partners.

In addition to this, and as shown throughout the paper, there is a great disparity between workers working through digital platforms online and offline. Those working online are rarely interested in being organized (at least in the currently existing structures). This especially concerns online workers who position themselves as genuine freelancers, who truly benefit from the advantages that the platform work offers to them. Those for whom this work represents the main activity often chose it in order to escape abusive employment relationships in local labour markets (Aleksynska, Bastrakova, Kharchenko, 2018). They are also the ones who usually enjoy higher earnings and overall better working conditions as compared to what is offered in the local labour markets. As such, they are not unhappy with the development of digital work and do not seek its regulation.

At the same time, for the vast majority of workers, digital work represents only a secondary activity in all reviewed countries (ibid; Pesole et al., 2018; Akgüç, et al., 2018; Kahancová, Meszmann, Sedláková, 2019; Owczarek, 2018). Thus, digital workers often rely on income security, social security provisions and other protections offered to them though their main job in the traditional sector. They do not seek labour protections in the digital labour market other than protections against non-pay, which are often remedied without involving trade unions, with the help of the platforms.

For workers operating offline through mobile apps, there is generally also a low awareness of trade union activities, and of the fact that worker interests can be represented by anyone. This is particularly true of young workers who are over-represented in some apps, but also of migrant workers, who either do not know about their rights, or do not speak the language, or are only interested in working temporarily (ibids; ESDE, 2018; Dudin, 2018). Trade union activities are also time-consuming. Some apps workers mention in interviews that they cannot afford spending time on such activities even if there were opportunities to do so (Akgüç, et al., 2018).

The void of trade unions’ response is somewhat filled, in some countries, by guilds-type and association-type actors. For example, in Hungary, there is an association of individual accommodation providers (MAKE- “Magyar ApartmanKiadók Egyesület” (Association of apartment rentiers). It serves mainly as a collective voice in face of the local government. Some of its actions concern providing information, training, and awareness-raising for accommodation providers operating through online platforms (Kahancová, Meszmann, Sedláková, 2019). In Slovakia, civic association “Vitaj Doma” (Welcome Home) was founded by AirBnB services providers. Its main functions so far consisted of providing a forum for exchanging information, including about regulatory changes and tax requirements (ibid). Online forums and social media groups have also flourished to exchange information about various aspects of online work (ex.: BeFree Facebook group for Ukrainian freelancer, counting over 40.000 active users).

This situation may be changing, however, as platform work generalizes. Indeed, there is evidence that the maturity of digital markets is what makes the difference for the trade union response. For example, in Poland, the phenomenon of digital work simply has not gained momentum yet, while other issues tend to dominate public debate and tripartite dialogue. Those include harnessing general over-flexibility of the labour market, general regulation of the excessive use of civil contracts, and improving working conditions for all workers, such as appropriate setting of the minimum wage (Sienkiewicz, L., 2019).

Importantly, it is also the business strategies and actions of some specific platforms that can provoke specific reactions on behalf of digital workers and of the existing trade unions. Some platforms are more aggressive and value-extracting than others. Their unilateral actions that substantially worsen working conditions can provoke collective response. For example, after Uber and Yandex.Taxi in Moscow raised commissions, drivers organized a 3-day strike in 2015, and another strike in 2017. However, the protesters were not numerous, and their concerns were not heard (Radio Freedom, 2018). Since July 2018, Glovo couriers organized three protests in Kyiv (Movchan, 2019). They protested against a particularly aggressive business model with the clear signs of violating the existing laws and engaging workers in a disguised employment relationship. Yet, the only reaction that they obtained from the app owners was their bans from the Glovo app. In response, couriers set up a trade union of delivery services workers, supported by the Ukrainian Social Movement NGO. While this trade union has no specific rights in Ukrainian law so far, it is also one of the very few examples of workers organization in the digital economy. Their main task as of now is to prove that their relationship with Glovo should be considered officially as employment (ibid).

