We cannot talk about the digital economy without talking about significant technologies that have made it possible for the digital economy to function properly. Some of these technological advancements will be discussed and we will get to see the role they have played/playing in the digital economy.
The internet is the largest global connection of computer networks that are used to send, analyze, store, retrieve and receive data. Internet of things (IoT) on the other hand refers to various devices such as meters, sensors, chips, and other gadgets that are internet connected and fixed in objects that we use every day which enables them to send and receive different messages. The internet has been the foundation for the growth and development of the digital economy and some key points will be identified as we go further.
Instant broadcast communication
The birth of the internet brought about a decline in the local mail system due to the emergence of e-mail, instant messaging, or text messaging which was a popular trend amongst the youth. The use of cellular phones to access the web made it much easier to send messages and receive replies almost immediately.
Facebook, Twitter, MySpace, and LinkedIn are all leading social networking services that connect over a billion people. They are online communities whereby individuals with the same interests exchange or share data like images, documents, videos, chats, music, and ideas amongst each other. Business owners are beginning to take advantage of social networking to target their audience or consumers.
Advertisements have been made much easier compared to when you will need to print flyers and stickers. You can easily carry out an advert on the web which will help consumers locate what they want and not just consumers finding what they want but helps advertisers to get more consumers. Search engines and software applications get paid to house adverts for various businesses, these ads will keep popping up whenever you search or try to make use of the application.
Google began digitizing public domain and out of print materials from various libraries in 2004, the process made over seven million volumes available. The internet has been very valuable for scientists and researchers in transforming the environment.
Other uses of the internet include social gaming, online classes, mobile banking, e-commerce, and lots more.
Blockchain which can be referred to as distributed ledger technology (DLT), is a process whereby the history or information of a digital asset cannot be tampered with or altered and left transparent through the use of decentralization and cryptographic hashing.
Blockchain technologies – which enable blockchain business models – can be seen as a decentralized, distributed ledger that is used to store the original data of a digital asset. These data cannot be altered or modified due to the design of the system which makes it a trustworthy disruptor for firms that are into payments, Healthcare and Cybersecurity. The platform gives room for multiple parties to engage in a safe and honest transaction without any need for an intermediary.
Cryptocurrencies wouldn’t have been able to stand without Blockchain technology, it can serve relevant functions as well for developing countries such as aid disbursement, digital identification, and property rights. Also, it can serve as an open-source platform that enables programmers to develop decentralized applications to run on their blockchain.
How does Blockchain work
Three (3) significant concepts are important when discussing Blockchain and they include; blocks, miners, and nodes.
A chain consists of an array of blocks and each of the blocks is made of three basic elements:
- The data or information in the block
- The nonce is randomly generated after the creation of a block, after which a block header hash is generated.
- The hash is a 256-bit number attached to the nonce and it has to start with lots of zeros which means it must be extremely small.
After the creation of the first block of a chain, a nonce will generate the cryptographic hash and the data which is inside the block will be tied to nonce except it mined.
They are used to create new blocks on the chain via a process known as mining. Finding the accepted hash is not an easy one which is why miners make use of specially designed software that can be used to solve the complex mathematical problem of nonce that will generate an acceptable hash. Billions of nonce-hash combinations need to be mined before arriving at the right one and when it eventually happens, miners will be acknowledged to have discovered or found the golden nonce and a block is added to their chain.
This is one of the most important concepts in Blockchain, the nodes are electronic devices used to keep copies of Blockchain and ensure the network remains functioning. Its major purpose is the decentralization of data and the chain cannot be owned by any organization or computer. It is the distribution of ledger through nodes that are connected to the chain
Cryptocurrencies: The Beginning of Blockchain’s Technological Rise
There are over six thousand (6,000) cryptocurrencies operating under the umbrella of the Blockchain. Cryptocurrencies are the Blockchain’s most well-known users, they are digital currencies or tokens such as Bitcoin (BTC), Ethereum, or Litecoin. They can be used to purchase or make payments for products and services online, they are best described as digital money. It makes use of a cryptographic security system that makes online transactions data stored and secured. It is a driving force in the emergence of the digital economy as most payments are done through the use of digital currencies like Bitcoins.
5G Mobile Broadband
Mobile broadband helps you to gain quick access to the internet irrespective of where you find yourself. It doesn’t matter which device you are using, your access to the internet will be on the go. Your mobile gadgets use the same technology as mobile broadband.
