- Internal Code :
- Subject Code : BUSM4689
- University : RMIT University
- Subject Name : Economics
The Multinational Enterprise in Global Production and Trade Networks
Needless to say, with the technological advancement the labour market is changing. There are no jobs left that are safe. The way people work is coming to an end. The digital platforms have potential to bring a change in the employment landscape. There is fear among the workers with growing innovation in technologies. These fears has an impact on jobs which is around automation, technology, artificial intelligence (AI) and robots. There is no clarity in the knowledge of job creation due to advancement in technology. Apparently, millions of jobs could be lost due to technology advancement or million could be created as well.
It is said that platforms and advancement in technology would more likely change jobs rather than to eliminate them. There is no doubt that digital platforms such as Amazon, Uber, Microsoft, Apple have reduced the need for routine mechanized work. This change has also led to increase in the demand as well as pay for the high skilled technical and analytic work. There are lot of transformation in the work due to advancement in technology. These days, phone and interactive voice response menus are used instead of switchboard operators. Self checkout machines are being used instead of the store grocery clerks. There are chances that in the coming years with the changing and evolving technology, even truck drivers, surgeons and paralegals would see their works upended.
In the current and coming environment, it is forecasted that the jobs related to technology would only be the occupation that could guarantee security in job as well as growth in the job. However, there are jobs in the personal care and the industry of medicine which is growing even at a higher pace. It is undeniable that all the industries have felt digital disruption from digital age. Across all the markets, the new tech companies have taken place. They have also eroded the profits of various enterprise companies.
The occupations which are seeing a downfall and are fastest declining are engine and other machine assembles, legal secretaries, data entry keyers, electrical and electronic assembles, postmaster and mail superintendents and word processors and typists. On the other hand, the occupations that are seeing growth or are fastest growing from 2016 are home health aides, nurse practicioners, statisticians, software developers, applications, medical assistants and information security analysts. These are the employment projections that are collected from Bureau of Labor Statistics. It has been shown by researchers that there is going to be decline in the manual labour in the coming years. However, there will be increase in the demand of cognitive, social and emotional skills.
With the emergence of digital platform economy, there is a wide range of human activities enabled by creation of online structures. The whole structure has been modified, that is, the way business works, the way people socialise and create value in the economy. It has also changed the way of competing for the resulting profits. There is diversity in the structure and functioning of the digital platforms such as Amazon, Etsy, Facebook, Uber, Salesforce and Google. Platforms which offers social media and search are Facebook and google. Amazon, Etsy and eBay are marketplace. There is reorganisation of our economy and the owners of the platform are seemingly in the process to develop more power.
When the digital era unfolded, there were skeptics that the new technologies would lead to undesirable impacts. It is yet to determine whether we would have a utopia or dystopia. One of the way to assess and determine the outcome is to look at the impact on employment and the character of the work. It is the duty of the society to take steps and choices to deploy a technology in such a manner that would be critical to shape the final impact. It is said that in the future, the existing jobs would be reorganised and redefined. It is possible that the character of the work would be reframed but would not be eliminated completely by digital technology.
The debate that whether the digital platforms have led to cretaing or destroying jobs is never ending and there will be no concrete answer to it. However, there are traces and evidences which can suggest an outcome. There is diversity in the structure and functioning of the digital platforms such as Amazon, Etsy, Facebook, Uber, Salesforce and Google. Platforms which offers social media and search are Facebook and google. Amazon, Etsy and eBay are marketplace. There is reorganisation of our economy and the owners of the platform are seemingly in the process to develop more power.
One of the market which could be affected by the digital platforms is automobile industry. However, there is no doubt that digital platforms open entrepreneurial opportunities. But as Robin Chase at Zipcar introduced an economic as well as social model of digitally enabled car. This model would not only lead to a fall in the demand of production of auto, but would also impact the automakers dramatically. Thus, such sharing solutions could have a detrimental effect on the entire market. An other example of this is book and encyclopaedia publishers who are finding this sharing solutions to their dismay. Thus, "sharing economy" has become a much debated topic. Many digital platforms like Uber, Airbnb, Helplin are disrupting the industries by describing the industries as user- unfriendly. They are claiming to create new services that are much more efficient and flexible as well. The new digital platforms work as a bridge between the supply and demand and provide several valuable and beneficial things. They help to make available goods and services across the world and that too within seconds. These platforms also reduce the transaction costs and the expenditure of allocating the resources. They also provide a multitude of new services. Thus, we can say that these platforms are the driving force for the innovation in the economy.
It is seen that in many platforms there is a scenario where the entire value created by the users is appropriated by the platform owner. The platform owner becomes a virtual monopolistic as the power is centralised. For the protection of consumers, workers, communities there is a possibility that the political fights would break out. There are many instances of disruption like destroying the security of employment relations for many people. It is a challenge that whether the policies could encourage labor market arrangements. It is not known whether they would provide protection for workers and are efficient by providing decent and sustainable lives for the people. Sometimes the answer to these big questions and debates depend on our choices rather than just on the technology. For instance, whether the cloud technologies lead to productivity growth and improvement in real income. It depends on the believe of people that how they structure the markets, innovate it or protect the communities, clients, workers and the users of the technology. It is up to us to create a world of greater benefits for the citizens and communities and to sidestep a dystopia.
