Digital economy

Digital platforms: a future of work with opportunities and challenges for Latin America and the Caribbean

In the last decade, digital work platforms in the region have increased 14 fold, and COVID-19 is accelerating the transformation. Now there is a need to improve taking advantage of employment and business opportunities in a sector where algorithmic management predominates.

News | 26 February 2021
24 February 2021 (Lima, Peru) - The transformations in the world of work due to the upsurge of digital platforms in Latin America and the Caribbean indicate a future with new job opportunities. However, the region still has a long way to go to ensure that they offer decent work opportunities and promote growth of sustainable companies, says the International Labour Organization (ILO).

"COVID-19 has caused an acceleration of trends for the future of work, while exacerbating the many challenges associated with working conditions on digital platforms," explains Vinícius Pinheiro, ILO Director for Latin America and the Caribbean.

This week the ILO released its new flagship global report, “World Employment and Social Outlook (WESO) 2021: The role of digital labour platforms in transforming the world of work”, which highlights the significant diffusion of this business model across the world and in the region.

During the last decade, the number of digital work platforms operating throughout the region increased 14 fold, that is, from 4 to 56 according to the data presented in the ILO report.

The WESO 2021 is based on findings of surveys of some 12,000 workers in 100 countries around the world who work via digital platforms. It is also supported by interviews with representatives of 70 different types of companies, 16 platform companies and 14 platform worker associations from around the world in multiple sectors.

The digital online work platforms considered in the report can be classified into two broad categories: web-based and location-based.

On web-based platforms, workers perform tasks or orders online or remotely. Tasks on location-based platforms include transportation, delivery or delivery services, and others such as home repairs, housework or caregiving.
In the region, most of the investments are concentrated in transportation and delivery platforms. In the context of the pandemic, in particular, the presence of delivery platforms has been notorious, which were even considered essential services.

"The expansion of digital delivery platforms during the pandemic, an event known as the 'pandelivery', has become a fundamental source of work for millions of people, even for professionals who lost their jobs during the pandemic," says Pinheiro.

"However, in many cases workers on delivery platforms are subject to longer and strenuous working hours, low incomes, high levels of informality and greater exposure to contagion risks," he explains.

“The pandemic could become a catalyst that takes the digital transformation of the world of work to another level, considerably improving the opportunities for millions of productive units and workers, provided that the labour regulations necessary for the decent job are in place,” adds the ILO Regional Director.

Along the way it will be necessary to face a series of challenges. One of the most important is the “digital divide” in the region, which limits the access of many people to the digital economy.

Another challenge that generates controversy about the business model of digital platforms is that work relationships are becoming increasingly diffused between salaried employees and the self-employed.

The ILO report highlights that many platforms have a payroll of employees that guarantees their operations and administration, and a large list of self-employed workers who make the connection between companies and clients, whose working relationship with the digital company is unclear.

One characteristic shared by these platforms is the so-called “algorithmic management” – that is, jobs are assigned and evaluated using algorithms, – which involves continuous monitoring and evaluation, establishment of scoring systems, client participation in evaluations, interaction only through the application, and a certain lack of transparency about how the algorithm works.

The ILO also highlights that the situation also poses significant challenges for companies, some of which face greater competition in which those with greater adaptability have a greater advantage, for example to operate under a pay-as-you-go system, and those that can also absorb in their costs the commissions of the platforms that in some cases are high.

In-country social dialogue and international cooperation will be essential to shape the digital platform sector and address issues such as worker classification, adaptation of legal and response frameworks, social protection guarantees and rights that involve a formal job, among others.

"The adoption of measures to improve the working conditions for workers of digital delivery and transport platforms is not only a matter of promoting respect for labour rights, but also an ethical imperative of recognition and appreciation of these essential workers," Pinheiro adds.