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Understanding Latin America’s wave of informal employment
Lucas Berti . Jul 27, 2020
Photo: Myriam B/Shutterstock
Lara, a 25-year-old trilingual international relations graduate living in Salvador, the capital of the northeastern Brazilian state of Bahia, has been forced into a career change by the coronavirus pandemic. Despite the qualifications and experience on her résumé, she resorted to selling homemade cakes in order to pay the bills. With the help of her mother, Lara put together her own store, stocking a variety of traditional Brazilian sweets. She is part of a group of 158 million informal workers in Latin America who are not protected by any labor rights, formal employment contracts and often have to work in unsanitary conditions.
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<p>While informal workers already make up an astonishing 54 percent of the region’s workforce, this share could become even larger. The International Labor Organization (ILO) reported that <a href="https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/documents/briefingnote/wcms_743146.pdf">Latin America lost 47 million jobs</a> this year until July, and is expected to worsen as the region’s economy is set to tank thanks to the coronavirus.</p>
<p>Latin America as a whole is a time-bomb for unemployment, with several companies closing. Citizens have resorted to alternative ways of earning money, but the precariousness of employment relations in the gig economy creates a vicious cycle of job crisis. </p>
<p>Poorer populations are finding it even harder, say experts. In 2019, before the pandemic hit, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) reported that 30.8 percent of the region was below the poverty line and 11.5 percent lived in extreme poverty. Unlike middle-class families who are forced to reinvent their professional careers, poorer communities don’t even have a starting line. </p>
<p>“Even though it was not a satisfactory wage, my office job guaranteed me the same salary amount at the end of every month. With the pandemic, when the office [closed], starting my own kitchen business at home was simply a solution,” Lara told the <strong>Brazilian Report</strong>. </p>
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<h2>The frenzy of delivery apps</h2>
<p>Quarantine measures have increased food delivery services to a whole new level. With restaurants closed for sit-in custom, people have turned to takeaway meals in their droves. Meanwhile, new businesses such as Lara’s cake service, require the aid of delivery apps to transport their treats to clients. Brazilians’ spending on top food delivery apps Rappi, iFood, and UberEats has increased by 103 percent in the first half of the year, according to a survey by startup Mobbi. In the city of São Paulo alone, downloads of delivery apps grew 700 percent between January and April. </p>
<p>However, while the <a href="https://brazilian.report/newsletters/brazil-daily/2020/01/29/ifood-delivery-app-workers-slave-labor-natural-disaster-floods/">expansion of delivery services</a> is excellent news for the companies behind the big apps, it hasn’t been so advantageous for the couriers themselves. The boom in orders has seen the amount of delivery drivers increase greatly. While the delivery companies see their profits rise, <a href="https://brazilian.report/tech/2020/06/19/brazilian-delivery-app-workers-rise-up-telecom-regulations-5g/">drivers remain underpaid</a> and now have much more competition for fares. Working conditions are also precarious as they are not strictly seen as employees, thus receive no protections or benefits. Delivery drivers for Brazil’s leading apps staged a walkout last month, demanding their bosses provide them with hand sanitizer and masks.</p>
<p>In Brazil, couriers work, on average, at least 15 hours per day, receiving less than BRL 1 (or USD 0.19) per kilometer. On average, they earn less than BRL 2,100 (USD 404) per month, according to the Association of Autonomous Delivery Drivers of the Federal District. If they suffer accidents in traffic, they are not due any compensation or assistance.</p>
<p>The situation is comparable in Peru. One 25-year-old courier said that major apps “offer you health insurance and safety items, but you have to prove that you are sick. It is a big lie.” And as the government demands commitments from companies, UberEats decided to leave the country in July, showing little to no interest in developing better relations with their drivers. </p>
<p>Argentina is equally in turmoil. In recession since 2018, the pandemic has only served to make the situation even more desperate, with the unemployment rate jumping to 10.4 percent in the first quarter of the year and getting progressively worse. Indeed, the gig economy has served as a safety net to thousands of Argentinians shut out of the formal job market. There are over 25,000 delivery drivers working for smartphone apps in the city of Buenos Aires alone, the result of a 600-percent increase in demand for these services during the pandemic. </p>
<p>However, app delivery work was only regulated in the capital as of July 16, when a city law ordered companies to provide drivers with health items and prohibit the so-called “punishment-reward system,” which pressures couriers to work even longer hours to earn slightly more money.</p>
<p>Regardless, the onslaught of delivery apps and stories such as Lara’s suggest that the coronavirus pandemic is wiping out formal employment across the region, leaving temporary, freelance, and part-time work as Latin America’s new normal.
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