In order to handle a large volume of data using the internet, the fifth generation (5G) wireless technology will be critical to meeting up such expectations. The 5G wireless network would be able to process double figures of data when compared to the present system. Significantly, it creates the option to connect much more devices such as smart devices and sensors.
The 5G network is an upgrade of the 4G network as it brings about:
- Wider channels (amazingly fast broadband).
- Larger bandwidth which simply means the ability to connect multiple numbers of devices at the same time without any delay.
- Ultra-reliable low latency (minimal response time).
The 5G network will improve the digital economy in rural areas since it has a larger bandwidth and this will solve or reduce the rural-urban drift. It will also help in the development of small businesses that will be relying on the wider bandwidth connectivity enabled by 5G.
Cloud computing describes the process of storing and managing all sorts of data on remote servers, replacing on-site servers or personal computers. Users or persons that need the stored data can access it via Internet-enabled devices which provides them with easy and secured access from anywhere they may be. Cloud computing enables businesses in the digital world to be more efficient, streamlined, and connected, saving time and money simultaneously. There is also the development of more innovative and effective tools which in turn increases innovation and it leads to increased business innovation leading through to increased revenue, and the creation of new jobs which is currently going on around the world.
Easy access from anywhere
Cloud computing doesn’t depend on personal computers or localized servers to store data, users have access to their data at any time, and from any place provided there is an Internet connection, this results in making the physical office obsolete This transforms the open road into an office for 24 hours and also encourages real-time collaboration by remote teams which empower workforces to succeed from anywhere.
Flexible and scalable
Businesses can customize cloud-based applications and scale them to suit their needs. Apps can even be remotely accessed and launched on virtual marketplaces. These marketplaces give a brand great exposure and visibility, allowing businesses to generate and acquire thousands or millions of users. Cloud computing provides businesses with unlimited flexibility and scalability.
Cloud computing is very cost-effective such that it is subscription-based, businesses only pay for select features that are necessary to run their day-to-day tasks.
Straightforward and easy updates
Cloud computing uses outside parties to handle data storage and security, businesses can always rely on happy-go-lucky software updates, maintenance, and troubleshooting.
Fast and secure
Cloud computing relies on services delivered through data centers. These data centers are constantly being upgraded and touched up for maximum speed, protection, and the best of performance. This data is not stored in just a single location so there is no vulnerability to natural disasters or hardware failures that can cause loss of data or security.
With so many uses of cloud computing, there’s no reason to sit and watch other businesses accelerate towards the future, getting ahead of the game is very necessary.
Artificial Intelligence (AI)
AI is causing a huge change in the entire business value chain by computerizing existing business processes, unveiling new value from data, and enlarging human decisions and actions.
The capability to scrutinize levels of data that are beyond human understanding allows businesses to individualize experiences, customize products and services and recognize widening opportunities with a speed and accuracy that has never been realizable before.
AI has impacted the digital economy in a lot of ways. Below is a list of some areas.
Productivity gains from computerization
AI authorizes huge productivity gains for businesses computerizing their processes. Robotic and cognitive process automation, multi-agent collaborative systems, machine learning, and natural languages processing are helping industries optimize value by improving processes and input (labor, capital, and assets) productivity.
Increased consumer demand
Consumer demand is possible to be operated by the accessibility to personalized and higher-quality AI-enhanced products and services in the coming years. It has been predicted that the gains obtained from consumer demand will overtake the gains acquired from productivity.
AI has a strong capability to drive innovation as it can quickly analyze data that would have, if not taken a very long time to process, lower research and development (R&D) costs and create new probabilities for examination.
AI has the likeliness to fundamentally interrupt core businesses and provide opportunities to innovate with entirely new business models.
AI coupled with analytics also enhances organizational structures to make more productive and faster decisions to cooperate and grow their businesses. A lot of companies are already using AI to forecast in order to improve their decisions.
Automation and robotics technologies
Automation and robotics are beginning to have a significant impact on employment because they are technologies designed for manufacturing or technologies created to reduce human effort. It has brought about lots of concerns especially for the developing countries as they will tend to adopt export-led manufacturing as a sole path to industrialization. Meanwhile, the developed countries’ economies can be filled with robots to carry out manufacturing jobs.
E-commerce is becoming the most significant component of the digital economy. It is a process that involves the selling and buying of products and services online. E-commerce is a platform that is used by most developed countries, the top three (3) ranked business-to-consumer (B2C) e-commerce nations are China, the United States, and the United Kingdom boasting of popular e-commerce platforms such as Amazon, eBay, Alibaba, and more is the worlds largest and most popular e-commerce site.
