Latest proposals on social security for platform workers
Globally organised work needs a global social security system.
Dr. Sch.-W. – 07/2019
Professor Enzo Weber, Head of Research
at the Institute for Employment Research, is taking a trailblazing approach to
the debate on the future of social security. The European Social Policy Expert
Group, consisting of representatives from the umbrella associations of the
German social insurance system, have already had the opportunity to discuss his
proposals thoroughly (see article Oct 2018).
Digital Social Security
Weber’s concept has now been revised
and a more detailed, refined version of the global and standardised Digital Social Security (DSS) model is now available. It was
published by the Hans Böckler Foundation in May 2019 under the title ‘Digital
Social Security – Outline of a concept for the 21st century’. The latest
version clearly shows that it is about more than simply shifting certain
administrative processes to the international level. Rather, the scope and
level of social protection for certain economic sectors has to be restructured
on a global level and, if the model is successful, the power of the
participating countries to structure social security has to be partially
At the core of Weber’s model is a
global DSS account for each individual platform worker. Each platform operator,
regardless of their location, transfers a certain percentage of the worker’s
remuneration from their platform work to this account, where it is held
temporarily. The system could be administered by an international institution
such ad the World Bank or the ILO. The
DSS account ‘collects the globally generated contributions and transfers them
on a regular basis to the social security system of the platform worker’s home
country.’ The responsible social security institutions would then divide the
incoming funds among themselves, possibility with the consequence that the cash
benefits generated from this, such as pensions, would be reduced
more details see our background
A version of the German Artist’s Social Insurance Fund?
Even if Weber does not want his model
to be confused with the ‘creation of a new fully-fledged international social insurance’, it is much more than
an international collection agency working on behalf of the social security
institutions. Weber would even forego the DSS account and allow direct
contributions to be transferred to the national systems, as long as the
principle of a uniform contribution rate is maintained. In essence, the model resembles
an international version of the German Artists’ Social Insurance Fund (KSK),
although Weber does not refer to this at all. It is not necessary to fully understand
the somewhat peculiar structure of the KSK in order to use it as a comparison. It
is enough to know that the Fund deals with artists in the true sense, but not
only artists; it is certainly not a fund in the traditional sense of a social
insurance institution, such as a health insurance fund; and the social element
consists in particular of a massive subsidy from taxpayer funds.
The KSK collects contributions and
subsidies, then transfers them to the competent ‘traditional’ social insurance
institutions, which provide insurance coverage according to their general
rules. Like the DSS model, all contributions are collected from market operators;
like the DSS model, benefits are claimed from the user due to a lack of
employer; like the DSS model, the ‘generator of income’ gains access to
high-quality social protection at extremely favourable conditions; and like the
DSS model, the endemic financing gaps must be filled by an anonymous
It is therefore understandable that the
KSK model is greatly popular on all sides of the German platform economy. Weber
takes up this unseen thread and weaves it consistently on a global level,
beyond the purely national dimension.
EU Digital Single Window
Weber’s concept has now been taken up
and further developed by a High-Level Expert Group appointed by the EU
Commission. It has proposed the creation of a Digital Single Window by the
European Union. The aim is to exchange the social security and tax-relevant
data of self-employed persons who work for multiple clients via electronic platforms
and all other types of labour market intermediaries. Platform operators would
have to automatically transmit all relevant income data to the Window in a
standardised format, regardless of where the client is based or lives.
The Window would then forward the data
to the national institutions responsible for taxation and the collection of the
social security contributions of the platform worker concerned. From the point
of view of the platform operator, the project would also have major advantages
because it would simplify reporting and compliance, regardless of whether
national law requires the operator or (typically) the self-employed platform
worker to report income.
The aim of this European solution is to
prevent platforms from having to report to a large number of national institutions
– a step towards the completion of a harmonised Digital Single Market. However,
it should be explicitly left to the Member States to decide whether they want
the system or not. What Weber sees as the core of a global Digital Social
Security model would be optional according to the proposal of the High-Level Expert
Group, namely a module that would enable platforms to collect contributions at
the source on behalf of the competent institutions and pass them on to these
authorities. This variant would also have the advantage that it would not
interfere with the competence of the Member States to define the contribution
rate themselves, including for platform workers.
Which country is ultimately responsible?
The question of the geographical
location of the country ultimately responsible for the social security (and
taxes) of the platform worker must be strictly separated from the issue of
establishing a digital account of any kind. This is no trivial matter, because in
the event of any doubts it also determines the level of benefits and, if one
follows Weber’s DSS model, it determines which country has to bear the burden
of underfunded social security. In principle, there are three possibilities:
the place where the service is produced, the place of residence of the
recipient of the service, or the place where the service is delivered.
According to the applicable rules, the
place where the service is provided is the ‘place of work’. Obviously for
practical reasons, Enzo Weber would like to start with the service provider’s
country of residence, which would normally be the same country where the services
are provided. Such a regulation would be contrary to the system, but could be
steered in the right direction with a little effort.
This would look quite different
according to a model proposed by Joachim Schuster, Member of the European
Parliament. He would like platform workers to be subject to the rules of the
Member State in which the service is physically or digitally received for the
duration of the service provision. This approach is difficult to implement, but
not inherently inconsistent, because it follows the country of destination
principle of the European rules on the posting of workers and the Services
Directive. It is only somewhat surprising because it comes from a Socialist MEP
and not from business representatives.
Consumption makes you rich – production makes you poor?
It should also be mentioned that the
topic plays a role in the macroeconomic debate, namely in the issue of which
countries are net payers and which are net recipients in the European ‘fiscal
adjustment’. In a publication for the left-wing network Social Europe, a
Portuguese economist argued that net payers in Europe were not those countries
whose domestic exports exceeded imports, but that the true correlations had to
be looked at the other way around. The largest net contribution comes from the
countries that import the most or, to put it another way, those that consume
more than they produce.
This thesis may be considered somewhat
audacious, because, according to this model, if all European countries were net
contributors, the EU as a whole would be financially dependent and externally
controlled by the producing rest of the world. This would mean that social
security could not be sustainably financed either nationally or by the EU.
However, this thesis is part of a more general trend. At the centre of value
creation, the role of the producer is becoming less and less important and that
of the consumer more and more prominent - for example, as a ‘co-producer’. This
will initially have consequences for global tax rules, followed by a flow-on
effect to social security.