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Colombian President Gustavo Petro wants to kill the gig economy

Europen February 22 Fleets of taxi drivers went on strike and attempted to block roads in more than 20 Colombian cities. Their beef was with Gustavo Petro, the country’s recently elected left-wing president. They cheered when Mr Petro’s government said it would regulate transportation apps such as Didi and Uber, which are illegal in the country. But his government caused an uproar among ordinary Colombians with a leaked proposal in January: A draft suggested they would fine users 10 million pesos ($2,000) and block the apps. Mr Petro put his plans on hold after hundreds of gig workers took to the streets in January. On the evening of February 22, the transport minister met with the striking taxi drivers; they will now draw up a plan. The uproar portends the political chaos that could become a feature of Mr Petro’s administration.

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Mr Petro has set himself a difficult task. The gig economy is booming in Latin America, especially in Colombia. Rappi is the country’s first tech unicorn, valued at $5 billion in 2022 and used throughout the region. It is not illegal in Colombia, but there is a regulatory gap because it is not considered an official employer. About 40,000 Rappi couriers work in the country. Another 150,000 gig workers work for competitors like Uber, iFood and Cabify.

Most of these gig workers are Venezuelan immigrants, about 2.5 million of whom are in Colombia. These apps provide them with a lifeline in the form of daily income. But it is unstable. “Some days are really bad,” said Venezuelan Rappi driver Roberto Romero. His journey will involve his bike weaving around Bogota’s horrific traffic in an attempt to avoid a fatal crash.

Mr Petro is concerned that gig economy apps do not provide workers with minimum wages, health insurance or pensions. He argued their contract created a “lying labor relationship”. His government wants to enshrine formal labor protections for gig workers and roll out labor reforms this year. Big tech companies are also easy targets for new leftist governments. “You shouldn’t be accumulating wealth while exposing yourself to labor risk,” said Edwin Palma, undersecretary for industrial relations.

Mr Petro also wants foreign tech companies to pay more taxes. In November, Congress approved the government’s new tax reforms, one of which aims to capitalize on the country’s growing digitization. It includes a 3% digital services tax on gross receipts and a stricter value-added tax on foreign digital services. It will automatically take tax into account for any company with more than 300,000 Colombian users. Finance Secretary José Antonio Ocampo mentioned Uber, Spotify and Netflix when he announced the proposal last year.

This approach departs from the laissez-faire techno-utopianism of the previous administration. Mr Petro’s predecessor, Iván Duque, championed what he called the “orange economy” of start-ups (a reference to Rappi’s unique color) and creative entrepreneurship. Mr. Duke sometimes even wears a ripped mustache hat. Today, by contrast, members of Unidapp, Colombia’s largest union of digital platform workers, now regularly appear in consultations with the labor ministry. “this [previous] The government has never bothered to listen to our needs,” said Unidapp President Luz Myriam. “But we are confident [this] The government is a fresh start and will implement our demands. ”

Critics fear the reforms will backfire. A heavier tax burden could stifle innovation and discourage future start-ups. “this [tax] The reforms will increase unemployment, inflation and poverty,” said Senator Miguel Uribe, from the conservative opposition. Higher labor costs mean more expensive and slower deliveries for delivery app customers. In Colombia, most gig workers were previously unemployed or engaged in other informal activities, according to a survey by the think tank Fedesarrollo. “The choice is not between formalization and informality,” says Cristina Fernández of Fedesarrollo (Cristina Fernandez), “It’s a choice between an informal delivery job or no job at all. ”

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