Yesterday I spoke at the Economic Ideas Forum organized by Wilfried Martens Centre for European Studies about the shared economy, as a source of growth and jobs.
Shared economy refers to the provisions of assets and services from one person to another, without intermediaries, usually within an online developed community, a website or, more recently, an application.
The best known example is Uber, which gives each person holding a driving license the possibility to offer taxi-like transportation services without being employed with a taxi company.
Another online community using the principle of the shared economy is Airbnb, very popular among tourists who are looking for low-priced accommodation. Through Airbnb, private individuals make available to tourists a low-priced room in their own home.
This type of shared economy has been developing continuously as it either offers the same services as the traditional economy, but at a lower price, or it offers new services that the traditional economy did not provide.
In 2014, the main 5 sectors of the shared economy have accumulated a total income of 15 billion USD worldwide, estimated to grow to 335 bn USD by 2025.
However, there are also many questions to be raised:
The first one is whether shared economy is jeopardizing the current economic actors and the jobs these have created.
During yesterday’s debate I advocated that, if the current economic actors adapt and borrow practices of the shared economy, there is growth potential for them, as well.
Let’s take the case of the hotel industry. At the moment, hotels feel threatened by Airbnb. Still, if the hotel chains changed their approach, inspiring themselves from Airbnb’s success, they could become more efficient economically. If, for example, hotels would offer a discount to clients checking out very early and would allow, in exchange, the renting of the rooms during the daytime, this would be beneficial to all: existing clients would gain, given the discount. Aren’t we upset when we have to pay the full price, though we arrive with the last plane at 10pm in the evening and already check out in the morning? Additionally, new clients can have access to a new product: day hotel room. Currently, anybody who wants to rent a room for a couple of hours during daytime has to pay the entire price asked by the hotel operator, like when keeping the room also during nighttime.
The labor market will also win because, if a room is used twice a day, you have to have it cleaned as many times as twice. And this means additional personnel.
Finally, the hotel wins as well, as the discount offered to the one checking out from the room will be lower than the money cashed for having rented the room a few hours during daytime.
Another question refers to the need of regulation of the shared economy. Currently, a consistent part of the shared economy sectors are not clearly regulated. They are acting somewhere in the thin area between legal and non-legal.
What I have explained at the debate is that, certainly, we do need regulation. More than this, we need uniformisation at EU level, in line with the single market. People move freely in Europe, so it is normal to know if we can use this service in the same way in all EU countries. Aditionally, consumers will use a service if it is transparent and completely legalized. At the same time, there are many industries where we cannot reduce regulation to a minimum. I would never agree to the online sale of medicines without license.
Moreover, we need to make the shared economy accesible to all age categories. Given that shared economy is linked to digital technologies, we need to equip elderly people with the right eskills.
Last, but not least, we have to continue to sustain innovation. Even companies who are very innovative now, need to have the right framework for future innovation to remain competitive.