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Friday, July 19, 2024

Airbnb, Uber come in from the cold

Finance Minister Siv Jensen and Norway’s biggest employers’ organization, NHO, are warming up to innovative new aspects of the “sharing economy” like lodging service Airbnb and transport service Uber. Instead of trying to fight their arrival in Norway, the authorities now seem more keen to integrate them into the mainstream economy.

Finance Minister Siv Jensen, leader of the conservative and free-market-oriented Progress Party, is now keen to meet with companies doing business in the so-called "sharing economy." PHOTO: Fremskrittspartiet
Finance Minister Siv Jensen, leader of the conservative and free-market-oriented Progress Party, is now keen to meet with companies doing business in the so-called “sharing economy.” PHOTO: Fremskrittspartiet

“We need to embrace the innovation that these companies bring,” Håkon Haugli, director of NHO’s Abelia organization for knowledge and technology firms, told newspaper Dagsavisen on Tuesday. After months of internal quarreling within NHO (Næringslivets Hovedorgansasjon), the forces most in favour of a free market seem to have won over those keen on more strict regulation.

The move comes just as NHO is gearing up for its large annual conference in Oslo on Thursday, which this year is entitled “Remix” and devoted to “the new working life.” It will stress the importance of digital innovation, and urge NHO member companies to embrace the opportunities it presents as a modern-day industrial revolution.

The innovation reflected in the online methods now used to connect passengers with drivers via the controversial transport service Uber, for example, or travelers with accommodation in private homes via Airbnb can’t be ignored, claims Haugli. He admits the “sharing economy” in which they operate presents difficult challenges, though, not least among NHO’s and Abelia’s own members.

Conventional taxi owners and operators, for example, feel threatened and angry that Uber, for example, hasn’t been subject to the same regulations that long have applied to them. Those running hotels, taxis and a long list of other businesses often insist they don’t necessarily fear competion from the “peer-to-peer sharing” of goods and services (from house-cleaning to borrowing privately owned equipment). They just want the proverbial level playing field.

Haugli and, not least, Norway’s finance minister agree that’s important. Instead of seeing the Oslo police crack down on Uber drivers, though, Haugli suggested to Dagsavisen that firms in the sharing economy that have arrived in Norway must be regulated in a “sensible” manner to ensure they pay taxes, have insurance and abide by Norwegian labour law. That’s in everyone’s interests, he said, also the companies engaged in what’s often called “collaborative consumption.” In what’s viewed as a sign that it’s keen to be accepted, Uber has joined NHO’s Abelia.

New priority for the finance ministry
Newspaper Dagens Næringsliv (DN) reported over the weekend that Finance Minister Siv Jensen now intends to pay a lot more attention to the sharing economy. “We can no longer close our eyes” to the burgeoning sharing economy, Jensen told DN. On Tuesday she told Dagsavisen that “we must meet it in a positive and offensive manner,” not defensive.

“We must prevent these companies from becoming part of the underground economy,” Jensen told Dagsavisen. “I’ll do what I can so that they will become part of the Norwegian economy that contributes to society.” She intends to invite representatives from companies within the sharing economy for a meeting, and she also wants to hear from Norwegians who have used services like Uber and Airbnb. Among them are the public operators of Norway’s own national but city-owned ski jump at Holmenkollen, which recently allowed Airbnb to use its observation tower as a unique place to spend the night as part of an international promotion.

Gerd Kristiansen, leader of trade union federation LO, is among those fearing the rise of an "underclass" in the Norwegian labour market, and she opposes any introduction of a miniumum wage. PHOTO: Arbeiderpartiet
Gerd Kristiansen, leader of trade union federation LO, is among those who’ve warned that the sharing economy can undermine Norway’s own economy and social welfare state. PHOTO: Arbeiderpartiet

Jensen’s approach is also aimed at addressing concerns from labour organizations. Gerd Kristiansen, leader of Norway’s largest trade union federation LO, has warned that goods and services offered in the sharing economy can threaten the entire Norwegian social welfare state if they’re not regulated. Her counterpart at NHO, Kristin Skogen Lund, admitted late last year that there was internal disagreement over companies like Uber and Airbnb within her own organization. Many of her employer-members at NHO agree with Kristiansen of LO: “We’re not seeing the usual fronts here, where the left side means one thing and the right side means something else,” Lund told DN just before Christmas.

Up for debate
The issue is likely to be debated at NHO’s conference, with both Lund, Haugli and Jensen facing challenges from, for example, Norway’s national taxi federation. Its leader, Øystein Trevland, launched another attack on Uber, and the authorities’ failure to regulate it, in newspaper Aftenposten on Tuesday. Trevland claimed Uber wasn’t simply part of the sharing economy but instead was little more than an “organized pirate taxi operation.” He claims taxi service in Norway has a social responsibility and that’s why it’s still regulated (and pricey), so that taxis are available all over the country at all times. Uber threatens the regulatory framework, he claims, and should be required to abide by the same regulations as other taxis until that framework is removed.

Kristin Krohn Devold, head of NHO’s division catering to the travel and tourism industry, appears caught firmly in the middle of the debate over Airbnb. While her NHO colleagues are warming up to enterprises like Airbnb and the innovation they represent, Devold’s hotel-owner members are frosty at best. She recently challenged, on her members’ behalf, new business ventures in Norway that in turn rent out and manage rooms on behalf of residential property owners to paying Airbnb guests, claiming they were illegal. She also told DN in December that she’s worried about tax evasion. Her division, NHO Reiseliv, wants to regulate Airbnb and commercial ventures that work with it.

That won’t be easy, as Airbnb continues to connect rapidly growing numbers of overnight guests with hosts in 34,000 cities and 190 countries worldwide. More than 8,000 of the host residences are in Norway, up 118 percent in the past year. And advocates of the sharing economy and its various ventures argue that it can create new needed jobs in Norway, at a time when unemployment is rising. Ventures like Inkeys in Oslo, which takes care of the practical aspects of renting out and cleaning room on behalf of local homeowners, are a prime example and its founder, Magnus Kristiansen, thinks labour leaders like Kristiansen should support them. “It’s important to create new businesses tied to other businesses and services like we’ve done,” he told DN last fall. Another example is Lotel in Bergen, which rents out students’ apartments to tourists in the summertime.

Seeking a balance
Businesses like this represent both innovation and huge challenges to the conventional economy that’s based on taxes and regulation. In Norway, homeowners are not liable to pay tax on income earned from renting out less than half of their homes, while hotels face an increase in the tax they must charge overnight guests, from 8 to 10 percent as of January 1, plus income tax on room revenues.

Tor Andreassen, a professor at business school NHH in Bergen, notes that this poses a major dilemma, not least for those who don’t want to penalize innovation. “We have to stop up and start thinking in totally new ways,” Andreassen recently told Bergens Tidende, the newspaper serving Norway’s West Coast city that attracts large numbers of tourists. Airbnb was offering as many as 1,000 rooms in Bergen last fall, equal to around 20 percent of the city’s total accommodation capacity.

“The main challenge here is not to hinder new technology and innovation, but to try to benefit from it (through new business creation) and to find ways to regulate it,” NHO President Tore Ulstein told DN this week, on the eve of its annual conference. “The challenge is to find the balance.” Berglund



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