The platform provides consumers with multiple options to choose from and they can compare products and prices as well to pick the best option. The process has made it easier for business owners to market their goods directly to their target audience and they can maximize various options of running ads that are open to them such as Facebook, Instagram and Twitter are platforms that can be used to market their products and services.
The most significant importance of e-commerce to businesses is that they are not limited to a particular number or sizes of what they can display, the digital platform help’s them to house unlimited products and services to ensure that their customers are well satisfied.
Access and Use of ICT in the Digital Economy
Evidence shows that ICT remains a dynamic force in the world’s economy. Its benefits remain obvious despite slowdowns and slumps in parts of the ICT-producing sector. Many developed countries including the United States, Canada and Australia show that the continued spread of ICT into areas like the business sector of many countries will invariably lead to improved performance of these sectors.
Technological advancements in ICT goods and services is continuing rapidly, driving down prices and leading to the growth of a wide range of new applications. Although applications such as broadband and e-commerce are relatively in their budding states and have enormous potential for future growth, ICT thus remains a huge factor that can foster future growth and innovation.
ICT impacts economic growth in the following ways:
Productivity and Growth
An ICT-producing sector is relevant for increased labor productivity. In countries like Ireland and Finland, aggregate labor productivity growth has been linked directly to ICT manufacturing. Although, an ICT-driven sector can support growth, this is not a prerequisite to benefit from ICT. The most important benefits arise from its effective use. This use can help firms improve their overall efficiency, reduce transaction costs and increase innovation. Studies show that the effective use of ICT can help efficient firms gain market share at the expense of less productive firms. The use of ICT can also help firms expand their product range, respond better and faster to demand, and customize their services.
The ability to adjust to changing demand and to innovate
ICT makes investments by firms more valuable through various channels, like the introduction of new processes, products and applications. Without this process, the economic impact of ICT would be more limited. The impact of ICT on the output of companies that innovate in comparison to that of firms who don’t innovate is massive.
Employment in the Digital Economy
In the past couple of years, a lot has been said and written in newspapers and magazines about the so-called uberization of work, new forms of employment that involve a sharing or collaborative economy, the flood of flexible mini-jobs in the ‘gig economy’, the uncertain future of wage employment, etc.
Generally in both printed and digital media, there is the rising and widespread feeling that the forthcoming surge of digital technologies — whether this is called the second machine age, the third or fourth industrial revolution—will strongly question the employment relationship in many economies.
Firstly, regarding the forthcoming tsunami of ICT, more fashionably named digital technologies, concerns have risen on how such a development might be characterized. The ‘digital turn’ on one hand is seen as an extension and amplification of current trends (the information society, the knowledge-based economy, the net economy) and, on the other hand, a notable breakthrough in the organisation of the world’s economy. This is closely linked to a rapid and exponential performance growth in a new generation of innovations, deemed unprecedented.
Although we can choose to assess the extent to which technological performance can be really disruptive as many see it, but it’s more important to consider how labour processes have and can be transformed, in a wide range of economic activities covering manufacturing and services.
Some notable trends can be observed: the use of ICT to enable strengthen and renew an international division of labour across value chains; the growth of the business model of digital platforms; the fast expanding capacity to collect large volumes of data and to generate economic value from this; and the digital revival of the informal economy.
ICT, and the Global Division of Labour
Over an extended period, there have been opinions and theories about repositioning the global value chain in the information age. Although some schools of thought have suggested that the transition from the information age to the Internet age which occurred between should be critically considered, it can be said that over the past few years, the fragmentation of the value chain at the global level can be seen as one of the key features of current globalization processes and efforts.
This fragmentation involves, first, breaking up various business functions for both tangible and intangible goods along numerous value chains: research and development; design; prototyping; production (including outsourcing and assembly); logistics and distribution; sales and marketing; and maintenance and servicing.
Second, it involves the reorganizing these functions as part of a new international division of labour. ICT provides a platform for the conduct of intangible tasks at any time and from anywhere in the world. It also facilitates the development of processes which collate and quantifies knowledge.
This concept of fragmentation clearly depicts a situation whereby human efforts at skillfully dividing and delivering tasks are broken down into increasingly standardized, fluid and interchangeable units.