Where unions have been unanimous throughout the region is in the personal transportation sector. Entry of Uber and Uber-type applications (such as Car.Go in Serbia) into the local markets provoked a general outcry of traditional players in this market. However, most of the demands did not concern working conditions of drivers. Rather, they focused on protesting against unfair competition practices of those applications that allowed drivers to work without proper professional licenses, insurances, and other obligations that the professional actors in the sector have to comply with. Also, they were aimed at fighting against unfair price setting that some companies practiced, such as dumping of transportation services in exchange of subsidizing drivers in order to break into the market.

4.2 Regulation through labour law: determination of the existence of an employment relationship

The question of worker classification is at the heart of the digital workers protection in all countries of the world (ILO, 2016). It also concerns workers in Eastern Europe, and especially those who find themselves in various forms of dependency from a platform or an app. Appropriate classification of workers as employees rather than self-employed can help granting workers the rights that they are due under the existing labour laws. In their turn, clear laws on the determination of the existence of an employment relationship, and their proper enforcement, can reduce incentives for companies to have an abusive recourse to self-employment. They can also reduce incentives for the apps developers and owners to build their business models around the possibility of relying on disguised employment relationships.

Some countries of the region do not have specific legal provisions on the determination of the existence of an employment relationship. Moreover, the topic seems to be quite sensitive. For example, when in 2018, the Ministry of Social Policy of Ukraine put forward a law proposal on the determination the existence of an employment relationship – a law proposal that was closely based on the ILO Employment Relationship Recommendation No 198 – it created a large wave of protests on behalf of the workers that it intended to protect. Many online workers saw this as an attempt of the government to “cut” platform work, and a threat to the flourishing IT sector where self-employment is omnipresent. But for other workers, such as those working through apps and more often being in the grey zone of disguised employment, this meant that it is not easy to bring claims to court (Dudin, 2018). The problem of worker reclassification in Ukraine is also exacerbated by the absence of specialized labour courts, and hence of experienced labour law practitioners and judges who would be able to mainstream the reclassification cases.

Other countries, such as Romania, were more successful in this regard. When the share of self-employed hit over 40% in the country in the mid 2010-es, the country managed to adopt legal instruments establishing a series of criteria to determine the legal nature of a work relationship. Interestingly, the legal change was integrated into the Tax Code rather than the Labour code. Also, instead of listing the criteria for an employment relationship, the new provisions rather list the criteria of qualifying as a true freelancer (at least four out of seven conditions have to be met: Roşioru, 2019). In addition, in 2018, a law on teleworking was adopted, setting up very clear definitions and conditions of this activity. Importantly, this law, coupled with the reformed social security provisions, according to which social security contributions are paid only be employees, sets substantial incentives for certain platforms and clients to award their workers the legal status of an employee (ibid).

4.3 Regulation through labour law: New provisions specifically addressing digital work

Local app-based platforms mediating offline work and online platforms often require different types of regulatory responses. Work performed through the local app-based platforms is mostly local in nature. As such, it can be rather successfully regulated at the national level. The caveat, however, is in the enforcement of such regulation: it may be jeopardized by the foreign ownership and non-national location of the apps’ managers. In its turn, online work performed through online platforms exists at national, regional, and international levels. As such, it would benefit the most from the regulation on these three levels. Yet, regional and international cooperation in the area of labour law regulation of online work so far lagged behind the development of online work. More generally, as the phenomenon of digital work is still quite new, regulations of working conditions by means of labour laws have so far been rather disparate.

Of all reviewed countries, any specific attempts to regulate work though local app-based platforms, by means of labour law, were found only at the national level, and only in the Russian Federation. Here, a law is currently being discussed in the parliament (second reading: end of 2019) about working conditions in the transportation sector. Among other issues, the law proposes to limit the working hours of taxi drivers (both traditional and those working through apps), including tracking whether they switch between different apps; monitoring their tiredness with special cameras installed in the vehicles; prohibiting employment of foreigners; and prohibiting driving without licenses by imposing fines on the apps rather than on drivers.

