21st Century workplaces (including online freelancing) will be harmed by copying 20th Century Labor Laws

Posted on October 31, 2016  /  2 Comments

quidriseinusecropped2Since the middle of October, we have been engaged in the dissemination of the findings of our research on online freelancing. Our audiences have been current and potential freelancers and the objective has been awareness raising. But we’ve been thinking about the broader implications as we formalize our dissemination strategy. The World Bank’s 2016 WDR entitled Digital Dividends, has many important and relevant insights, including:

Better skills will help many workers cope with the effects of internet-enabled automation. But changes in the labor market also require rethinking social protection and tax systems. The on-demand economy leads to more informal employment, transferring insurance and occupational obligations to freelance workers. Strict labor regulations, common in developing countries, and overreliance on labor taxation encourage faster automation by making hiring more expensive. It would be better to strengthen workers’protection independently from work contracts by delinking social insurance from employment, offering independent social assistance, and helping workers retrain and find new employment quickly. In many countries this requires major reforms. And countries just starting to develop social protection systems and deepening labor laws should design them for the 21st-century workplace, rather than copy what industrialized countries created for a very different world of work.

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  1. There are two sides to this. Governments need to also consider taxation of freelancers taking into account things like health benefits, retirement benefits now have to be Bourne by the freelancers themselves.

    On the other hand having more f eelancers is benefiting to small businesses and they should make it easier for small businesses to employ freelancers.

  2. In Sri Lanka, if a service is supplied to an entity outside the country, the payment received is deposited in a LK bank account and declared, it is exempt from tax. If the service is supplied within the country, normal taxes apply.