A Good Society is the one which supports the fundamental values of justice, freedom and solidarity. There is a need to come up with new ideas and concepts in order to make the Good Society a reality. There are a lot of criticism for the new platforms. These platforms are dependent on a workforce of independent contractors. The workers that are working in these platforms are at their own risk and are paid low wages. The workers do not have social security too. The responsibility of an employer in these platforms are not taken by the platform providers as well as the clients. The digital platform has an advantage over other forms of businesses. These digital platforms and the providers do not have to pay for the cost of labour or the means of production. Thus, these platforms grow exponentially without facing the same growth in the production costs. They have very low marginal costs.
There are political challenges in these platforms regarding many problems, for instance, privacy, labour laws and data protection. The three sided platform architecture can be explained by an upside down triangle. The one slanting side is the supply side. These supply side consists of independent contractors. The other slanting side of the the triangle is the demand side. The demand side of platform consists of platform clients. These two slanting sides of triangle are opaque user interface and the front end. The upper horizontal side of the upside down triangle is the platform provider. This is the transparent bug data backend. Thus, there are always minimum two parties between which the platform provider functions as the intermediary.
The platforms have to be "disruptive" in order to attract the investors. This means that the platforms have to break up an established induatry or say business model. This is to funnel the profit of the industry or business model into the platform business. This would in turn attract the investors towards this platform economy. In order to maintain the marginal costs as minimal as possible, it is required that the product is virtual. This is to achieve the expected exponential growth by the investors. Flexibilty is one of the promise that the digital labour platforms make to their employers as well as their clients. The independent contractors work as a "contingent workforce" and are available on demand. But as soon as the work geysbogwr they are dismissed from the job. The major issue that needs to be addressed is to establish standard labour laws as well as social security laws that could deter the issue of uncertain pay. It is undeniable that the platform model also provides many advantages over the conventional forms of companies. However, it is essential to distribute the entrepreurial risks as well with the entrepreneurial opportunities. The workers also need to be benefitted apart from the clients and the platform providers. This is not possible without regulation. It is required to do a consistent categorisation and taxonomy of various platform based outsourcing mechanisms.
It can be said that the impact of platforms on the employment relationship is varied and limited. But it is expected that in the future it might have a transformative and potentially harsh impact on employment relationship. The definition of worker in EU law is mentioned in the European Commission's Communication on the collaborative economy. This definition of worker might be applied to the platform workers. Some specific risks that are related to platform mediated work needs to be urgently addressed by the regulatory response. It is unclear about the understanding of the impact of the new platform on the society. The broad definition given by EC was also not specific. The platforms just provide a matching service where it provides an algorithm that allows this effective matching. The effective matching of labour providers and users are done. These platforms also provide services that reduces the risk that are present in market transactions. Thus, by providing such services it addresses the problem of market failures.
There are varied effects on the labour markets. The first one is the reorganisation of the the activities from employment relationship to self employment. The best example of a successful platform which reorganised sectors is Uber. Second, there are platforms that lead to the offshoring of work from the local labour markets. One of the example of such effects is MTurk. The local services includes transportation, hospitality provision, eating out and art. The competition in these platforms could be increased only of there is reorganisation to self employment. This would lead to pressure on the working conditions as well as the pay of the workers. Moreover, platforms also provide an increase in the breakdown of working activities into individual tasks.
The reaction of the policy makers would tell us the impact of the rise of online platforms. The platforms, particularly the ones that are operating in the local labour markets are not beyond the reach of the current regulatory frameworks. This is demonstrated by the experience of incipient regulatory responses. The employment relationship is defined with reference to three main criteria. These are the criterion that EU law guarantees rights to workers: the nature of the work, the subordinate relationship and the remuneration provided. The policy makers need to address the risk which are related to the work that is platform mediated. The workers are categorised into part time, fixed term and agency work. The policy makers need to provide special protection to different workers. The workers that are not qualified as employees should be protected from regulation on self employment.
There is an increase in the politicization of this issue. This increase in the politicization has led to opening of opportunities for many of the relevant actors. These are trade unions, political authorities, traditional and new industries representatives. They are held responsible for defining and designing the rules of the game. This process need to thinking about the obstacles that are between the market and the society, between commercialization and motivating the sharing of public space, between the profit and the welfare aspect.
Marxists political economists emphasized on the platform profits and revenue model. Digital platforms are highly dynamic. It is found by Gillespe that the origins of platform is simultaneously architectural, political, computational and figurative. According to the understandings of political view, the platform is seen as open, neutral, progressive as well as egalitarian. The gig workers demand recognition as full employees on the digital platforms. The protest and litigation by the workers of digital platforms are making aware the public bodies so that they can ensure the labour rights. Recent research tells that the discontent among workers of digital platforms is rising very fastly. The reason for future political backlash would be working conditions, employment status and wages of the digital platforms. The protests by the people are for the gig work as the work does not provide them with decent living and also does not provide with the basic respect that the workers are entitled for.
References for Disruption to Wages and Job Security
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