Regarding online platform work, similarly, as of 2019, only national attempts to regulate such work were found. Most of them are still at the negotiation and proposal stages. For example, in Poland, an attempt to address the issue of platform work under the Commission for the Codification of Labour Law has ended without any conclusions (Owczarek, 2018).

Perhaps the most (if not the only) advanced efforts to regulate online platform work by labour law is found in the Russian Federation. In 2013, its Labour Code was amended by the Federal Law N.60-F31 to include Chapter 49.1 “On distinctive features of remote work of employees” (Filatkina, 2015; Lioutov and Tsypkina, 2018). The new chapter aimed specifically at legalizing and regulating “on-distance”, “remote” labour relationship that are mediated by digital technologies, and Internet in particular. Article 312.1 of the Labour Code defines its scope of application as pertaining uniquely to work performed outside of employers premises and outside a standard workplace controllable by an employer, and for which ICT networks are used for communication between the employer and the employee on execution of a job. Remote employees are considered to be those who concluded a work contract about remote work, and should be normally covered by labour law, taking into account the particularities of this work. They should receive a salary, rather than civil-contract-type compensations, have a right to paid leave, and be considered as staff. The control over employee is performed remotely, with electronically set milestones and deadlines and sent work by those dates considered as proofs of work being done (ibids). The remote employees thus defined are different from home workers, which are also regulated by the Labour Code. Differences, among others, include the workplace: for a home worker, the workplace is the employer’s organization, while for a remote worker, the workplace is his or her own home, without territorial limits (ibids). The list of works to be performed remotely, however, is not fixed by the legislator.

These new provisions also grant remote workers a number of exemptions from the general rules applicable to hiring and execution of employment contracts. For example, the parties are allowed to exchange documents in an electronic form (“electronic documents”) as long as they are authenticated with a so called “reinforced qualified electronic digital signature”, which in Russia are formal legal terms also defined by legislation. They are also allowed to abstain from maintaining “work books” - the official track record of a worker’s life-long experiences, which all employers and employees are obliged to keep. Finally, the law allows a remotely working employee to set his or her own work and rest regimes in a unilateral manner (Gerasimova, Korshunova, Chernyaeva, 2017).

Other particularities include provisions on confidentiality and information protection clauses that should be part of the employment contracts of remote employees. They should concern the company information accessed by the remote worker, but also that is produced by the remote worker for the company. Thus, the law forsees that both remote worker and employer should follow the rules of information safety. Personal computers of remote employees can be equipped with crypto-protection systems, preventing information sharing with third parties. In return, a remote worker can ask for a purchase or amortization of computer equipment necessary to execute work (Lioutov and Tsypkina, 2018).

Yet, the new regulation is seen only as a first step towards creating a real regulatory field of online work. Some Russian lawyers consider that the concept of remote work was defined too narrowly, as it does not cover remote work performed for an employer located outside of the Russian Federation. As a result, there are currently no provisions on the rights and obligations of workers operating remotely across borders, and neither there are provisions to guarantee equal treatment or safety (Gerasimova, Korshunova, Chernyaeva, 2017). Moreover, for the new provisions to be effective and complete they have to be supplemented by a series of amendments, including a possibility to execute remote (telework) arrangement only on a part-time or temporary basis, otherwise combining it with regular work with the same employer; the “right to disconnect” (Lioutov, 2018); more clear regulation of working time of remote workers ; and a more clear set of criteria of proving the existence of an employment relationship (Lioutov, 2019). The subordination criteria, necessary for establishing an employment relationship, should also be complemented by the economic dependency criteria, as well as by acknowledging the asymmetry in economic powers of both parties of the agreement (ibid). Some scholars also regret the abolishing of “work books”, suggesting that technologies allow to have “electronic work books” (Kurennoy, Kostyan, Khnykin, 2017), which may be a useful tool for proving online work experience and for claiming social security (particularly pension) rights.

