By Laura Ripani*

The gig jobs are definitely a central phenomenon in the future of work debate. A recent report developed by McKinsey shows that around 20% to 30% of workers in the United States and Europe are independent workers. How is this digital transformation happening? How does it affect the digitalization of the labour market in Latin America and the Caribbean?

Thanks to the emergence of digital platforms that create more and larger efficient labour intermediation markets, McKinsey estimates that at least 15% of the independent workforce has use an on demand digital platform to generate income. However, this percentage is growing every year.

An important element of digital labour markets is that mechanisms to build trust, traceability and quality verification are very different from the personal circles of trust where autonomous employment is usually managed. This enables hiring services from professionals we do not know, but have been verified and are supervised by an algorithm.

Web jobs versus gig jobs

An example of web jobs would be digital markets of freelancers, such as graphic designers or professional consultants (Upwork or Amazon Mechanical Turk), while an example of gig jobs would be transport or accommodation services (Uber or AirBnB).

McKinsey states that there are four categories of gig workers, depending on whether the job is full time or not and if it is developed by choice or necessity. These four types are: casual earners (40%), who use independent work for supplemental income and do it by choice; free agents (30%), who actively choose independent work and this is their main source of income; financially strapped (16%), who complete their work with supplementary sources by need; and reluctant people (14%), whose source of income is independent work, though they would prefer a traditional job.

Gig jobs in our region

How is this growing phenomenon affecting the region and how can we predict its influence in the Latin American and the Caribbean labour market? The growth of gig jobs in our region provides an opportunity to develop local platforms that shall enable our countries to earn a place in the digital economy. Innovation and entrepreneurship, which support the gig work platforms are closely linked to the future competitiveness of our region in global markets of digital services delivery. Therefore, a very restrictive regulatory framework shall affect the digital competitiveness of our countries for sure.

Several surveys developed in other regions of the world show there is an accelerated growth of gig jobs intermediated by digital platforms, something that will occur in the Latin American labour market soon.  Public institutions in Latin America must innovate to be able to propose and lead systems that make the most of the data and information on gig jobs to promote regulation and social security service delivery models that adapt not only to the digital reality, but also in more general terms to a labour market that is migrating towards increasingly flexible labour relations. These arises the following questions:

• What are the most suitable labour training instruments to grant the gig workforce the best opportunities to compete in a world of global digital services?
• How can gig jobs support individuals with financial problems and reluctant people who are undergoing labour transitions?
• How can we bring balance to the protection of traditional jobs with the need of a regulatory framework that promotes digital competitiveness in the region?
• How can we promote the development of gig work platforms that promote a distribution of income between workers and platforms, which may lead to a fairer society?

It is key to generate consensus on the fact that, regardless critical opinions on gig jobs and the impact of digital labour markets on traditional labour markets, the most important thing is to build a constructive and open dialogue among different public and private actors, entrepreneurs, and the civil society, in order to develop a proactive framework that may contribute to promote innovation and digital competiveness in the region, working towards sustainable and inclusive development.

*Laura Ripani is a Lead Labor Markets Specialist at the Inter-American Development Bank (IDB).

Originally published by IDB.