Are we ready for the Collaborative Economy?  

Collaborative economy cover

Digital Revolution comes with big changes in the future of European Community. Accelerate innovation opened the needs for a Digital Single Market. Digital Europe needs new business models to better fit the regional development and the new competitiveness requests.

Collaborative economy is one of the new and big challenges in the new geopolitical landscape. The development of existing collaborative platforms is a real problem for existing market players and practices, but offers extraordinary opportunities to individual citizens to offer new services, in flexible working arrangements and new sources of income.

Named also “sharing economy”, the collaborative economy covers a variety of sectors and is rapidly emerging across Europe. But Europe should be ready to proactively support the innovation, competitiveness and growth opportunities offered by modernization of the economy. Looking to encourage the development of new collaborative economy model, European Commission very recently announced a set of “Guidance and policy recommendations for the collaborative economy”, activity included in the “European agenda for the collaborative economy”.

 

Digital EuropeThe Guidance offers essential information about the single digital market evolution and shows the European Commission’s support for consumers, businesses and public authorities to engage confidently in the collaborative economy. The Commission will review collaborative economy developments, collect statistical data and evidence and work with Member States to exchange best practices.

The collaborative economy is growing rapidly, with important market shares increases in some sectors. Gross revenue in the EU from collaborative platforms and providers is estimated at EUR 28 billion in 2015. This was a two time growing comparing last year. Collaborative economy could add EUR 160-572 billion to the EU economy, according experts estimations.

What is Collaborative Economy?

In a short definition „collaborative economy” refers to business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals. Collaborative economy transactions generally do not involve a change of ownership and can be carried out for profit or not-for-profit.

According EU Commission, the collaborative economy involves three categories of actors:

  • service providers who share assets, resources, time and/or skills — these can be private individuals offering services on an occasional basis (‘peers’) or service providers acting in their professional capacity (“professional services providers”);
  • users of these
  • Intermediaries that connect — via an online platform — providers with users and that facilitate transactions between them (‘collaborative platforms’).

5 Key issues in collaborative economy development

collaborative systemMarket access requirements – creating new markets and expanding existing ones collaborative economy businesses affect markets traditionally served by classic service providers. According existing EU law, collaborative platforms and new collaborative service providers can be subject to market access requirements (business authorizations, licensing and quality standard requirements);

Liability regimes – according EU law online platforms – as providers of digital intermediary services, are under certain conditions exempted from liability for the information they store. This exemption from liability applicability will depend on the legal and factual elements relating to the activity performed by the collaborative platform.

Users’ protection – collaborative economy blurs the lines between traditional consumers and business classification, due to multi-sided relationship that may involve business-to-business, business-to-consumer, consumer-to-business, and consumer-to-consumer transactions. In these relationships, it is not always clear who the weaker party requiring protection may be.

Self-employed and workers – traditional employment models are disrupted. New digital citizens of Europe can work in flexible arrangements, having individual tasks performed on an ad hoc basis rather than regularly performed tasks.

New taxation models – collaborative economy should adopt the same taxation rules (personal income, corporate income and value added tax). EU community still need to solve key issues associated to taxpayers and taxable income regulations, weak information exchange and differences in tax practices across the EU.

European Commission will establish a monitoring framework covering both the evolving regulatory environment and economic and business developments. The monitoring will aim to follow trends on prices and quality of services, and identify possible obstacles and problems encountered, generated by divergent national regulations or regulatory gaps.

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IT IS A LONG WAY TO DIGITAL EUROPE

European Commission just published his annual update for Digital Economy and Society Index (DESI), a composite index that summarizes relevant indicators on Europe’s digital performance and tracks the evolution of EU member states in digital competitiveness. As main conclusion DESI 2016 stated a certain progress could be observed in connectivity and some public services area, but Europe overall digital transformation is very slow.