4.4 Fair competition, tax compliance, and other regulatory responses

In addition to the issue of status in employment and working conditions, the emergence of digital work was accompanied by the concern regarding the legal status of workers and of the platforms through which they operate. The concern is that, under the pretext of being a “new” mode of work, these platforms and workers actually get a competitive advantage by avoiding various local regulations required to enter the market in a given segment. In addition, tax avoidance and under-reporting of income by workers operating via online platforms of any sort are often an issue.

4.4.1 Regulatory responses to local app-based platforms

The main issue with the local app-based platforms is that they often claim to be only a technology service. For example, this was the case of Uber and Uber-type applications, who refused to acknowledge that they are a transportation company. As such, they claimed to fall out of the scope of current national legislations regarding the licensing and insuring of drivers and of their vehicles. Thus, they refused to be bound by the same legal obligations as other traditional market players in the sector, despite de facto providing the same personal transportation service (Duncan et al., 2016). The concern, however, is that by doing so, they practice unfair competition with respect to the licensed services. Similar concerns are voiced with respect to platforms for short-term property renting. They allowed some private individuals to compete with the professionals in the hotel industry, but without having to comply with all the safety and hygiene regulations of the sector, and hence undermining the business of the latter.

A related issue is fiscal obligations and taxation: platforms are open to participation of non-professionals and are not checking whether those non-professionals are paying taxes. This adds to the unfair competition concern, but also results in omnipresent tax evasion and income underreporting. For example, in Hungary, official complaints were brought to court claiming that Uber Hungary Kft. as the subsidiary of Uber International Holding B. V. (registered in the Netherlands) carried out their activities without meaningful tax payments (Duncan et al., 2016).

Thus, several countries reacted to the development of the digital work first and foremost by reconsidering what legal status such applications and platforms should have.

Regarding the local app-based platforms, regulatory responses were undertaken on both national and regional level. A key example of the regional regulation is the EU-level European Court of Justice 2017 ruling (Judgment in Case C-434/15), on the status of applications that provide intermediation service in the field of passengers’ transportation, such as Uber. According to the Judgement, services provided by such applications must be regarded not as ‘an information society service’ but as ‘a service in the field of transport’.

This ruling became important source of law for the EU-member states, including Eastern European. It allowed them to extend the scope of the existing sectoral (transportation) laws to Uber-type applications. For example, Slovakia’s court referred in its decision to this European Court of Justice 2017 Judgement, ruling that Uber should be viewed as a transportation company and hence comply with the existing laws on professional licensing of drivers and safety requirements for the cars. (Reuters, 2018). Hungary amended the existing law on transportation to bring Uber-type companies under the scope of the existing regulations. Such legal changes meant that all drivers had to comply with professional licensing and insurance obligations. Some other non-EU countries of the region, such as Belarus and Serbia, adopted similar modifications.

However, some other countries adopted different national responses to the unfair competition claims against local app-based platforms (Table 3.2). The Baltic States responded to unfair competition complaints by putting everyone on an equal – liberalized – ground, but in exchange for tightened obligations to declare activities and pay taxes.

For example, in 2017, the Estonian parliament passed a law that outlines the conditions of providing transportation services mediated by digital electronic platforms and regulates their position to traditional taxi service (National Training Fund, 2017). As per this law, neither traditional taxi drivers nor new digital providers have to comply with the previously required conditions of professional training. Rather, they have now an obligation to ensure their own training provision to their drivers. In addition, the Estonian tax and customs committee (EDCR) initiated a pilot project for the transportation sector, in cooperation with Uber, to connect the digital payment system of the digital transportation provider directly to the EDCR digital tax system. This has a double effect of reducing undeclared payments and substantially decreasing the administrative burden for service providers (ibid).

