Digitizing Latin American: Gig Economy in Developing Countries

As the internet and smart technologies have gone from military issues to penetrating all daily affairs, the World has changed a lot. Even the labor sector has experienced amazing transformations as new platforms have influenced work relations. We are taking a look at the gig economy in Latin America.

The Gig Economy Changes Work Relationships

Remote jobs have become progressively frequent and self-employed people have turned into an important workforce. Likewise, for developing countries, adapting to that paradigm has driven an interesting phenomenon: the digitization of the informal markets that have always been typical in emerging economies.

That scenario, where companies rely on informal workers and professionals bet on on-demand jobs, is called gig economy. What once was a business model for independent musicians and artists, is now a global trend.

From Canada to India, more and more people are joining freelance platforms to gain some income. However, while in developed nations the discussion has had to be with labor rights, in regions such as Latin America, the focus is on quite another matter.

The Gig Revolution

The so-called gig economy is also known as the collaborative market. It currently represents the evolution of self-employment, driven by digital innovations. Online platforms such as Uber, Lyft or Upwork set the tone for the rising of this worldwide freelance movement, which nowadays covers around 30% of the global workforces.

The main attractions of the gig economy are the decentralization of work and the high grade of freedom workers have. In this labor alternative, the US and European citizens have found flexibility, whereas governments foresee their legal implications. On the other hand, for many Latin Americans, it seems to be the evolution of the precariousness that characterized their labor sector.

Latin American, as a region under development, shares characteristics with Southern Asia and Sub-Saharan Africa, where freelance communities are also extremely prominent. The workforce from these latitudes has become an interesting offshore outsourcing market of talent for US and European companies. And, as expected, this has led a socioeconomic transformation.

Some studies pointed out that the gig economy would grow up to 25% globally after 2014. In contrast, predictions for Latin America call for an increment from 14 billion USD in 2014 to 350 billion USD income by 2025.

Freelancing: The Evolution of this Generation

These numbers show how important gigs are going to be for this generation’s evolution. Since deeply depressed economies in Venezuela, Nicaragua, and the Caribbean lack strong currencies, USD-based on-demand jobs could be very profitable. Likewise, for many Latin Americans, working in the platform market can generate incomes higher than those obtained through formal employment.

This fact, coupled with the attractive autonomy and task diversity that freelance work markers offer, gives gig economy an amazing potential. Its relevance is such, that some analyst suggests that the economic migration of the future might be digital rather than physical.

Regarding entrepreneurship in the Latin American gig economy, IE Business School recently published research that explores the issue. At the same time, freelance communities have grown, supported on US and European platforms, many of them have also been born in the region. Countries such as Brazil, Argentina, Mexico, and Peru are on the forefront of the fad. Here hundreds of startups that offer on-demand services have developed, aiming at collaboration, social improvement, and economic influence.

The Implications of a Developing Gig Economy

The implications of the development of the gig economy are mainly the following: oversupply, employment security, overwork, discrimination, social isolation.

In 2015, the willingness to participate in collaborative economies reached 70% among surveyed Latin Americans. Even so, one of the biggest concerns for freelancers is oversupply. Many Latin on-demand workers feel that competition has become more and more difficult since platforms have gained popularity. Growing awareness of online gig work and the lack of good local jobs is causing many new people to go online. This has generated saturated talent pools in which it is sometimes very hard to compete.

Regulating the Gig Economy

Similarly, the informal nature of the working relations allows “employers” to break links with the independent collaborator in an easy way. Although that might be a good feature from the business perspective, from an employees’ point of view, it’s a constant threat of dismissal. This is an aspect that has strongly motivated the movement in favor of regulating the of gig economy.

Gig workers face a complicated situation in terms of labor rights, that can compromise their mental and physical health. Because of the lack of regulations, freelancers often work up to an unhealthy quantity of hours. They are also devoid of social protection or anti-discriminatory policies. The latter is combined with the social isolation that is typical of remote jobs.

However, regardless the issues, gig economy in the continent is still growing. In a panorama of precarious work conditions, inconveniences like such seem not to be important obstacles. Which indicates that the focus for countries should be ensuring regulations through bilateral mechanisms. So that good working conditions can be achieved both digitally and physically.

Could this be the Future?

The platform, freelance or gig economies are an open door for Latin American workforces. Despite the issues, the context has eased the penetration of this movement. Denying its existence or ignoring its potential of positive impact could be a big mistake for regional governments. The digital revolution seems to have transformed the reality of informal working and it might comprise the key factor to achieve economic development.

Whether digitizing informal work is convenient or not, it is a fact that governments should take into consideration.

About Alejandro Pérez Morales

Alejandro Pérez Morales, as a professional, can be split into three different faces: a Venezuelan young Bachelor in Mass Media that has precociously put himself into the competitive and innovative world of marketing and content production, a frustrated painter and writer that is passionate about humanities, and a fervent lover of social organizations and political issues. A triad of interests that define everything he communicates.

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