DESI index is calculated on five pivotal dimensions: connectivity (broadband infrastructure development), Human Capital (skills needed to use advantages of digital society), Internet Use (online involvement of citizens), Digital Technologies integration (business digitisation and online sales), and Digital Public Services (eGovernment and public services digitisation).

Together to a new Digital Single MarketOettinger Status

Replacing major EU program focused on Digital Agenda, the new Digital Single Market program is becoming the main digital focus of EU Commission, granting full access to digital benefits, for citizens, for business and for government. In EU Commission vision it is time now to fit the EU’s single market to the digital age – unifying 28 national markets in a single one. This should create thousands of new jobs and could contribute €415 billion per year to EU economy.

Three main policy directions are sustaining the Digital Single Market strategy:

EU countries clusters

The overall Europe index progression is scored at 0.52 in 2016, up from 0.50 last year. Most important drivers for this improvement were Connectivity and Integration of Digital Technology dimensions. Considering average EU index countries were grouped in clusters according to their score:

Running ahead: Austria, Estonia, Germany, Malta, the Netherlands and Portugal – countries with score above the EU average and faster growing

Lagging ahead: Belgium, Denmark, Finland, Ireland, Lithuania, Luxembourg, Sweden and the United Kingdom – countries with score above the EU average but slower growing:

Catching up: Spain, Croatia, Italy, Latvia, Romania and Slovenia – countries with score below the EU average but faster growing:

Falling behind: Bulgaria, Cyprus, Czech Republic, Greece, France, Hungary, Poland and Slovakia – countries with score below the EU average and slower development:

Clusters

EU Countries Clusters

 

Main DESI Findings on 5 Dimensions

Connectivity

  • all European citizens have all access to broadband
  • 71% of European homes can access high-speed broadband (at least 30 Mbps)
  • 7% per year was average growing of high-speed broadband coverage
  • 72% of European homes subscribe to fixed broadband
  • 30% only of fix connections are high-speed.

Human Capital/Digital skills

  • 76% of Europeans go online regularly – once per week
  • 45% of Europeans still don’t even have basic digital skills
  • 18 of each 1000 people aged 20 to 29 years graduated in 2013 Science, Technology and Mathematics (STEM).

Use of Internet

  • 68% of Internet users reading news online
  • 37% performing video or audio calls
  • 57% using online banking
  • 63% using social networks
  • 65% shopping online

Integration of Digital Technology

  • 31% > 34% was increasing in business software for electronic information sharing
  • 14% > 18% was social media increasing with customers and partners
  • 7.5% of European SMEs are selling online cross-border (to other EU member states)

Digital Public Services increasing

  • from 75 to 81 points for the quality of European online public services
  • the number of public services available online
  • from 45 to 49 points for using public administration as a way for facilitating the delivery of online services.
compared

Ranking evolution 2015-2016

 What is the Digital Economy and Society Index?

The Digital Economy and Society Index (DESI) is an online tool to measure the progress of EU Member States towards a digital economy and society. As such, it brings together a set of relevant indicators on Europe’s current digital policy mix.

DESI

DESI Main Policy Areas

The DESI is composed of five principal policy areas which represent overall more than 30 indicators:

  • Connectivity: how widespread, fast and affordable broadband is,
  • Human Capital/Digital Skills: the digital skills of the population and workforce,
  • Use of Internet: the use of online activities from news to banking or shopping,
  • Integration of Digital Technology: how businesses integrate key digital technologies, such as e-invoices, cloud services, e-commerce, etc. and
  • Digital Public Services: such as e-government and e-health.

To calculate a country’s overall score, each set and subset of indicators were given a specific weighting by European Commission experts. Connectivity and digital skills (‘human capital’), considered as foundations of the digital economy and society, each contribute 25% to the total score (maximum digital performance score is 1). Integration of digital technology accounts for 20%, since the use of ICT by the business sector is one of the most important drivers of growth. Finally, online activities (‘use of Internet’) and digital public services each contribute 15%. The DESI online tool is flexible and allows users to experiment with different weightings for each indicator and see how this impacts overall rankings.

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