In a similar spirit, Lithuania amended its Road Transport Code in 2016. New provisions allow passenger transport to be organized by both natural and legal persons in both taxi and ordinary passenger cars. In return, the passenger transporter must provide the passenger data to the road transport control authorities, declare the service to the municipal authority, and declare the income received from these activities to the State Tax Inspectorate. The requirement for passenger transport operators to obtain a permit to carry passengers has disappeared from the Code (Verslo Zinios, 2017; OECD, 2018b).

Latvia amended its Road Transport Law in 2017 (with effect on March 2018). On the one hand, the Act establishes equal licensing requirements for any personal transport-operating entity. The Act and its accompanying secondary legislation provisions also oblige “ridesharing” apps to accept only electronic payments, and to register in the Enterprises Register as legal entities providing full accounting of business activity. On the other hand, the Act liberalized and simplified the process of obtaining licenses (OECD, 2018a).

In case of property-rental apps, there was also a range of national responses, similarly framed around the issue of fair competition, taxation, and bringing workers under the scope of existing regulations in the tourism and accommodation sector. Differently from Uber, however, some of the regulations may be implemented at the city and district levels. Some additional regulations also come in response to the price escalation of rented properties and a resulting depopulation, disturbing neighbors and pollution. For example, in Prague (Czech Republic), municipal authorities can charge private hosts a fine for failing to register with their local tax office. Despite this tax regulation, municipal counselors are also calling for a more global and comprehensive approach to regulating the work of mobile apps. In 2018, they launched a petition urging authorities to address the unfair competition in the hospitality sector (Kafkadesk, 2018). If, in response to this, legal changes will be implemented to classify hosts of Airbnb and other similar platforms as accommodation services, the hosts will have to comply with the Trade Licensing Act. They will be under obligation to declare performance of a trade to the Trade License Office and paying an administrative fee. Failure to do so would constitute an infraction and the offender would faces a fine. Providers would also have to levy radio and television broadcasting fees. In addition, hosts would need to report to the foreign police department that a non-EU national has been provided with accommodation, within three working days after the provision of accommodation, and to maintain a guest register. Failure to do so would constitute an administrative offence subject to a fine (Ecovis, 2019).

In Hungary, some municipalities of the central districts of Budapest amended their local townscape regulation. Pursuant to the amendment, unless a local condominium's bylaws explicitly allow the registered use of a given unit to be changed from "residential" to "temporary accommodation", such a change is not permitted. This is seen as an obstacle for private hosts, as in the absence of explicit permission in the bylaws, they may not be able to start their Airbnb business. The Supreme Court of Hungary ruled that a condominium is indeed free to prohibit or restrict other uses of units to ensure uninterrupted residential use. To enforce compliance with the prohibition or restriction, the condominium may sue a private non-complying host (Schoenherr.eu, 2018).

4.4.2 Regulatory responses to online work through online platforms

Online work through online platforms faced a somewhat different set of issues. If income under-reporting and tax non-compliance are important, related concerns are also raised with respect to the possibility of transferring money from abroad altogether, and administrative registration of “online freelancers”.

As of 2019, no regional or international regulation seemed to address these issues. On a national level, attempts to formalize online “freelancers” by improving their tax compliance are found in Ukraine. Here, the 2016 law (No 4496) marked the first step towards decreasing administrative barriers for the “export of services” and somewhat simplified the legal procedures for doing business of online entrepreneurs. As such, this law was a move towards legalizing online freelance activity for foreign clients, which previously completely fell outside the scope of legal regulation (Ain.ua, 2017). Still, many freelancers struggle to understand cumbersome administrative rules and monetary regulations for cashing money for their work from abroad. More regulatory progress is expected in the nearest time in the area of foreign currency regulation, to allow for money transfer through intermediaries (and online platforms are often seen as such), and to abolish the obligation to immediately convert foreign currency into the local currency in case of direct transfers from clients. Those regulations are expected to reduce the practice of transferring online earnings to foreign, rather than Ukrainian, banks, with their subsequent cashing abroad.