The sharing economy Item 6.1 of agenda Standards Working Group meeting 2018 Michael Mietzner Eurostat, Unit B5

Background and concept At the Standards Working Group meeting 12-13 June 2017 Spain addressed issues that concern activities that involve "collaborative consumption": Car sharing Uber Collaborative consumption: Set of resource circulation systems, enables consumers to "obtain" and "provide", resources or services, through direct interaction with other consumers or through an intermediary. Examples: Second-hand shops More recently platforms such as Uber and Airbnb

Background and concept cont. Increasing importance due to the information technology! Consumers, the main actors, set the rules for the exchange. But intermediaries also play an important role! Not just intermediaries Also set their terms and conditions Typically take margin from the exchange/transaction value/volume

Examples for the sharing economy BlaBlaCar (https://www.blablacar.com) Single trip car sharing web site The intermediary only develops and makes available the platform. Classification options: If the service provided on an informal basis, is this an economic activity in terms of NACE/ISIC? In certain countries (Uzbekistan etc.) car sharing largely substitutes public transportation. For the intermediary the activity takes place to generate an income. Need to measure that activity! NACE Rev. 2 class 63.12 (Web portals)? Information related to transport will be is lost as relationship is restricted to private use.

Examples for the sharing economy cont. Uber (https://www.uber.com) Provides passenger transportation Via the platform Uber sets terms and conditions of the exchange. The intermediary charges the driver a commission as a percentage of the agreed fare. Classification options : The activity can be classified to NACE Rev. 2 class 49.32 (Taxi operation). This way the information on transport is not lost!

Examples for the sharing economy cont. On-line portals for services to buildings, i.e. plumbing, flooring, painting etc. The consumer selects the required services from a service list, and posts a "job request" for quotes; Registered service providers are notified via email/SMS, and submit their quotes; The consumer receives notifications and decides which offer to accept, if any. Classification options : The economic activity of the intermediary could be classified to NACE Rev. 2 class 43.99 (Other specialized construction activities n.e.c.).

Examples for the sharing economy cont. Intermediaries between electricity suppliers and consumers Facilitating the consumer change supplier to one that hopefully offers better conditions and prices to the consumer. If the client enter into a contract for electricity supply with a new supplier this intermediary receives a commission during the remaining contract period. Classification options : The economic activity of the intermediary could be classified to NACE Rev. 2 class 35.14 (Trade of electricity).

Actions launched in June 2017 The Standards Working Group meeting 12-13 June 2017 decided to send the presentation and the short document produced by Spain to the Working Group participants. The Working Group participants were encouraged to provide, by the end of June, comments on the questions raised. A discussion in the CIRCABC discussion forum on "Collaborative activities" was launched on 27 June 2017.

Actions launched in June 2017 cont. Interventions from 13 countries in CIRCABC forum discussion: Austria Bulgaria Denmark Estonia Finland Germany Hungary Italy Lithuania Norway Poland Portugal Romania

UN Expert Group 6-8 September 2017 Document presented by Mr. John Murphy (US Census Bureau) Issues addressed: The definition of services in the SNA Trade in services in ISIC Outsourcing Examples discussed: Accommodation services Deal of the day Internet sites Third party fulfilment in retail trade

UN Expert Group 6-8 September 2017 cont. Does an intermediary in the provision of services perform the actual service? Example: The intermediary provides the actual accommodation, rents the equipment, or changes the condition of the object of the service. If yes, classify to the activity as described. Measure the gross amount received for the provision of the service. Accommodation services as described would be classified to ISIC 5510.

UN Expert Group 6-8 September 2017 cont. Does the unit subcontract the actual service but assume or accept “capacity risk” or transactional risk for the provision of the service? Example: A provider that subcontracts the accommodation services to a hotel but pays for the night even if the room is open. If yes, classify to the activity of the capacity or transactional risk. Measure the net amount received for the provision of the service. Accommodation services as described would be classified to ISIC 5510.

UN Expert Group 6-8 September 2017 cont. Does the unit not perform that actual service but rather only provide intermediary or agency services in the transaction? Example: A booking service that provides reservation services to hotels but has no capacity risk and operates on a commission or fee basis) If yes, and if there is a separate class for agency services, classify to the activity being performed. If there is no separate class, classify to the class of the change producing service and measure on a commission or fee basis. Accommodation services as described, ISIC 7911 or 7990, depending on business model.

UN Expert Group 6-8 September 2017 cont. Is there a need to change ISIC to accommodate the activities/arrangements of the intermediaries? Conclusion: The general perception was that a guidance document was the best way forward.

EU Court of Justice Judgement in the Uber case Judgment of 20 December 2017 in Case C-434/15 - Asociación Profesional Elite Taxi v Uber Systems Spain SL: "The service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport"

EU Court of Justice Judgement in the Uber case cont. The Court declared that an intermediation service such as that at issue in the main proceedings, the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as "a service in the field of transport" within the meaning of EU law. https://curia.europa.eu/jcms/upload/docs/application/pdf/2017-12/cp170136en.pdf

Consequences for ISIC/NACE The concepts, presented at the UN Expert group 6-8 September 2017, can until further be used as guidance for how to treat intermediaries in ISIC/NACE. The Judgment by the EU Court of Justice of 20 December 2017 in Case C-434/15 should in theory not have any impact to classification by ISIC/NACE, as the purpose of the ISIC/NACE classifications is statistical. However, the conclusions in the case by the EU Court of Justice cannot be ignored as for their impact on statistical applications. In the context of an update or a revision of ISIC/NACE the classification of intermediaries in the provision of services must be addressed.

The way forward… The Standards Working Group is invited to comment on the following issues: Which are in your view the main, distinct characteristics of the "sharing economy"? Is a comprehensive review of this treatment in NACE needed at this time? If ISIC/NACE is not updated/revised in the near future, what do you believe should be done to better accommodate and visualise the sharing economy in the existing classifications? If ISIC/NACE is updated/revised in the near future, what do you believe is the best approach to better accommodate and visualise the sharing economy in the classifications?

Thank you for your attention. Michael Mietzner michael. mietzner@ec Thank you for your attention! Michael Mietzner michael.mietzner@ec.europa.eu Tel.: +352-4301-35801