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Court Decision Defies The Anti-Gig Economy Debate

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Welcome to this week’s news round-up on the Brazilian innovation and technology ecosystem. Here are some of the main developments seen in Latin America’s largest economy during the week ending January, 31, 2020:

A big decision

The conclusion of a court case this week around two Brazilian startups that had been accused of subverting formal employment laws may impact the anti-gig economy debate across the globe.

In an unprecedented decision, the São Paulo employment tribunal ruled in favor of food delivery firm iFood and logistics operator Rapiddo, both companies owned by Brazilian tech conglomerate Movile. The ruling did not recognize the original accusation that both startups, disguised as intermediaries, sought to evade a labor relationship with couriers that operate through the platform and failed to comply with related labor standards around health and safety.

Judge Shirley Escobar denied the request for recognition of a employment relationship between couriers and companies, due to the peculiarities of the whole arrangement, “which, in fact, is innovative and only possible through technology [and] is proving useful as a response to society’s [needs].”

“It is neither credible nor reasonable to imagine that the entire population can and want to shape itself between employees and employers”, the judge said.

Prosecutors at the labor court had previsouly said they had found robust evidence to support their original argument. They described a complex arrangement where multiple actors (for example, the logistics firm as an intermediary operator) are combined and “surgically chosen to mask and hinder” the employment relationship between couriers and iFood, now worth well over $1 billion.

A “digital slavery” situation between the parties involved was also described by the prosecution, where prizes and other types of financial rewards led to an intensification of work or an increase in the couriers’ workload.

Based on the understanding that the companies were operating illegally, the prosecution sought the recognition of the employment relationship, in addition to 24 million reais (US$ 5.5 million) in collective moral damages, the equivalent to 5% of the estimated gross revenue of the startups involved.

In a statement, iFood celebrated the decision and described the latest developments as “extremely positive”: “The decision, historical and unprecedented in the country, demonstrates that the Brazilian Justice has a great understanding of the impact that technology has nowadays, reinforcing the legality of the business model and the absence of requirements for the characterization of the employment relationship.”

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Top week at Nubank

Brazilian fintech Nubank has announced a number of new hires to its senior management team. Jag Duggal, formerly a product management director at Facebook, joins the São Paulo-headquartered startup as chief product officer. Youssef Lahrech, ex-senior VP for card analytics and infrastructure at Capital One, will join as global head o analytics and technology. Marcelo Kopel, formerly a senior executive at Itaú Unibanco, one of Brasil’s largest private banks, has also joined the fintech as chief financial officer.

All the new hires have joined the company’s executive management team at Nubank, which includes its founder and CEO David Vélez, as well as the cofounders Edward Wible and Cristina Junqueira, currently away on maternity leave.

Also this week, Nubank appeared on a list of the world’s highest-valued startups. Among the 23 companies valued at $10 billion listed by analyst firm CB Insights this week, the fintech was the only Brazilian company, at rank 21.

The list of decacorns included Indian hotel startup Oyo (rank 23), while the top 10 included companies such as US fintech Stripe, which grew its valuation from $22.5 billion to $35.3 billion. The first company on the list is Chinese AI company Bytedance, valued at a whopping $75 billion.

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Hello, tuk-tuk

Uber has introduced the tuk tuk to Brazilians with a new launch this week. The coastal city of Vitória, in the southeast of Brazil, was chosen by Uber as the location for the launch of the fleet of electric vehicles.

The 26-strong tuk-tuk fleet was introduced in Brazil in partnership with car rental firm Movida and follow over a year of negotiations with the local authorities to secure the necessary approvals.

According to the company, the launch of the tuk-tuks, which are immensely popular in countries like India and Thailand, is part of a strategy to diversify the transport options available on its platform. There are no immediate plans to launch the offering in larger urban centers like São Paulo or Rio de Janeiro.

