With digital transformation eliminating grown structures?

Focus on Swiss employment law

by Dr iur. Marianne Wüthrich

Digital transformation of all areas of life is currently praised as an indispensable and inevitable vision of the future: From an early age, schoolchildren – contrary to warning voices of renowned educators – are bothered with tablets, the public services are to be offered more and more through vending machines or online, and in spite of grave security concerns and democratic objections e-voting is driven forward, whole municipalities are switching to electronic services. IT corporations are agitating strongly the boost for the beckoning billion-dollar business with the solvent Swiss state. In the meantime, the Federal Council is campaigning for a “Digital Switzerland Strategy” (cf. Current Concerns No 25 from 19 October 2017).
    The focus is currently on Swiss labour law, an illustrative example of the transformation of “traditional forms of living and working together”¹, i.e. the integration of the working population into globalised structures and digitised large corporations. At this point, some important building sites in the labour law are to be outlined, which we must keep in mind in the near future.
On 4 October 2017, the Avenir Suisse think tank has published a study entitled “When robots roll up. Preparing the labour market for digitisation”. On 8 November, the Federal Council adopted the report “Effects of Digital transformation on Employment and Working Conditions – Opportunities and Risks”. Some significant points will be discussed here.

“Preparing the labour market for digitisation”

In its report, the Federal Council examines the measures that will be necessary as a result of the restructuring of the labour market due to digital transformation: “In this context, two subjects are in the focus: First, education should be oriented even more towards competences and knowledge required in the digital economy. Secondly, the Swiss labour market must continue to have the flexibility for the use of digital transformation. At the same time, the insurance against social risks must be guaranteed.”²
Coming up step by step in the near future is to specifically keep a close eye on the – so far only planned – measures. Today, we first deal with the labour law issues that have to be solved in the context of digital transformation.
Objective of the more than 70-page study by Avenir Suisse is to “uphold and further increase the flexibility of the relatively liberal Swiss labour market […] in the ‘fourth industrial revolution’” as well as “to reject interventionism and new regulations.”³ Primarily employees are expected to be more flexible: They should be willing to forego a part of the employee protection in the Swiss Labour Law, because only under the condition of “more flexible working models” digital transformation would not destroy jobs but on the contrary would form “a prerequisite for the creation of new jobs” (study Avenir Suisse, p. 7).
Digital transformation is therefore likely to lead to major upheavals in the labour market and to increased uncertainty for many employed persons. Who in the future wants a job – or more jobs! –, he and his family can live reasonably from, will have to wrap up warmly. That’s why we citizens, too, have to “keep an eye on the risks” and to join in the discussion in good time.

“Atypical work” will increase – employee protection is to be reduced

Even though today the overwhelming majority of working people in Switzerland still have full-time jobs and a majority of part-time workers have voluntarily chosen this form of work, already about 18 per cent of jobs are – with increasing tendency – “atypical”: fixed-term employment contracts, work on call without a minimum working hours guarantee, teleworking, multiple workers and false self-employed persons of the “Gig Economy” (see box). While Avenir Suisse on the one hand assuages that the fear of an increase in “precarious” (i.e. underpaid and poorly insured) forms of work was virtually unfounded, the authors explain a few pages later: “In the medium term, however, the importance of new forms of employment will certainly increase. A strong increase should even be understood as a positive signal for Switzerland.” Because in the first “World Digital Competitiveness Ranking (IMD, 2017)”, Switzerland is only in 8th place ... (Avenir Suisse study, pp. 30 and 34).
In this sense, the think tank as well as parliamentarians from bourgeois parties demand a reduction in employee protection in the “Federal Act on Labour in Industry, Commerce and Trade (‘Arbeitsgesetz’ ArG)”.

Envisaged reforms of labour law: working time, rest period, recording of working time should be regulated more flexibly

First, a preliminary remark: The Swiss Code of Obligations OR regulates the private labour law. Apart from a number of compulsory regulations, for example on notice periods or continued pay in the case of illness, the drafting of the contract is left to the individual employers and employees or rather to Collective labour agreements (CLA) between the unions and the employers’ organizations on many issues. In contrast, the Swiss Labour Law primarily includes mandatory worker protection norms, such as maximum working time, overtime rules, rest period, prohibition of night work (with clearly regulated exceptions) and much more.
Since today a large part of the employed persons in Switzerland works in the service sector and many – especially in the context of digitisation – are no longer bound exclusively to a workplace in the company, a number of recent initiatives by the National and the Council of States focus on working time and rest period:

