In a potentially transformative move for Europe's gig economy, the European Union is in the final stages of negotiating a proposed law. Recognizing gig workers as de facto employees, the legislation would require companies to provide minimum salaries and additional benefits to these workers. This could have significant implications for ride-sharing giant Uber (NYSE:UBER), which might have to raise fares by up to 40% and reduce its workforce.
The impact of this proposal, known as the Platform Work Directive, could be far-reaching, particularly for Uber, which operates in 3,000 cities and towns across Europe. If enacted, the law could force Uber to cease operations in hundreds of these locations. Anabel Díaz, Uber's regional general manager for Europe, projected that work opportunities could decrease by 50-70% if the company is forced to reclassify its drivers and couriers across the EU. In the past year alone, over one million people earned income through Uber's app in Europe, suggesting that up to 700,000 individuals could lose access to flexible work and see a significant drop in earnings.
The proposed law would require companies like Uber and Deliveroo (OTC:DROOF) to offer benefits such as paid parental leave and social security to their drivers or riders. These benefits are similar to those provided to full-time employees. The initiative has been under consideration since 2021 in response to the COVID-19 pandemic, which underscored the need for legal clarity on the rights and status of gig workers across Europe.
Europe's gig economy, comprising 28 million workers, experienced an unprecedented demand for its services during the pandemic. However, this new legislation could disrupt this sector significantly while aiming to ensure that gig workers can earn a reasonable living from their jobs.
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