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Also on California ballot: Gig economy, race in admissions

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Written by Karishma Mehrotra
| San Francisco |

October 26, 2020 4:01:40 am


Supporters of “pro-black” initiatives on the ballot at an event hosted by the California Democratic Party Black Caucus. (AP)

Should Uber drivers be considered employees? Should public schools consider race when accepting students? Should 17-year-olds who will turn 18 by the time of a presidential election be allowed to vote in the primaries? Should prisoners be able to pay cash to get bail?

Other than choosing between presidential candidates Donald Trump and Joe Biden, in what is being called the contest for “America’s soul”, these are some of the questions Californians will be voting on come November 3. Debates in this Democratic state have long been leading indicators of social issues roiling America — and the propositions on the ballot this time are no different.

“To study California initiatives and referendum is to study a microcosm of the major… issues that people and politicians have cared about,” wrote historian John Allswang in his book on the state’s proposition system.

This year’s propositions, put on the ballot by citizens who garnered at least 623,212 signatures in support of each, come from a long tradition of direct democracy in the country. US citizens can suggest propositions — or legal measures — to be put to popular referendum in a state, bypassing the legislature.

California was the second (after its close liberal sister Oregon) to institute the system in the late 1800s and has used it most frequently. A series of propositions in the 1900s dealt with politics over oil exploration and insurance companies. In 2008, Proposition 8 was one of the first legislative debates about gay marriage. In 2010, voters were asked to choose between emission standards and employment rates — all issues that made their way eventually to international discourse as well.

This year, the most contested proposition, Prop 22, has voters asking if Uber drivers should have flexibility or stability. With stickers on Uber vehicles and on bags of online grocery service Instacart, app-based companies have spent $181 million — the most in California’s history on a proposition campaign — to get voters on their side. If it passes, it would exempt companies like Uber from providing employee benefits to their drivers. A group of gig workers sued Uber for $260 million on Thursday for the company’s aggressive in-app messages asking riders to support the prop.

Currently, companies like Uber, Lyft and food delivery firm DoorDash use a contracting model so that they don’t have to pay their workers unemployment insurance, overtime, or compensation. The companies claim most of their drivers, a million Californians, would prefer the flexibility of contract work over the stability of employee benefits.

“(E)mployment comes with a cost: hundreds of thousands of drivers would lose work opportunities overnight,” wrote Dara Khosrowshahi, Uber CEO, in a blog post. “To be clear, I’m not arguing that gig work is perfect. On the contrary… we should be honest about how independent work must improve to meet the needs of the moment.”

Uber and the companies argue that if this proposal doesn’t pass, drivers would be forced to become full-time or leave the platform, and prices will increase.

Those who are voting against the proposition want drivers to get full employee protections and say companies shouldn’t write their own labour laws. Democratic nominee Joe Biden has endorsed this side.

Another contentious measure, supported by Democratic Vice-President nominee Kamala Harris, would allow public entities in employment, contracting and education to consider race, sex, colour, ethnicity, or national origin to address diversity. In other words, it would allow affirmative action, giving preferential treatment to historically disadvantaged groups. The state had outlawed this practice in the 1990s. The system is different from quotas, which are banned by American federal law.

This is most often brought up in the case of university admissions. Many Asian Americans believe affirmative action measures hurt them, as their higher scores are de-valued for another’s identity. Others say diversity should focus more on class, not race.

A social media campaign directed at Asian Americans targets Chinese American politicians who support the proposition: “Will Assemblyman Evan Low Betray You?” one flier reads. Signs across the state read “Don’t Divide Us” or “Opportunity for All”.

Prop 24, calling for consumer data privacy protections, is more than 50 pages long. It wants changes to the California Consumer Privacy Act of 2018, redefining sensitive data, limiting the time companies could hold onto data, and creating a new regulatory agency — with several parallels to the Personal Data Protection Bill currently pending in Indian Parliament.

California and several other states are also tackling criminal justice reform, in the backdrop of this summer’s Black Lives Matter protests. In Ohio and Maine, voters are considering a civilian review board to investigate police misconduct, and in Michigan, the police may need a search warrant to access electronic communication. Other states are tackling campaign finance reform and recreational marijuana use. Mississippi is considering a new state flag, while Rhode Island might change its official state name.

