Colombian Government Faces Off With Delivery Apps In Bid to Provide Social Security

In an interview with Bloomberg Línea, deputy labor minister Edwin Palma denies Rappi’s claim that implementing reforms would raise the cost of delivery apps’ services

According to Alianza In, a union representing delivery platforms in Colombia, the government's proposed labor reform would threaten some 80,000 jobs in the sector.
March 29, 2023 | 11:05 AM

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Bogotá — The Colombian government’s labor reform project aims to ensure that delivery platforms be responsible for the safety of their workers, ensuring they are affiliated to the social security, health, pension and labor risk subsystems and comply with their obligations to pay tax, or directly assume the payment of 100% of the contributions as employers.

Delivery companies would also be liable for covering their drivers’ or riders’ medical expenses in the event of an accident.

However, the proposals have been criticized by Colombian unicorn Rappi, which claims that the reform would increase the cost of deliveries to customers to 18,000 pesos ($3.90).

“It is a lie, for a fundamental basis,” Colombia’s deputy minister for labor affairs Edwin Palma Egea told Bloomberg Línea in an interview. “We have had many talks with Alianza In [the trade union that represents digital platforms], including Rappi.”


He added that Rappi is resorting to “a strategy of exaggeration”.

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During the government’s meetings with the spokespersons of the delivery apps, “two major agreements” were reached, the first of which refers to the need to regulate the platforms, while the second is that the reform should first focus on delivery apps, and not ride-hailing apps.

The latter agreement is due to the fact that “mobility platforms have been changing the business model and organizational scheme, and obviously involves other bodies, such as the Transport Ministry”, Palma said.


However, the conversations also evidenced a “fundamental disagreement” as to how the Labor Ministry defines labor, and that it must be assumed that there is an employee-employer relationship, he added.

“There is a personal provision of service, there is subordination, and there is remuneration in exchange for work”, and which are already part of the country’s labor laws, Palma said.

José Daniel López, executive director of Alianza In, said in an interview with Bloomberg Línea that the labor reform proposed by President Gustavo Petro’s government would not only affect these companies, but would also set several precedents for the entire ecosystem and threaten 80,000 jobs in Colombia.

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He said he envisages a model in which “the app platforms are responsible for the payment of labor risks when delivery drivers earn more than the minimum wage, or accident and civil liability insurance when their monthly income is less than the minimum wage for having worked fewer hours.


The most important aspect of this whole debate is that we are talking about labor rights, and particularly labor rights in this new way of organizing work.

Edwin Palma Egea, Colombia's deputy labor affairs minister

Palma pointed out that the discussion focuses on “whether there is subordination or not” and that the government defends that there is, since “it is the platform which sets the conditions” for its workers.

“It is the platform that blocks the worker, and they have had to fight to that they are guaranteed the minimum and fundamental right to due process,” he said, and described such workers as “false self-employed persons”, when in fact they are “a real worker”.

He added that, in designing the labor reform, the government took into account a proposal from Tu Orden, another local delivery platform, and in which “all labor rights and social security” were included, and which “would make the business viable”.


“But obviously other platforms feel that Rappi’s model is precisely the one that has taken them out of the market because they are playing with an advantage, by ignoring labor rights,” he said.

A Rappi delivery rider in Mexico City in April 2020.dfd

Palma said however that the government is flexible, and that it is essential to try to reach an agreement that facilitates the legislative process.

He said the government “has no interest in destroying either the platforms, or the system, or this way of working. What we want is to bring labor rights that today are being taken away everywhere in the world”.

“We have said: ‘the worker can connect at the hours he/she deems fit. The platform must help calculate those hours of connection, those hours of availability, and convert them into social security contributions. This is allowed by the technology,” he said.


Palma added that the discussions’ message is being simplified by certain unions that are against the reform by stating that the proposed labor reform “will destroy jobs, will destroy the platforms, and will increase costs”.

“Exaggerating the impact of the reform -that is also strategic- to make it digestible among public opinion, but without going into detail article by article, proposal by proposal, and with that they simplify the debate,” he said.

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