Fragmentation involves globally outsourcing specific jobs, particularly the mass production of tangible and intangible goods. At the same time, other functions are relocated to be closer to decision-making centers or consumer markets. The new generation of digital technologies, including communicating apps, objects, and learning robots, will improve this trend and potentially alter the balance of power. However, a recent study suggests that the relative advantages of relocating operations to low-wage countries may be offset by reducing the cost of manufacturing robots that can outperform a low-skilled workforce.
Economists’ recent study of online platforms describes the current economy as having ‘two-sided markets, which are regularly observed in consumer and business-to-business markets. Here, products and services are delivered to two distinct user groups simultaneously—the two sides of the market—through a platform that can be accessed from a computer, smartphone, or tablet. One side of the market is comprised of consumers who benefit from access to low cost or free services and positive network extras since the services become more attractive as user numbers grow; by accessing these services, however, and whether they realize it or not, they are supplying the platform with large volumes of personal data on their profile, location, and consumer habits.
The other side of the market comprises economic players involved in providing platform-based services and which also benefit from positive network externalities in relation to the size of the consumer base. The value of a service for the players on one side of the market correlates to the number and the quality of the players on the other side. Economists refer to this phenomenon as ‘cross network externalities’ and consider them typical of two-sided markets.
These platforms are financed by charges on the transactions between the two sides of the market. Still, the collected information is also valuable to the actors on both sides, representing a source of data and a body of knowledge. Therefore, the platform itself is the primary location of value creation for both sides. Examples of platforms that correspond to this description include Google, Booking.com, Uber, Amazon, etc. In contrast, the superficially ‘free’ nature of their services (Google when used by individuals, for example) is, in reality, merely an indicator of the optimum pricing model for one side of the market. Online platforms have been developed in the trading of goods and services and the labor market as intermediaries in the demand and supply of fragmented work.
Cloud technologies have led to the rise of large-scale physical infrastructures of data centers and high-speed connections. In addition, the recent exponential growth in the performance of data mining and modeling software makes it possible to analyze massive quantities of digital data as a basis for activities such as consumer profiling, behavior modeling, and movement tracking, as well as the mapping of communications and the diagnosis of machine breakdowns or human illness.
The big data industry relies on the ‘four Vs. ‘ principle: volume, velocity; variety; and value. The predictive power of big data software is improving quickly thanks to its capacity to handle volumes of data simultaneously, going beyond current levels of human understanding. By way of an example, machine translation tools now draw on a considerable body of digitalized texts in every imaginable language rather than using linguistic algorithms solely. Big data software is increasingly combined with other, recently widespread, technological innovations such as the geolocation of people (now embedded in smartphones); the geolocation of products (embedded in RFID chips); mobile apps, allowing ubiquitous access to online services and social networks; and the ‘Internet of things’— communications protocols facilitating the exchange of data between physical or virtual objects equipped with sensors, telemetry tools, QR codes and embedded apps in computers, smartphones or robots.
From a work-related perspective, big data collection and analysis have implications in terms of surveillance and monitoring in the workplace and the monitoring of employee activities. Big data modeling solutions are making it even easier to use quantitative and qualitative performance standards as a basis for individual benchmarking and performance profles. These are not new tools in the management field, but the tools available for their implementation are increasingly formidable.
Consumer-generated big data is also transforming working practices in the felds of commerce, marketing and fnancial services; more generally speaking, the same applies to all client-facing activities where the aim now is to customize products and personalize services. The platforms for exchanging services in the informal economy are not a new as many would imagine, but they have become both more visible, thanks to their development first into websites, and more efficient, thanks to the online platform model.
This model provides new opportunities for not-for-profit exchanges over collaborative platforms or peer-to-peer networks for services in areas such as DIY, car sharing, babysitting, equipment pooling, domestic help, etc.—the so-called sharing economy. This denomination, however, covers a vast spectrum of activities. At one end of this spectrum, there are networks allowing individuals to share or pool goods and services, either without monetary exchange or via alternative currencies at the local level. At the other end of the spectrum, some online platforms, which were initially designed as ‘sharing’ or ‘collaborative,’ have speedily succeeded in capturing the value created on both sides of their market. As a result, they have become very profitable businesses, positioning themselves as market leaders, such as Airbnb.
At the same time, platforms’ business model also facilitates alternative forms of trade, such as direct sales from farmers to consumers, fair trade, short distribution circuits at the local level, etc. While it also revives the debate about “common goods” that can be shared at a meager marginal cost. Indeed, digital commons, such as open-source software or creative commons publishing licenses, are shifting the boundaries between property and use.