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Direct Selling Industry To Benefit As India Embraces Gig Economy

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Direct selling remains a compelling option for young entrepreneurs

In these tumultuous times, direct selling has provided hope for millions of people who were looking to utilize their skills to go the startup route

20 Mn individuals could be engaged in direct selling by 2025, FICCI-KPMG

Times are tough, Covid-19 is unrelenting and with no clear end in sight. No one predicted how severe and lasting the cascading impact would be on the economy when lockdown started. Pay cuts, job losses, and business closures have debilitated a system already battling a fiscal downturn. According to the Centre for Monitoring the Indian Economy, the unemployment rate in India is estimated to be at 27.1% as of early May, as nearly 122 MnIndians lost their jobs in March and April 2020.

India, like other countries, refocused their gaze within as the infections began to rise rapidly. Initiatives like ‘Vocal for Local’ and ‘Aatmanirbhar Bharat’ urged businesses and individuals to recalibrate and realign strategies. This approach encouraged local manufacturing, but also created a sense of ownership and determination among budding entrepreneurs.

Direct selling remains a compelling option for young entrepreneurs. It provides a business opportunity at negligible initial investment or operating costs. The option lends flexibility to work on their own time. However, it is Aatmanirbharta that has always been a central tenant in direct selling.  Running your own business means you decide whether your business sinks or floats.

In these tumultuous times, direct selling has provided hope for millions of people who were looking to utilize their skills to go the startup route.  The 2019 sales figures of $2.47 Bn proves that direct selling industry is thriving and illustrates its potential with the continued growth. The direct selling industry is growing at a healthy rate of 12.1% YoY and India currently ranks 15th, four places up since last global rankings. The pandemic notwithstanding, direct selling is bucking the trend and continues to make a rapid recovery.

Apt For Remote Working culture

So, what is to account for this continued growth during unprecedented strife? The conventional work models have seen a paradigm shift with an exodus to digital. However, direct sellers have always been nimble and adaptable.  Most importantly though, the direct selling industry has always depended on person-to-person (P2P) interactions.

Social media tools like FB live, Instagram live, video conferencing, podcasts and webinars showcase the one-on-one skills marketers have by increasing the number of encounters and focusing direct sellers’ energy towards individual customers . This move has opened new possibilities for direct sellers, and this augurs well for the recovery of the industry and its workforce that thrives working on its own terms. 

Empowering Entrepreneurship

As per the report by FICCI-KPMG, 20 million individuals could be engaged in direct selling by 2025. Direct selling is a business and allows you to be your boss without the commitment of high initial capital and overhead costs. Today, direct selling comprises of millions of professional sellers who are extremely skilled at what they do and can achieve seemingly lofty goals. It also provides flexible work hours to homemakers, which is an important reason the sector has a large percentage of its workforce as women.

Vocal for local

The local growers and manufacturers stand to benefit as the demand of homegrown product continues to rise. As per the industry report, the direct selling industry employs close to 6 Mn representatives and has added to this workforce during the pandemic. The industry has seen a demand spike in wellness products which are rich in vitamins, minerals, antioxidants, phytonutrients. Such products are essential for building immunity and homegrown firms in this segment have benefited by building significant manufacturing capabilities in India.

In summation, the direct selling industry has created a robust ecosystem which provides an avenue for entrepreneurial aspirants to own and operate their own business. The sector continues to attract a ready workforce in search of stable earning opportunities without the trappings of a mundane work life, just the way the gig economy works.



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Irish gig economy app expects to sign up 30,000 users by January

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Gigable, an Irish app aimed at the freelance economy, expects to sign up almost 30,000 people by year end as Covid-19 boosts restaurant deliveries and the demand for drivers.

John Ryan, founder of the company, said that the number is up from 7,000 since before the pandemic took hold and growth accelerated as restaurants sought freelance drivers.

Gigable allows freelance workers to connect with delivery jobs offered by restaurants in Ireland and Britain.

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