One area in which the restrictions imposed by governments to control the coronavirus pandemic should have represented as an opportunity for growth, is the so-called platform economy. As its name indicates the platform economy is economic activity which is facilitated by online platforms.
The coronavirus restrictions which included social distancing, not being allowed to travel abroad, closure of retail outlets, has encouraged the public to conduct some of their transactions online.
Some of us may have already been used to this, such as all those using platforms like Amazon or those buying an airline ticket on internet. In recent years, in some countries this grew significantly to the extent that it has forced the closure of businesses. Does anyone remember Blockbuster anymore? It was a provider of home movie and video games rental services, which was driven out of business by Netflix. Or does anyone remember when was the last time you went physically to a travel agent to buy an airline ticket?
Being locked down by the virus for several weeks gave us the opportunity to work from home using an internet connection, and to undertake a number of business transactions online. This is why the pandemic provided an opportunity for growth to the platform economy. However, we need to ask where it will go from here.
Will it continue growing and become part of the new normal? Will e-commerce drop the ‘e’ because this will be the main method of doing business?
The future of the platform economy should be viewed as positive after the coronavirus
The likelihood is that the platform economy will at this stage continue growing, displacing some more of the traditional activities. The experience of the past weeks has convinced businesses that online platforms can improve productivity, reduce costs, and help create entirely new markets.
Employees believe that thanks to online platforms, they have the flexibility which they wish to have. Consumers are provided with convenience that enables them to have more leisure time.
The downside argument to all this is that it could lead to what students of economics call technological unemployment. However, the world has been through this phenomenon before and it will not be the last time.
On the employment front, there will be new opportunities even for Malta, and especially the Maltese. Online service delivery will enable Maltese to provide services abroad, if they demonstrate they are as capable as their competitors in other countries. There are already a number of websites that facilitate such online service delivery, both to individuals as well as to the collective.
Research has shown that in Europe an estimated 10 per cent of the adult population has ever used online platforms for providing some type of labour services. About two per cent work at least 20 hours a week on platforms and earn at least 50 per cent of their income via online labour platforms. If this continues to increase the characteristics of the labour market as we know them today, are likely to change significantly.
Businesses shall be moving from recruiting staff locally to reaching out to remote workers. Indefinite contracts of work will increasingly be supplemented or even substituted by temporary work contracts. And continuous employment will change to project-based or casual employment. Instead of having a single employer, employees will move to having multiple concurrent clients.
From a customer perspective there is a strong expectation that more and more goods and services shall be available online, and this will certainly be a big driver of the platform economy, especially if online shopping and procurement will also provide comfort, communication, value, consistency apart from convenience.
So the future of the platform economy should be viewed as positive after the coronavirus. It will present more and more opportunities for businesses and employers who want to embrace the change.