  • Working hours and rest periods: employees in executive positions and specialists  shall be exempted from the rules on maximum working hours; the prescribed 11-hour rest period per day shall be relaxed for them (which is often already the case in today’s practice;)4
  • Seasonal model: shall be possible for certain sectors by regulation of the  Federal Council5
  • Recording of working time: executives and specialists shall generally be exempted from the obligation to record working time;6 as well as employees in start-ups with employee participation during the first five years of operation.7
  • Home office: For those working partially at home, the rules on maximum daily working hours and rest periods shall apply only to a limited extent.8

Protection of workers must be guaranteed

Changes of the labour law in a moderate framework certainly make sense to some extent. In principle, employees in management functions have to meet their specifications. Today it is already partly their own business when and where they do this. A mother, working partially on a computer at home in order to take care of her own children, must be able to organise her working hours and rest periods. However, it is important that employees’ representatives are able to shape such new arrangements and to ensure that the purpose of working hours and rest periods, namely the protection of employees, is guarenteed. In the sense, for example, of the union Unia (the largest trade union in Switzerland): “A modern labour law protects the employees [...]. Instead of undermining the labour law piece by piece, protective measures are needed that are adapted to the new forms of work. Therefore home office, clickworking [see box] and constant accessibility have to be regulated. Unia is committed to employee participation and active participation concerning their working hours and working conditions. It is committed to ensuring that employees can organise their working hours as far as possible in accordance with other areas of life within the statutory framework of working hours and rest periods.”9

Employees or independent workers – the central question about coverage by social insurance

In Switzerland there is the question of greater concern of how much insurance coverage a worker has, if he is employed or if he has several job contracts or projects as a free-lancer. This is not the framework for a thorough description of these types of problems. However, it is to be documented that with the increase in jobs or contractual jobs through digital platforms, it is imperative to solve the problem of insurance coverage.
Avenir Suisse suggests the creation of a third category in addition to the independent and hired worker: “the independent employee”. This status would be particularly suitable for short-term or irregular activities. As a think tank mostly for the large enterprises with headquarters in Switzerland, the Avenir Suisse emphasises the importance of a minimal amount of buro-cracy (for example with an online agreement instead of a written and signed employment contract!) as well as „broad contractual liberties“: “Both parties, when determining the status of the independent worker, are free to define the limit of the least amount of regulations: amount of work, salary, expected performance and duration of the contract. The defining of a workload or the place of work can be omitted. Compensation for holidays and vacation or dismissal is not required.” (Study Avenir Suisse, p. 58) – It’s already clear which party would enjoy the „broad liberties“ of this model …
The „independent employee“ would get “flat-rate insurance” (AHV, lowest rates in career provision, minimal continuation of salary payments in the case of illness or accident), however, no unemployment insurance. The rates would be halfway shared with the employer (Study Avenir Suisse, p 58f.) – How the employee must afford his insurance payments with his small salary through “short-term or irregular employment” is not revealed to us by the think tank ...
More human empathy for the digital worker is shown more naturally by the union, Unia: “More and more employees are becoming  ‘Crowd workers’: isolated, apparent independent without social insurance. So that such extreme forms of exploitation as in the earlier times of capitalism are avoidable, the employee of the platform economy  must be protected from arbitrary acts and his salary, his development possibilities and the balance of work and life, must be made secure. The social risks, such as illness, unemployment or age, should be secured through the same social insurances as with other employees.”10
To avoid the involvement of unions, Avenir Suisse suggests as well a new “voluntary social partnership”: “It must be avoided that all new forms of employment will be replaced by a classical employment contract which could be negotiated under a collective bargaining...” (Study Avenir Suisse, p. 57) – No comment …
*** 
So far the first information about worker rights, which with the increasing digitisation of the working world has come. The sketched-out measures, written by the Swiss Federal Council in its report of 8 November 2017, and most importantly the question of which school and career education we must pass on to the youth of our society, is to be subjected to further research.     •

