Newsletter June 2019

What is the "gig economy", why is it growing so fast and what are its risks?

Independence or precariousness of employment?

Latin America joins the trend

Some people suggest that it is necessary to regulate the sector.

What is the "gig economy", why is it growing so fast and what are its risks?


Let's say you're unemployed. And you see an opportunity to work with Uber carrying passengers in your car. You can also lease your apartment through the Airbnb digital platform. And sell some of your stuff on Facebook without intermediaries; and maybe offer your professional services for a few hours.


At the end of the month you get a salary and then the combination of these options allows you to live without having an employer. You connect directly with other users on the Internet. You are free, you are your own boss.


It sounds very good, maybe, but you do not have social protection and you are not saving for your retirement. You get sick and the matter gets complicated. Paid vacations, do not dream about it. It seems that, what sounded perfect, is not so perfect any more.


This is just one side of the coin. The other one, is the one of highly qualified professionals who work independently for several companies, organize their time and develop skills that allow them to insert themselves in different work teams.


In the "Gig world" consumers and producers join through in digital platforms.


Many of them are entrepreneurs, they can work from home or on the plane and they generate income that is higher than what they could get in a fixed job with a single employer. They move in the digital world like fish in the water and they never stop studying.


Those two profiles are part of the gig economy, also known as collaborative economy, or freelance economy, which has generated a lot of jobs in the last decade.


It grows as new technological developments that generate platforms for users to exchange goods and services outside of traditional companies are created.



Independence or precariousness of employment?


According to one of the most spread versions, the name gig comes from the time when jazz musicians made their living with the money received in each presentation. Something that persists until today in the artistic world and that has been extended to the rest of the labor sectors.


Artists have traditionally worked in casual jobs as "freelancers". The new thing is that this labor model has expanded to other economic sectors.


This model of work has given good results to the technological innovators who, with their start-ups, create the necessary platforms for collaborative exchange, operating at minimum costs and becoming dominant mediators of a sector, which allows them to keep an percentage of each transaction.


A study made by the consulting firm McKinsey showed that 27% of workers in the United States and Europe are part of this trend.


In the case of the United States, a survey conducted by the Freelancers Union and the Upwork organization detected 55 million people who are self-employed. But not only that. Two thirds of the survey respondents said that they were independent because they had no other option.


Diane Mulcahy, a researcher who recently published a book about the gig economy in the United States, has a different view of the phenomenon.


In the Gig Economy they work from doctors and programmers to Uber drivers.


"Many independent workers choose this form of employment because they value their autonomy, the control they have over their work and the flexibility that it provides," Mulcahy said.


His research on the subject shows that the phenomenon is not only reduced to Uber drivers. His analysis suggests that it is a substantial change in the world of work.

"There are platforms available for the work of encoders, doctors, lawyers, graphic designers and many other professionals." The gig economy crosses all industries, salaries and levels of education, " Mulcahy said.


In Latin America, this phenomenon is gaining strength in countries such as Brazil and Mexico.


The gig concept seems to be so broad that it includes an unemployed person looking for an option to survive, an employee who occasionally seeks a second source of income or a young professional from Silicon Valley who develops creative projects.


Latin America joins the trend


According to César Buenadicha, leading specialist of the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB), the collaborative economy will grow globally from US $ 14 billion in 2014 to US $ 335 billion in 2025.


"In Latin America there is still no consolidated growth figures to date, but some data from AirBnB and Uber in key sectors such as Brazil and Mexico (and in a smaller measure Argentina), allow us to estimate a substantial increase in the sector in the region."


Some people suggest that it is necessary to regulate the sector.



According to Buenadicha, the gig or collaborative economy understood as a new form of interrelation between consumers and producers through digital platforms, grows rapidly in the region and poses enormous opportunities and challenges.


"You have to analyze and understand in detail the labor, fiscal and social implications, and the ones from the field of competition, of the collaborative economy," he said.


One of the risks of the Gig Economy is the precariousness of employment because there are no employment contracts or regulations.


Some of the risks that the growth of the sector can bring are related to the possible increase in labour informality.


In this sense, Buenadicha believes that there must be a timely regulation to promote social inclusion and, at the same time, innovation in the countries of the region.


Others, however, think that one of the positive aspects of the gig economy is that it has not been regulated, what creates a more democratic space for the users themselves to make decisions.

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Worker participation in GIG economyWorker participation in GIG economy

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