30 octubre 2018

The Gig Economy Is Shifting Paradigms

Entrepreneurs of new projects and services, therapeutic companions, personal trainers, UBER drivers, porters, RAPPI riders and other similar on-demand delivery services, motorcycle couriers, carriers or messengers are some examples of those who do not have an employment relationship with users or the owner companies providing the app, the software that matches users with service providers.

Published in El Cronista on October 30, 2018
Even the Government in the City of Buenos Aires that banned UBER explicitly has created BAtaxi, an e-hailing app for registered, licensed taxis with a banking account to somehow compete against UBER, Cabify, Lyft and phone booking taxi services, like Taxi Premium and others that developed apps to connect drivers to passengers easily. Remember that taxi companies have a call-center service under different names that are used to book trips and so there is also a link between the company who gets the trips and the taxis joining the platform.

If UBER drivers can claim an employment relationship, the same claims may be brought by taxi drivers who join the BAtaxi platform against the Government of the City of Buenos Aires.

In the US, in European core countries such as Spain, the UK, France, Germany or Italy, in Australia and New Zealand, in Japan and even in China (where Uber merged with DiDi Chuxing), UBER and other similar platforms have proven to be successful both in terms of operations and efficiency of the services provided, and are challenging the rules of labor law and self-employment contracts under the National Civil and Commercial Code [Código Civil y Comercial de la Nación], and demanding a new legal framework to meet the new paradigms.

In Latin America the situation is quite similar. In fact, Colombia, Mexico, to a lesser extent Chile, Brazil, Peru, Bolivia, Paraguay and Ecuador, have launched initiatives that include bills to set new rules for employment precisely in an attempt to make those initiatives viable.

The gig economy is compelling public authorities, Congress and experts to review old models and rethink a new subsystem that will undoubtedly require a change of mindset and a total rearrangement of all the pre-existing schemes.

A reality like this must be taken into account as a central factor for any analysis.

These new forms of organizing work is creating new job positions, whether as employees, independent contractors, or in a new category revolving around these two classic pillars.

As a matter of fact, we should not let the debate become exhausting, trying to figure out whether these new workers are freelancers or employees under an employment relationship, a model that because of direct or indirect, intrinsic or collateral costs have made this classification unfeasible.

I honestly think that these two extreme categories have been exhausted, and today we do not know how to fit the models that generate employment into this classification, whichever their nature. And amid a global meltdown where employment is scarce, we should provide the gig economy with a reasonable legal framework.

Finally, it is worth mentioning that Article 14 bis of the Argentine National Constitution states: “Labor in its several forms shall be protected by law”, and our Magna Carta makes no distinction between the type, method or form of employment, but rather refers to any kind of work.

In such a context, we know that throughout history there have been special schemes, like that for the construction industry, domestic service or offshore workers, together with professional services such as those provided by doctors, lawyers, entrepreneurs, and lately those who work with UBER, RAPPI, and other platforms.

Everything points out to the need to create a new subsystem combining the factors that characterize this form of employment, preserving the prominent features that make it successful and widely-used, ensuring that the new rules do not destroy or ruin the initiative, which nowadays is one of the most effective forms of job creation, even when it is a new category: tertium genus.

The challenge has been presented, together with the need for a labor reform that can build on what has been done so far. These new kinds of employment and job promotion should be introduced taking into consideration that this is the main goal for the present and the future, a landmark for those who have developed a convenient, profitable activity to regain their lost dignity, or for those who carry out a sustainable, profitable activity to preserve it.

By Julian A. de Diego
Director of the postgraduate course on Human Resources at the School of Business at UCA.