This broad spectrum reflects two significant changes: first, the digital renewal of the informal economy, and second, the increasingly blurry margins between the formal economy and the informal economy—and consequently, between formal and informal work.
New forms of work in the digital economy
Two specific work practices characterize digital nomads.
First, they extensively use computers, smartphones, cloud services, the Internet, and email while conducting their professional activity. Second, their working time is not spent solely on the premises of the employer (and neither is it spent on their premises if they are self-employed) as they work mainly from remote locations such as their home, client premises, external sites, modes of transport, hotels, co-working spaces or any other. ICT-based mobile work may also be virtual. In some cases— geographically dispersed virtual teams, computer-based video-conferencing, virtual meetings bringing together avatars of real people, remote monitoring of industrial facilities, remote maintenance, etc.—real-life mobility is less important than the ability to be present in multiple virtual locations.
By allowing people to be present everywhere in virtual form without physically relocating, digital technologies are fostering the development of new virtual forms of work organization. According to the European Working Conditions Survey (EWCS), the percentage of workers (wage earners and self-employed) spending at least one-quarter of their working time outside their usual workplace rose from 7% in 2005 to 24% in 2010. There were, however, significant variations among EU countries: from more than 40% in Nordic countries and the Netherlands to between 25% and 30% in Belgium, France, Germany, and the UK, 20% in Spain, and less than 15% in other Southern or Eastern countries. They are primarily men (65%), higher education graduates (56%), and those aged between 35 and 49 years (45%).
The proportion of digital nomads is highest among executives and professionals (45%) and, to a lesser extent, among intermediate professionals (33% of technicians, assistants, supervisors, and paramedic occupations). Focusing only on salaried workers, those working mainly on client premises, external sites, home or elsewhere accounts for 23% of men but only 11% of women. The campaign ‘New World of Work’ (NWOW), initiated by Microsoft in 2005 and launched in its national subsidiaries during the period around 2010, provides an exciting example of employers’ strategies to foster the development of digital nomadism.
The purpose of the campaign is to promote new flexible, autonomous, and mobile work organization patterns—and obviously to promote the new generation of Microsoft’s online and cloud-based tools. With such tools, enterprises can free their employees from fixed workplaces, allow them to work from anywhere at any time, and develop a new work culture. Each subsidiary of Microsoft is charged with developing a national NWOW coalition.
In Belgium, for example, the coalition (established in 2012) gathers high-tech businesses, public administration bodies, and consultants in human resource management and provides coaching and support services for enterprises or administrations interested in the implementation of
NWOW initiatives. To some extent, digital nomadism could be considered as an extension of telework. However, most national collective agreements implemented after the European framework agreement on telework are restricted to telework at home, considering that other forms of distance working, such as remote offices, hired offices, itinerant work, or work on client premises are, respectively, covered by specific other collective agreements.
Most national or sectoral collective agreements considered the different forms of distance working separately, while migratory work organization patterns combined all of them. As a result, several authors think that current legislation or agreements on telework do not cover the full range of working situations with which digital nomads are confronted.
The development of ICT-based nomadic work entails several consequences for the employment relationship. First, while the employment relationship classically relies on clear definitions of working time and working place, the various patterns of nomadic work are dissolving both of these. The NWOW campaign clearly aims at this dissolution while describing it as a ‘new work culture.’ Moreover, company practice in ICT-based mobile work reveals that flexible working time and flexible workplaces are often coupled with an increasing role for wage flexibilization, for instance, flexible remuneration according to targets, performances or results, and the introduction of extra-wage benefits.
On-Demand Work Through Online Platforms
On-demand work depends on a continuous employment relationship with an employer. Without a regular job, pre-defined working hours, or volume of remuneration, the employer calls on the worker only when needed. According to a report on new forms of employment, which draws a detailed picture of the contractual varieties of on-demand work across Europe, two key categories of employment contracts can be found: either the well-known ‘zero hours’ contract or a minimum threshold contract.
In the first type, which exists in the UK, Ireland, and the Netherlands, the employer guarantees no volume of work. While only the Irish legislation makes provision for financial compensation when the number of worked hours falls below one-third of a full-time job, under a minimum threshold contract, the volume of work and remuneration are only guaranteed for a stipulated number of working hours (generally between one-quarter and one-third full-time equivalent, depending on national legislation). However, in some particular cases, such as the ‘min–max’ contract in the Netherlands, both a lower and an upper threshold are fixed, which, in practice, leads to a variable part-time contract.
