Digital platforms that connect consumers with workers to provide services first emerged after the global financial crisis, and they have grown in significance with the pandemic. This column examines the impact of labor platforms on countries of the Global South, and the opportunities they may offer to resolve longstanding problems of poverty, unemployment, and social inequalities. While platform work currently adds a new layer to the widespread informality of labor markets in developing countries, the quality of such work can be improved through new legislation and collective bargaining.
Across the globe, digital platforms have gradually become the center of contemporary capitalism. The phenomenon of ‘platform capitalism’ arose from a combination of the availability of extensive financial resources after the global financial crisis of 2007–09 and the expansion of the internet. It was further enhanced by the Covid-19 pandemic, which made ‘virtuality’ the privileged space for socialization, work, education, commerce, and consumption.
Within the universe of digital platforms, labor platforms – those that connect consumers with workers to perform a service – occupy a fundamental place. These companies propose a business model according to which they are mere technological intermediaries without labor relations with the workers, whom they consider to be self-employed. This has led governments, unions, researchers, and the International Labour Organization (ILO) to investigate the precarious nature of the ‘Uberization’ or ‘platformization’ of work.
Although labor platforms are a global phenomenon, they have specificities according to the places in which they are embedded. This is especially relevant for platforms where workers perform their tasks in a given geographical space, such as PedidosYa, Uber, or Clintu. In these cases, the companies interact with local labor markets, traditions, institutions, and unions.
In the countries of the Global North, many voices argue that labor platforms constitute a threat to the welfare state and the historical process of ‘decommodification’ of labor – the gradually increasing protection of workers over the 30 years after the Second World War through legislation, social benefits, and strong trade unions.
In more recent decades, the trend has been one of ‘recommodification’ as employers seek to evade or weaken protective institutions via temporary contracts, zero-hours contracts, on-call contracts, bogus self-employment, and outsourcing. Labor platforms can be thought of as the latest manifestation of this process, contributing to a further weakening of labor protection.
But this is not a new problem in the Global South. On the contrary, in places like Latin America, the welfare state has never had the same size and importance as in Western Europe. Similarly, social inequalities and the informality of labor markets are historical characteristics of societies in the Global South, which are characterized by what the Latin American economist Raúl Prebisch called ‘structural heterogeneity’.
Structural heterogeneity implies the co-existence of sectors where labor productivity is high or normal (that is, similar to that achieved by the economies of the Global North) with others in which, given large technological lags, productivity is much lower (compared with the Global North). This inhibits the equal distribution of jobs and, therefore, the equal distribution of income and opportunities for social mobility.
Indeed, according to ILO statistics, while 61% of global employment in 2016 was informal employment, informality was below 20% in Australia, Canada, the United States, and Western Europe. This contrasts with 53% in Latin America, 68% in Asia and the Pacific, and 86% in Africa, suggesting that the informality of labor platforms adds a new layer to existing informality in the Global South.
In addition, in the early years of labor platforms, work in many countries of Latin America (including Argentina, Brazil, and Colombia) was done by migrant workers from Venezuela. These were mostly men with high levels of education, who found in platforms an opportunity for development and a ‘refuge’ from structural unemployment and poverty.
With the pandemic, labor platforms have become a refuge for additional groups – not only for migrant workers but also for local informal workers, who have lost their traditional informal jobs because of the Covid-19 crisis. Thus, there has been a kind of ‘horizontal mobility’ within the informal economy: from one type of informal activities to another, digitalized type.
From this perspective, platforms constitute an opportunity for work and good earnings for many workers. Indeed, according to surveys among food delivery workers conducted in Brazil, Mexico, Argentina, and Chile, platforms are the main or only source of earnings for the workers involved. Platform work also offers higher earnings than the local minimum wages.
The other key aspect emphasized by this research in Latin America is that workers strongly value their ‘autonomy’ – that is, the capacity they have (or think they have) to organize their own working day, without bosses.
But as shown by studies in Latin America and elsewhere, workers are not as free as they pretend to be. They are controlled (directly or indirectly) by the platforms through ‘algorithmic management’, and they need to work very long hours to obtain earnings above local minimum wages.
These characteristics are at the heart of workers’ feelings of injustice, and the many experiences of workers’ organization and struggles against platforms. In Latin America, for example, there have been hundreds of riders’ strikes during the pandemic, marked by widely used hashtags such as #BrequeNosApps and #EnTuPedidoVaMiVida, and demanding health and safety protection (in the form of alcohol gel or masks) and increases in workers’ rates.
With the high levels of poverty, unemployment, and social inequalities in Latin America, many platform workers fear that legal regulation of labor relations could have unforeseen consequences: that the companies will eliminate their ‘low entry barrier’ work and leave the countries. In many interviews with platform workers in Latin America, the respondents defend their (real or fictitious) autonomy and fear that legal regulation will force them to adhere to rigid schedules.
This seems to update a longstanding challenge to the working classes of the Global South (only with new identities and new types of jobs) – the dilemma between having a precarious job or not having a job at all. The big question is how to resolve this dilemma: how can these new precarious jobs be transformed into better quality jobs?
The regulation of platform work in countries of the Global North is also a controversial theme. There has been a variety of national judicial responses, including the UK Supreme Court ruling that forced Uber to categorize all its drivers as workers, providing a minimum wage and benefits such as holiday pay and pension contributions. But there is still a lack of legal regulation of labor relations.
Other regulatory responses include the ‘rider law’ in Spain, a new royal decree that recognizes food delivery riders from digital platforms as employees rather than self-employed, and therefore recognizes workers’ labor rights.
Collective agreements are an alternative response, an area in which the Nordic countries are the most advanced. In 2021, the Danish Chamber of Commerce and the United Federation of Danish Workers (3F) signed a nationwide collective agreement for food delivery services. Similarly, since 2018, there has been a collective agreement between 3F and Danish-owned platform Hilfr, which provides cleaning services in private households.
The main difference between the two types of response is that while the latter (Denmark) is based on collective bargaining between unions and employers in a system in which unions and labor relations are strong, the former (Spain) is a legal intervention by the state. The Spanish law is also having unforeseen consequences: instead of employing their own workers, the platforms are increasingly resorting to temporary work agencies to provide workers.
There has been a similar variety of initiatives to regulate platform work in Latin America. For example, courts in Brazil and Uruguay have issued legal judgments on work for digital platforms, recognizing the dependent and subordinate character of the relationship between Uber and drivers.
There have also been many projects of legal regulation. In Argentina, for example, the government is working on a special workers´ statute for platform food delivery workers. Brazil, Colombia, Peru, and Mexico are also designing special regulations for platform workers. For now, all of these are initiatives and not yet laws – and they cannot yet count on full support from companies or unions.
It is undeniable that the state has a key role to play in the regulation of labor relations on platforms, particularly in highly unequal countries where big companies can take advantage of precarious labor markets. Standardization of the employment relationship on platforms may guarantee labor rights to workers, but it may also reduce some of their benefits such as the autonomy and comparatively good earnings they may provide. In addition, vague laws continue to provide space for companies to control the labor process on their own terms, through algorithm management.
To achieve better and more sustainable results in the regulation of platform work, it is imperative that when designing new laws, policy-makers engage in more intensive dialogue with the platform companies, the workers, and their organizations.
Collective bargaining can make a real contribution to improving the quality of platform work and should be promoted by governments. Searching for consensus will also reduce the (already unconvincing) threat by platform companies that they may leave the countries of the Global South.