Digital transportation platforms (DTPs) experienced accelerated growth during the Covid-19 pandemic in major Latin American economies and are currently experiencing continued growth, but with problems such as precarity, exploitation, and inadequate labor laws.
In countries like Chile, for example, they have become one of the best places to go for thousands of irregular migrants trapped in the bureaucratic maze of efforts to obtain permanent visas and work permits.
This situation enables abuse by companies that have significantly increased their turnover under a liberal economic model that favors them, along with the proliferation of the Internet.
There is no official data on how many “drivers” there are.
Still, one only has to go to the streets to see dozens of motorcycles and bicycles with backpacks bearing the logos of multinational companies in the sector, such as Cornershop, Pedidos Ya, Rappi, and Uber Eats.
According to the latest report from the Ministry of Labor, the number is close to 300,000, of which 43% are Chileans and 57% are foreigners, mostly Venezuelans (42.5%), followed by Colombians (4.4%) and Peruvians (3.5%), mostly men.
“In Chile, there is no official data on the number of workers because companies are very envious and because there is a high informality in the economy,” said Rodrigo Palomo of the University of Talca.
The employment situation of these “drivers,” most of whom are self-employed, is regulated by the so-called “Uber Law” and Law 21.431, which amends the Labor Code and establishes common rules for all workers, whether employees or self-employed.
“Drivers have organized themselves,” Palomo points out, citing as an interesting example the union of Cornershop, a Chilean platform bought by Uber in 2021, with which he had “a first collective bargaining” because “it had never had collective bargaining in any country in the world.”
BRAZIL, HALF OF THE MARKET
In Brazil, which accounts for half of the food delivery market in Latin America, according to a study by the Getúlio Vargas Foundation (FGV) business school, the problems point to the risk of monopolies and precarious labor, problems that the Lula da Silva government wants to combat.
According to FGV, 80% of the market is concentrated in the local company iFood, which already took a heavy blow in 2020 from the Administrative Council for Economic Defense (CADE) – the antitrust agency – when it vetoed exclusivity contracts with restaurants after a complaint from Uber Eats and Colombian company Rappi.
At stake is a billion-dollar business: according to the Brazilian Association of Bars and Restaurants (Abrasel), home delivery food sales will generate about US$7 billion in 2021 or 20% of the industry’s total revenue.
A business sector that, according to the Institute for Applied Economic Research (IPEA), employs 1.5 million people (known as “microentrepreneurs”), albeit in precarious employment conditions.
“It’s not possible that in the 21st century Brazil someone has to work more than 14 to 16 hours, sometimes not even earning the minimum wage and going six to seven years without a wage adjustment,” Labor Minister Luiz Marinho said recently.
For Gilberto Almeida dos Santos, president of the Union of Courier Drivers, Motorcyclists, Cyclists and Motorcycle Taxi Drivers of São Paulo, the largest in the country, the union has faced a system of quasi-exploitation in working conditions over the past six years.
“Companies need to understand that they have been exploiting workers for six years, and it’s time to clarify the situation,” especially “social security,” which is required by law, he says.
It’s a complaint that falls on the ears of the new president, who is determined to put forward a proposal that “companies recognize everyone as a conventional worker” at a time when, according to Rubens Mussolin Massa, a doctoral student in New Business at FGV, “Brazil is experiencing an increase in formal unemployment and a false growth in the entrepreneurial rate.”
It is a difficult balance because it is a matter of “dialogue with the reality of growth platforms” and “from the workers’ point of view” without “implying a slowdown in growth,” Massa warns.
ARGENTINA, NO WAY BACK
In Argentina, the market is divided between Pedidos Ya (76%), part of the international cluster Delivery Hero founded in Germany, Rappi (22%), and a dozen other companies that currently deliver 67% of products purchased through electronic channels, compared to 39% before the pandemic, according to a report by Kantar and the Argentine Chamber of E-commerce for the first half of 2022.
“Many entrepreneurs in the hospitality industry say they installed it in the pandemic” and that “now it is very difficult to go back because these companies have absorbed the distribution channel,” said Gonzalo Ottaviano, head of the Union Association of Motorcyclists, Messengers, and Services.
Workers are considered employees or independent partners, and delivery drivers work as self-employed: they register their work through a “single tribute” system and charge companies for their work.
There is no regulation of these companies at the state level.
Only the city of Buenos Aires has included the “digital platform operator” figure in the 2020 Transit and Transportation Code, which allows companies to classify delivery drivers as self-employed.
This figure obligates them to establish an effective complaint resolution process and occupational injury insurance.
It prohibits them from implementing incentive schemes or penalties that favor road safety risks and sending notifications while delivery drivers are making deliveries.
CONTROVERSY REIGNITED IN MEXICO
In Mexico, the controversy over delivery and transportation platforms flared up again in January when cab drivers and delivery drivers protested the arrival of Uber in Cancun, the country’s top tourist destination.
And the government of Mexican President Andrés Manuel López Obrador has sided with them, asserting that it is up to the states to regulate the operation of these companies, which are generally seen as a source of increased tax revenue.
Despite legal loopholes, Mexico is among the top ten countries worldwide for e-commerce sales; half of the population buys food and beverages through digital channels, according to the Mexican Association of Online Sales (AMVO).
A study by the Centro de Investigación y Docencia Económicas (CIDE) and the Asociación de Internet Mx claims that platforms such as Uber, Didi, and Rappi have had a positive impact on the restaurant industry, with growth of up to 33% for establishments using these channels.
But their proliferation and rapid adoption prompted authorities at the local and federal levels to impose higher fees, including a special tax regime for them since last year, levied on both businesses and delivery drivers.
In addition, strong pressure from partners who travel Mexico’s roads to deliver orders has led the Mexican government to establish an insurance program allowing them to access social security in exchange for a contribution of Mex$40 (US$2).
This strategy has caused exasperation among both companies and delivery drivers because they have been burdened with issuing invoices and statements.
RAPPI’S COLOMBIA
In Colombia, the sector is led with 44% by local company Rappi, which was founded in 2015 as a home delivery start-up and now has a presence in nine countries and more than 250 cities in the region, with nearly three million users.
It is followed by Ifood (9%) and DiDi Food (3.6%), all growing but where precarity and exploitation are the main scourges.
In recent years, dozens of “riders” have protested outside Rappi offices – including burning backpacks – to demand better working conditions and to take responsibility for their health in the event of an accident.
In light of this situation, the Colombian government said in January that it would push forward with a study to regulate the more than 700 existing digital platforms to create better working conditions for the people who provide their services.
“For regulation, it is necessary to create a framework that allows both technological innovation and the protection of the labor rights of those who work in these systems so that they meet the minimum requirements required by law in Colombia,” said Darío Hidalgo, professor of transportation and logistics at the University Javeriana.
“Social security, health, pensions, and labor risk management would improve the precarious situation of the providers of this high-demand service,” he concludes.