On-demand work has existed for a long time. Its development is related to the expansion of flexible work practices in the 1990s, and the British case of zero-hours contracts was mentioned in most research reports on flexibility at this time. However, on-demand work is different from intermittent work, for instance, for artists or seasonal workers. In irregular work, the nature of the economic activity is factually not continuous (for example, in artistic jobs), whereas, in on-demand work, working hours are adjusted only to the employer’s needs.
What is new is the combined utilization of online platforms, geolocation, and mobile apps on smartphones to match employers’ requests and workers’ availability (time availability and optimal physical location) and to fine-tune the on-demand process. This new pattern of work organization is named ‘work on-demand via apps’ or ‘online platforms for on-demand work.’
The development of such online platforms for on-demand work is mainly observable in economic activities characterized by continuous, but variable, demand: domestic and care activities, including for children and seniors; extra-school activities for children; organization of events of any kind; office support; retail trade; express delivery; truck driving; etc.
In many cases (care, technical, cultural, sales or office skills, specific professional licenses), a particular skill or training may be required, although no specifc skill is needed in others. From the employers’ point of view, the basic principle of the on-demand employment relationship fits the requirements of such activities. The continuous character of the business allied to a need for specific skills justifies a stable employment relationship, while the discontinuous volume of business justifies a variable volume of remunerated working hours carried out by a pool of available workers. However, according to a recent ILO report, the development of online platforms and apps is progressively shifting the nature of on-demand work from specialized work (e.g., mobile nurses, child carers, audiovisual technicians, accountants, secretaries) to low-skilled “gig” jobs.
In summary, the employment relationship—which still exists in contractual form—is often becoming characterized by highly flexible working time, extended availability, and highly variable wages, while working time is becoming disconnected from the work contract. The undermining of the contractual relationship concerns works and everyday life, which, in turn, is being subordinated to the demands of increasingly unpredictable work schedules.
Crowd working (or the crowdsourcing of work) refers to work carried out through online platforms which allow organizations or individuals access to an undefined and unknown group of other organizations or individuals prepared to solve specific problems or supply particular services or products in exchange for. Work is “externalized to the crowd.” Different types of crowd working platforms are currently operating at the global level:
– Crowd working on fragmented virtual micro-tasks. The pioneer in this field is Amazon Mechanical Turk, set up in 2006. This type of platform establishes a marketplace for micro-tasks in web development, design, software development, photo/video image recognition, data replication, translation, audio transcription, data-based research, and the submission of bids for creative tasks (such as designing a logo). Although Amazon qualifies those tasks as “human intelligence tasks” (HITs), they result from a typical process of “virtual Taylorism,” separating design from execution and fragmenting the work process into elementary units that can be outsourced to the global crowd.
Tasks can be outsourced to anybody, amateur or professional, without control over skills.
As written on the Mechanical Turk home page: “We give businesses and developers access to an on-demand, scalable workforce. Workers select from thousands of tasks and work whenever it is convenient”. Prices are set by auction. Work is only paid if well done. The platform rates workers—and their rating is displayed when they apply for a task.
– Crowd working on freelance tasks. Other platforms, such as PeoplePerHour, are only open to freelance professionals who must be agreed by the network and provide professional credentials. Freelancers publish their daily or hourly rates, and those requiring labor select them according to profiles and prices. These platforms mainly manage virtual tasks, which can be carried out anywhere using digital tools: web design and development; copywriting; translation; multimedia production; public relations; community management in social media; tutorials for mobile apps; etc.
– Crowd working for material tasks and services, executable at the local level. Such tasks are not at all “virtual” and consist mainly of “gigs”: errands; babysitting; watching cats or dogs; gardening; home repair; and a wide variety of tasks that do not require professional skills. TaskRabbit is a well-known example and has “subsidiaries” in many countries; indeed, such platforms can be multinational companies, but they must operate locally.
Crowd workers’ profiles vary from skilled professional to unskilled amateur. According to a recent survey carried out in the UK, about 21% of the population aged 16–75 had sought a job on crowd working platforms during the past year, but only 11% had found one: 3% had done so at least once a week, and 4% had found at least once a week. In addition, the survey reported that 88% were looking for online tasks while 12% were looking for offline ones.