1     “Strategy Digital Switzerland “. Swiss Confederation. Federal Office of Communications OFCOM. April 2016. p. 5
2    “Effects of digitisation on employment and working conditions – opportunities and risks”. Report of the Federal Council dated 8.11.2017, in response to the postulates 15.3854 of Reynard from 16.09.2015 and 17.3222 of Derder from 17.03.2017
3    “When the robots come. Preparing the job market for digitisation “. October 2017, p. 4. Authors: Tibère Adler and Marco Salvi. Publisher: Avenir Suisse (cited: Study Avenir Suisse)
4    16.414 Parliamentary Initiative Konrad Graber, Councillor of States CVP Lucerne, from 17.03.2016. “Partial flexibilisation of the Labour Law and the preservation of proven working time models”
5    ibid.
6    16.423 Parliamentary Initiative Karin Keller-Sutter, Councillor of States FDP (the Liberals) of St. Gallen, from 14.03.2016. “Exception of the recording of working time for executives and specialists”
7    16.442 Parliamentary Initiative Marcel Dobler, National Councillor FDP St. Gallen, from 09.06.2016. “Employees in start-ups shall be exempted from the recording of working Time”
8    16.484 Parliamentary Initiative Thierry Burkart, National Councillor FDP Aargau, from 01.12.2016. “More  freedom for the organisation of work at the home office”
9    “Frontal attack on employee’s protection by the trade association”. Unia online from 07.11.2017. www.unia.ch/de/aktuell/aktuell/artikel/a/14256/
10    “Theses of the Trade Union for a public discussion. Digitisation of work”. Unia, April 2017

The ploughing up of labour markets and isolation of people through Gig Economy

mw. “Digital platforms”, i.e. business relationships via the Internet in which the contracting parties do not know each other personally, are described online as follows: “Platform-based business models influence the way we book accommodation, establish relationships, pay, move and work. The latter is neither obvious nor thoroughly researched. Basically, these platforms only provide a contractor and a client. For this reason, Uber, for example, does not refer to itself as a transport service platform, but as a pure mediation platform. The platforms operate in multilateral markets and link peer to peer groups such as passengers with drivers or buyers with sellers. Typically, this results in an Uber driver using his private car and an Airbnb lessor using his own apartment to carry out a contract. It is special that the contractors are part of the Gig Economy, as they are paid for ’gig-based’ by order.”
In the “Gig Economy”, people work temporarily and without contractual and insurance protection as so-called “independent” or “self-employed” workers (“Freelancer”). According to the source mentioned above, 34% of the working population in the United States already works independently, and according to “Deloitte Research” (2016) some 25% of all persons of employable age in Switzerland partly perform temporary, additional or project-based work alongside full-time or part-time jobs.
However, the independence of freelancers (or clickworkers) is rather illusory, as they are usually poorly paid and irregularly and bear the risks of illness and accident themselves. The client, on the other hand, earns several times: He does not have to pay for office space, no further training and no social security premiums, and the payment for individual contracts or projects is naturally much cheaper than the wages for permanent employees.

Source: Cornaz, Catherine. “Gig Economy: Wie Uber & Co. die Arbeitswelt verändern”. 6.4.2017. https://blog.hslu.ch/diginect/2017/04/06/gig-economy/

Resistance against Uber car service in Zurich

mw. November 2014: Uber Pop starts in Zurich. Private drivers without a taxi licence start to take passengers with them at much cheaper prices (“Tages-Anzeiger”).

August 2015: The IG Airport Taxi drivers Zurich complains about Uber drivers pushing themselves into the official taxi waiting area at the airport (“Schweiz am Sonntag “).

December 2015: Spontaneous taxi-driver demonstration in central Zurich with a horn concert and traffic blockades. Occasion: Registered taxi drivers will be fined if they do not comply with legal work and rest periods, Uber drivers will not. Taxisection Zurich demands prohibition or at least strict control of Uber Pop (“Blick”).

December 2016: SRF reports more than 500 criminal proceedings against chauffeurs who are said to have carried passengers on a regular basis without an appropriate licence. The Zurich cantonal police catch 139 Uber drivers, the city police 79. Some drivers ask passengers to get in the front to simulate a private journey (SRF programme “10vor10”).

June 2017: After several enquiries from the cantonal council, Zurich’s State Council finally states that Uber-Pop drivers often act illegally without a permit for professional passenger transport. Although the drivers met the requirements of the Californian online company, they violated Swiss law (“Limmattaler Zeitung”).

August 2017: Uber stops the controversial layman service in Zurich. Uber-Pop drivers have three months to get a taxi licence so that they can work under the Uber X label (“Blick”).

Source: Watson from 10.8.17 https://www.watson.ch/Schweiz/Wirtschaft/516657605-Das-Ende-von-Uber-Pop-in-Zürich--How-the-company-communicates-it-–-and-how-it-really-was

***
The Californian leadership of the digital platform is obviously agile: it adapts to the legal situation in other countries and then continues to take profits unmolested …