Digital technology is essential to modern economies and can provide countries with new paths to development. It is an enabler, opening up opportunities across a wide range of sectors from agribusiness to retail, transport and manufacturing. Technology-enabled businesses are increasingly common in emerging market investment portfolios.
One area which has grown exponentially in the past decade is digital labour platforms. Through these platforms, individual workers are able to provide services to companies or individuals in exchange for payment. According to some estimates, there are up to 40 million platform workers in the global South alone, and it is estimated that by 2025 one third of all labour transactions will be mediated by these digital platforms. Digital labour platforms can provide the opportunity to facilitate sustainable development through job creation, particularly in labour markets with high unemployment and degrees of informality.
Given these opportunities, at British International Investment (BII) we have a growing focus on platform work. Our activity includes direct investments in digital labour platforms and companies developing and/or using platforms, as well as indirect investments through venture capital (VC) and other funds in our portfolio.
While great scale and access to under-served groups has the potential to achieve significant development gains, platform work also brings challenges for responsible investors relating to labour and working conditions. As a development finance institution committed to responsible investing, we aim to promote adequate risk controls to ensure these platforms can help to improve worker livelihoods.
Platform work has only become mainstream in the last decade and therefore there is little existing guidance on best practice for working conditions, social protection and worker safety. In addition, the implementation of international standards and government regulations is not straightforward. This is because platform workers often fall into grey areas of labour law in nearly every economy in which they operate.
In response to this need, we have partnered with SIFEM to publish Managing labour risks and opportunities of platform work. The guidance provides an overview of key concepts, focusing on digitally- intermediated labour and location-specific platform work. It explores potential benefits in developing economies, associated labour risks, and options for responsible investors to build into their decision-making.
The guidance has been designed for investment professionals, Environment, Social and Governance (ESG) and impact specialists, as well as business integrity and corporate governance teams. The note is accompanied by case studies of positive examples from emerging markets and a toolkit for responsible investors who are gauging this type of labour risk in their portfolios. That said, considering the quickly evolving landscape of platform work, this guidance cannot provide answers for every scenario, and we expect good practice in digital labour platforms to evolve rapidly.