Only one out of four crowd workers did the income from crowd working represent at least one-half of their income; most crowd workers are young people (51% are younger than 35) looking for extra income. Concerning the employment relationship, most crowd working platforms deny any employer responsibility. Instead, their websites display general terms and conditions of use and legal disclaimers, leaving workers all responsibilities for settling their taxation, social status, social and professional insurance. In the case of platforms for freelancers, the deal is relatively straightforward: workers are supposed to have freelance status (self-employed or other) in the country where they live. Other platforms are less explicit.
For instance, the disclaimer of the Belgian platform Listminut declares that ‘The relationship between service demander and service provider is independent. Most providers are individuals who provide services only on a casual basis. This kind of service provision does not need to comply with the social status of self-employed.’
Crowd working has other damaging effects. For example, platforms using a bidding system for online payments are promoting a worldwide race to the bottom. In addition, the method of rating workers may lead to the unilateral disqualification of workers who have no means to contest or mount counter-claims. The fragmentation of tasks can also spill over into freelance work; for instance, the platform PeoplePerHour launched in 2012 a pricing system named “hourlies,” in which freelancers are invited to describe what tasks they can perform in one hour of remuneration.
Crowdsourcing platforms are obliged to comply with general legislative provisions in commercial law, consumer protection directives, the civil code, and data protection regulations, but specific legislation on crowd working has not yet been collectively defined at the European level. Their terms and conditions generally dictate all the details (such as pay, working conditions, and intellectual property), but workers effectively have no clear status.
The business model of digital platforms has introduced the concept of ‘prosumers’ or, in other words, individuals who both produce and consume digitized information. They are rarely paid, but prosumers carry out work by supplying data and services for which salaried employees were previously partly responsible, such as amateur reviews of services or products, rating services, providing user-generated content, and data entry. Less explicitly, a wide range of our daily digital activities as users of social networks, mobile apps, search engines, and connected objects contribute to the production of economic value which the platform owners capture.
According to Cardon and Casilli, such activities could be considered as “work” if they comply with three conditions:
- They produce value for economic players.
- They are subject to a minimal level of contractual agreement, usually accepted by clicking on an agreement message, defining property ownership of data and user-generated content, privacy standards, and consumer rights.
- They provide performance indicators: indicators of reputation, quality assessment, and popularity measurements; that lay people instead of experts rate services, etc.
Some authors theorize this kind of work as “digital labor” (Scholtz 2012). In some cases (e.g., clicking “like” on a Facebook page), these tasks can be considered as low-intensity and low-expertise, exploited by data mining algorithms; in other cases (e.g., rating a travel service or a movie), tasks can be considered as cognitive within informal activities, captured and appropriated in a market context through the mediation of digital systems. Prosumer work exists quite clearly outside any employment relationship.
Trade Related to the Digital Economy
The globalization of the Internet and the flow of data across borders have led to the digitization of economies. Every sector of the economy now relies on the Internet and data to conduct business. As a result, governments, businesses, and civil society in the developed and developing world can use these technologies to improve the quality of economic growth, create new jobs, strengthen social inclusiveness, and improve governance.
The globalization of the Internet and the ability to move data across borders is also transforming the nature of international trade. This is happening in five key areas:
Businesses can use the Internet (mainly digital platforms) to export. It also offers opportunities for small and medium-sized enterprises (SMEs) and businesses in developing countries to use these platforms—and the comprehensive set of ancillary services they provide—such as online payment mechanisms to reach consumers globally.
Services can be increasingly traded online, mainly IT, professional, financial, and education services. In addition, new digital services such as cloud computing have also been developed and become crucial business inputs.
- Data collection and analysis allow new services (often also provided online) to add value to goods exports.
- Global data flows underpin global value chains.
- The growth of digital technologies such as 3D printing and M2M communications further complicates the nature of trade transactions, with implications for regulatory co-operations and changes to established trade-related principles like rules of origin.
The digital transformation has reduced the costs of engaging in international trade, facilitated the coordination of global value chains (GVCs), helped diffuse ideas and technologies, and connected a more significant number of businesses and consumers globally. But even though it has never been easier to engage in international trade, the adoption of new business models has given rise to more complex international trade transactions and policy issues.
In today’s fast-paced and interconnected world, governments face new regulatory challenges in managing issues arising from digital disruption and ensuring that digital opportunities and benefits from digital trade can be realized and shared inclusively.