Brazil tries to regulate gig economy. It could get even worse for workers

and . Dec 19, 2019
Brazil's moves to regulate gig economy could make conditions for workers even worse Photo: Robert Anasch/Unsplash

Since Brazil escaped its worst recession on record, unemployment rates have slowly—yet consistently—gone down. But new data from Brazil’s official statistics agency sheds more light on exactly what kind of jobs people are managing to get. And the data shows that Brazil is becoming ever closer to the very definition of a gig economy.

The number of people working with vehicles—such as drivers for lift apps, taxi drivers and bus drivers—increased 29.2 percent in 2018 and reached 3.6 million, some 810,000 more people than in 2017. This is the highest increase in percentage and absolute terms since 2012, which marked the beginning of the National Household Sample Survey (PNAD), released on Wednesday by Brazil’s statistics agency IBGE.

</p> <p>The survey also showed an increase of 12.1 percent in the number of Brazilians who worked on public roads in comparison to 2017, adding up to 2.3 million people. Among these workers are, for instance, street vendors. The largest percentage variation in terms of workplace, however, was for people who work on the premises of another company, which saw a high of 38.3 percent.&nbsp;</p> <p>Meanwhile, the number of people working in-company has gradually decreased since 2015—with a pronounced 4-percent drop between 2017 and 2018. &#8220;This may indicate an increase in outsourcing in companies,&#8221; explained <a href="">IBGE</a> analyst Adriana Beringuy.</p> <p>The percentage of self-employed workers has once again increased. &#8220;Between 2012 and 2016, there was an increase in the contingent of people employed as employers or self-employed on the National Register of Legal Entities (CNPJ), reaching 29 percent in 2016. In 2017, this share decreased to 28.1 percent, growing again in 2018 and returning to 2016 levels,&#8221; said Ms. Beringuy.</p> <p>In Brazil, thanks to apps such as Uber and 99, the transportation sector was the only one to have a positive balance in job creation during the first quarter of this year. According to IBGE, the 133,000 new jobs in the area are the result of the ease with which unemployed people can enter these jobs.</p> <div class="flourish-embed" data-src="visualisation/1122439"></div><script src=""></script> <h2>The weakening of labor rights</h2> <p>Any job is a job, right? Not exactly. Formal full-time employment in Brazil grants workers access to the country&#8217;s labor legislation safety net: monthly deposits into a severance fund (accessed in the case of layoffs), insurance against workplace accidents, a guaranteed Christmas bonus, paid vacations, among other benefits. </p> <p>But people working for apps have a no-strings-attached relationship with the tech companies that connect them to customers. They are not considered workers, but rather labeled as &#8220;entrepreneurs&#8221;—a skilled move pulled in many countries to avoid corporate liability. But, since the boom of transportation apps in Brazil, hundreds of workers have decided to take companies such as Uber or food delivery service Rappi to court, requesting to be treated as a regular employee.</p> <p>This issue has been debated for a number of years but gained momentum after a motorcycle courier working for Rappi died during a delivery after he suffered a stroke.</p> <p>In this specific case, the clients of the app tried to save the biker, calling paramedics and even an Uber driver to take him to the hospital. However, emergency services were late to arrive, and the Uber driver refused to take the man to hospital.</p> <p>There are at least nine bills pending in Brazil&#8217;s lower house that seek to force the recognition of an employment relationship between these workers and the apps&#8217; owners, but none is close to being taken to a vote.</p> <p>A <a href="">study</a> by the Labor Prosecution Service on app work classified this type of employment as &#8220;neo-feudal&#8221; due to the reorganization of the relationship between the worker and the owner of the work tool, which in this case is the platform that connects drivers and couriers to customers.</p> <div class="flourish-embed" data-src="visualisation/1122373"></div><script src=""></script> <h2>Gig economy: when regulation actually hurts workers</h2> <p>There are currently some 100 bills pending in Congress <a href="">related to regulating</a> ride-hailing apps, ranging from the obligation to take out insurance for drivers and passengers, to ensuring that standardization and industrial quality agency Inmetro has the jurisdiction to monitor and enforce rules on these platforms’ means of charging.</p> <p>Today, when crossing an interstate border, an Uber driver may be fined and have his/her vehicle seized for illegal transportation of passengers.&nbsp;</p> <p>This is because the National Land Transport Agency (ANTT) requires that these trips be reported to the government body, with details of the destination of the route, and carried out exclusively by registered companies. To act according to national rules, these applications would have to send a prior list of passengers to the ANTT and comply with several other rules, such as submitting evidence of tax and labor compliance, registration with the Ministry of Tourism, and prohibition of sub-authorization of the provision of road transport service. In other words, none of this happens.</p> <p>As a result of this bureaucracy, in September of this year, a bus chartered by Buser (a form of Uber for buses) had its departure delayed by ANTT inspectors. The argument used was an alleged problem with insurance, because the protection was registered with the license plate of the vehicle belonging to the company partner of the application.</p> <p>Another type of regulation the apps push back against is the restriction of the circulation of cars from other municipalities. However, the Supreme Court recently argued that these rules are unconstitutional, as they hinder free enterprise and competition.</p> <div class="flourish-embed" data-src="visualisation/1121892"></div><script src=""></script> <h2>Confusing precedents</h2> <p>While Congress fails to resolve the situation, the courts have addressed the issue in a confusing manner. When transportation and delivery apps arrived in Brazil, it was common for labor courts to recognize employment relationships between workers and the platforms.</p> <p>A recent example involves the delivery company Loggi, which was forced by a regional labor court to register all couriers that use the application as its employees. Since then, however, such a decision has been exceptional, as this legal understanding has changed over time.&nbsp;</p> <p>A <a href="">survey by website <em>Consultor Jurídico</em></a> showed that between January 2018 and February 2019, Uber answered 178 lawsuits in the São Paulo labor courts. Currently, the number of cases against these platforms in the Superior Labor Court does not exceed 50. </p> <p>And these numbers are likely to keep falling, as the Superior Court of Justice ruled this year that cases involving apps and their workers should be decided by common courts. According to the court, the change is valid because there is no employment relationship, rather a provision of services.</p> <p>This understanding was reinforced by the flexibilization of labor legislation enacted in 2017. In court, the main arguments used to justify the lack of an employment relationship are the lack of subordination or company interference in the service provided.&nbsp;</p> <p>Labor prosecutors refute these statements, claiming that the rates charged for fares and deliveries, which are very low, cause workers to spend more hours connected to the application, which, &#8220;without any direct order&#8221;, keeps them available for long periods. On the other hand, the inspection of the work performed, say prosecutors, is the responsibility of the clients, and the apps are only responsible for excluding those with the worst ratings and keeping their best-evaluated drivers or couriers.</p> <p>One of the justifications for this insecurity was given by the head of the Superior Labor Court, Maria Cristina Peduzzi, who credited the current scenario to the fact that the world is facing &#8220;the Fourth Industrial Revolution.&#8221; &#8220;Today we have an ‘on-demand’ economy. It is a new reality. Amazon and Uber are platforms that have diversified trade. Legislation must adapt.&#8221;

Brenno Grillo

The Brazilian Report's correspondent in Brasília, Brenno has worked as a journalist since 2012, specializing in coverage related to law and the justice system. He has worked for O Estado de S. Paulo, Portal Brasil, ConJur, and has experience in political campaigns.

Marcelo Soares

Marcelo Soares is a Brazilian journalist specializing in data journalism and reader engagement.

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