Rappi, Glovo, and PedidosYa will have to abide by new Argentine regulations

Mar 13, 2020

The last-mile delivery industry has been a rollercoaster of ​​emotions and conflicts for Latin America. To all this, Argentina has decided to join the countries that are taking regulatory actions for digital platforms.

The startups that operate in Argentina, such as Glovo, Rappi, and PedidosYa, will have to adjust to this new regulatory framework to respect this interesting middle ground proposed by the Argentine government.

A midpoint for the shared economy?

The Argentine government’s proposal does not intend (for now) to modify the Labor Contract Law (LCT for its Spanish acronym). Their main proposal is to formalize the distributors.

Of a project with 41 articles, only two have been proposed consisting of the following points:

Salary: A maximum working time of 48 hours is established for the couriers. Therefore the worker deserves a minimum salary and a corresponding year bonus derivative to the hours worked in the platform.

Distribution conditions: Considering the different conditions in which the couriers work, an increase in the service cost of 10 percent in rainy conditions is proposed. Also, since the work equipment is considered to belong to the courier, such as the bicycle and the backpack, in case of rain the increase would be of up to 20 percent.

Health: The dealer will be assigned a fund with monthly contributions from the startup. This fund is calculated on average with three daily salaries of the last six months. With this fund, the distributors can make use of the money in case of illness or accidents. They may also withdraw funds without needing to present a medical note.

Dismissal: The couriers who are fired or, in shared economy terms, “discharged from the platform”, the corresponding compensation is one salary for each year worked.

Electronic salary receipt: Couriers must receive a digital certificate of their payment, replacing the need to make invoices.

Right to information: The courier must be informed in the behavior of the application’s algorithm in relation to user ratings. Startups cannot reduce a courier’s orders based on their rating as this is considered “discrimination”. However, they can reduce the number of orders when there is little demand.

Disciplinary regime: Couriers cannot reject orders and if they do not accept a service in 30 days, they can be discharged from the platform.

Vacations: Vacations will be one day for every 15 days worked. 

Other rights: A workplace risk insurer is mandatory for these startups as long as the workers are not removed from their respective unions and rights to strike.

The end of a shared economy

The term shared economy sounds attractive because of its egalitarian connotation. However, apparently this has not been enough for couriers in practice. At least for these regulations proposed by the Argentine government, there are several complex elements that have not been considered. 

The first thing is that of the three main platforms that are being sought to regulate (Rappi, PedidosYa, and Glovo), one has a strong history of leaving countries that are not profitable.

Therefore, it is likely that we already know which is the next country from which Glovo will be exiting this year. This may well leave out of work couriers who will have to migrate to other platforms willing to accept the additional costs of this proposal. 

As a former UberEats courier, there are a couple of points that I would like to highlight: The fact that there are minimum salaries for delivery people sounds quite attractive, however, this does not mean that last-mile delivery platforms are limited to a single commission per order.

There are bonuses (quite good and attractive) already predetermined to encourage couriers who meet a certain number of deliveries per day. Therefore, I consider that what will happen is that the initiative will make startups remodel these same bonuses to comply with the legal obligations and probably even limit themselves exclusively to the law.

These models are supposed to be created to earn additional money to your main source of income, however, these part-time gigs have mutated into full-time jobs. 

In relation to the care of the worker’s equipment, in my experience, the company sells the backpacks to the workers in weekly payment plans to cushion the expense.

And this decision is not philanthropy form the startups. It means brand presence with every delivery person that travels the streets.

In relation to insurers, adequate coverage for distributors is definitely necessary as they are constantly exposed to high risks.

In the end, the proposed laws take into consideration the main pains of those who depend on these platforms and solve problems on an immediate basis. However, in the long term, the consequences may be counterproductive if we continue to put so many obstacles in the way of the sharing economy.

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