Monopolies and job insecurity, the rise of “delivery” in Latin America

Digital transport platforms (PDT) experienced an accelerated boom during the pandemic of the COVID-19 in major economies Latin America and today they maintain a sustained growth, although with problems of precariousness, exploitation and insufficient labor laws.

In countries like ChiliFor example, they have become one of the best floats for thousands of irregular migrants trapped in the bureaucratic maze of trying to obtain a stable visa and work permit.

This situation allows abuses by companies that have considerably increased their turnover within the framework of a liberal economic model that favors them, together with high internet penetration.

READ ALSO: New competitor of Yape and Plin aims to allow transfers of more than S/ 500

There is no official data on how many “riders” there are, but you only have to go out on the street to see dozens of motorcycles and bicycles with backpacks with logos of multinationals 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 Chilean and 57% are foreigners, mostly Venezuelans (42.5%), followed by Colombians (4.4%) and Peruvians (3.5%). , mostly men.

“In Chile there are no official data on how many workers there are because the companies have been very jealous and because there is a high rate of informality in the business,” explains to EFE Rodrigo Palomo, from the University of Talca.

The labor situation of these “riders”, the majority of whom are independent workers, is governed by the so-called “Uber Law” and Law 21,431, which modifies the Labor Code and establishes common standards applicable to all workers, whether salaried or independent.

“The ‘riders’ have been organizing themselves,” says Palomo and gives as an interesting example the Cornershop union, a Chilean platform bought in 2021 by Uber, with whom he had “a first collective bargaining” since “he had never bargained collectively anywhere country of the world”.

READ ALSO: Spanish Glovo announces 250 layoffs, 6.5% of its workforce

Brazil, half of the market

In Brazilwhich according to a study by the Fundación Getúlio Vargas (FGV) business school accounts for half of the food delivery market in Latin America, the problems point to the threat of monopoly and also job insecurity, issues that the government of Lula Da Silva assures that he is willing to fight.

According to FGV, 80% of the market is concentrated in the local company iFood, which in 2020 already received a serious blow from the Administrative Council for Economic Defense (CADE) – an antitrust body – by vetoing exclusivity contracts with restaurants after a complaint by Uber Eats and the Colombian company Rappi.

The fight is for a multimillion-dollar business: according to the Brazilian Association of Bars and Restaurants (Abrasel), food delivery sales reached about 7,000 million dollars in 2021, 20% of all turnover in the sector.

A business that offers employment, but precarious employment, to 1.5 million people (called “micro-entrepreneurs”) according to figures from the Institute of Applied Economic Research (IPEA).

“It is not possible that in the Brazil of the 21st century someone has to work more than 14-16 hours to sometimes not even earn a minimum wage and stay between six and seven years without rate adjustments”, recently said the Minister of Labor, Luiz Marinho

For Gilberto Almeida dos Santos, president of the Union of Couriers, Motorcyclists, Cyclists and Mototaxistas of Sao Paulo, the largest in the country, the union faced in the last six years a regime of almost exploitation in working conditions.

READ ALSO: E-commerce: more than 300,000 businesses already sell online in Peru, according to Capece

“Companies have to understand that they have already been exploiting workers for six years and the time has come for them to resolve the situation”, mainly that of “social security” stipulated by law, he affirms.

A complaint that has had an effect on the ears of the new president, determined to promote a proposal for “companies to recognize everyone as conventional workers”, at a time when, according to Rubens Mussolin Massa, doctor in New Business from the FGV, “Brazil is going through an increase in formal unemployment and a false growth in the rates of entrepreneurs”.

A difficult balance since it means “dialogue with the reality of platforms” in growth, from “the gaze towards the worker” without this “meaning a slowdown in their growth”, warns Massa.

Argentina, no turning back

In Argentinathe market is divided between Pedidos Ya (76%), part of the international Delivery Hero cluster founded in Germany, Rappi (22%), and another dozen companies, which currently deliver 67% of the products purchased by electronic channels compared to 39% before the pandemic, according to a report by Kantar and the Argentine Chamber of Electronic Commerce for the first half of 2022.

“Many businessmen in the gastronomy sector say that they installed it in the pandemic” and that now “it is very difficult to go back because the sales channel has been absorbed by these companies”explains to EFE the person in charge of Framework and Inspections of the Union Association of Motorcycle Messengers and Services, Gonzalo Ottaviano.

The workers are considered collaborators or independent partners and the distributors function as a kind of self-employed: they declare through a system called “monotributo” and invoice the companies for the work carried out.

There is no regulation for these companies at the state level and only the city of Buenos Aires incorporated the figure of the “digital platform operator” into the Transit and Transportation Code in 2020, which allows companies to qualify the delivery drivers as self-employed.

This figure obliges them to establish an effective procedure to solve claims and provide work accident insurance and prohibits them from implementing incentive or sanction systems that promote risks to road safety and from sending notifications while the delivery drivers are making the delivery.

Politics revived in Mexico

In Mexicothe controversy surrounding the delivery and transfer platforms has been revived this January, the date on which taxi drivers and delivery men protested the arrival of Uber in Cancun, the country’s main tourist destination.

And the government of the Mexican president, Andrés Manuel López Obrador, has chosen to sideline by ensuring that it is the responsibility of the states to regulate the operation of these companies, which are generally seen as a source to increase tax collection.

Despite the legal loopholes, Mexico is among the top ten countries in the world with the most sales in electronic commerce, and half of the population buys food and beverages through digital channels, according to the Mexican Association of Online Sales (AMVO).

A study by the Center for Economic Research and Teaching (CIDE) and the Mx Internet Association ensures that platforms, such as Uber, Didi and Rappi, positively impacted the restaurant sector, with growth of up to 33% for establishments that adopted these channels.

But its expansion and rapid adoption caused the authorities, both local and federal, to impose higher rates, even with a specific tax regime for them since last year, with which they collect from both companies and distributors.

In addition, the strong pressure from members who travel the Mexican streets to deliver all kinds of orders, prompted the Mexican government to create an affiliation program so that they can access social security based on contributions of 40 pesos (2 dollars).

A strategy that annoys both companies and distributors due to the burden that issuing invoices and declarations represents.

Rappi’s Colombia

In Colombiathe sector is led by the local Rappi, with 44%, born in 2015 as a home delivery startup, and which today is present in nine countries and more than 250 cities in the region with nearly three million users.

They are followed at a great distance by Ifood (9%) and DiDi Food (3.6%), all of them growing but with precariousness and exploitation as the main scourges.

In past years, dozens of “riders” protested in front of the Rappi offices -including burning backpacks- to demand better working conditions and that the company take responsibility for their health in the event of an accident.

Faced with this situation, the Colombian government assured in January that it was advancing in the study to regulate the more than 700 existing digital platforms in order to provide better working conditions for the people who provide their services.

“In order to regulate, it is necessary to establish a framework that allows both technological innovation and the protection of the labor rights of those who work in these schemes so that they have the minimum required by law in Colombia,” Darío Hidalgo, a professor of Transportation and Logistics of the Javeriana University.

“Social security, health, pensions, occupational risk administrator would improve the precarious situation of the providers of this service that is in high demand,” he concludes.