Challenges in Digital Platform Jobs in Latin America

International Labor Day 2021 finds the region with a new type of worker: platform worker. These work arrangements provide a great opportunity by enabling more efficient use of resources and flexibility for both businesses and workers. But they also entail risks, such as increased income volatility and possible deterioration in employment conditions, particularly access to social protection. Additionally, new digital workers are more likely to be freelancers than formal employees.

With the pandemic, jobs have picked up pace across digital platforms over the past year. However, based on information from the 2019 CAF Survey (ECAF) conducted as part of the latest Economy and Development Report, 9.4% of workers in 11 major cities in the region reported having provided a service through a digital platform in the past month, while 6.7% had signed up as a supplier—albeit inactive—on a platform. In other words, a total of around 16% of the workforce can be classified as active or potential platform workers. These rates were logged highest in Panama City (23%), Bogota (20%) and Quito (19%).

As in advanced countries, in Latin America, platform work coexists with other traditional and non-traditional forms of employment. In some cases, these are workers with formal jobs, who earn additional income through platforms, while others are self-employed. According to the ECAF, of the total number of platform-active workers in the last month, 60% are self-employed, 27% are wage earners, 10% are employers while the remaining 3% are unpaid family workers, cooperative members and housekeepers.

The ECAF survey also shows that—on average for all job categories—platform work is a major activity in 41% of cases; however, it is higher among self-employed workers than in all other categories. It is also more prevalent among men than among women, among young and older adults than among middle-aged people, and among those with lower education. In the context of the COVID-19 pandemic, the incidence of platform jobs is likely to be even higher than the values captured by the ECAF in 2019, especially among self-employed workers.

“Recent growth in platform work compels us to rethink social protection institutions and adapt them to the characteristics of today’s labor market. Access to social benefits by platform workers poses challenges similar to those posed by traditional independent employment coverage. In this sense, technology could become an ally, by facilitating logging of activities and payment of obligations,” says Guillermo Alves, chief economist at CAF Directorate of Socioeconomic Research and co-editor of the Report.

The working conditions of this type of jobs play a pivotal role because in some cases working hours are often long and unpredictable. About half of digital platform workers earn less than two dollars per hour, as revealed by a recent study from the International Labour Organization (ILO). Challenges to improve the quality of life of platform workers include regular work and income, freedom of association and collective bargaining, among others.

Digital platforms are here to stay, and they create job opportunities, especially for young people. Companies now have access to a broad, flexible and diverse worker base, while expanding their customer base. The challenge is to foster constructive dialogue between authorities, employers and workers to define regulations tailored to this new reality that improve the quality of life of the population and boost competitiveness in the region.