Flexibility – and Opportunity – in the Digital Economy

The rapid evolution of the digital economy has transformed how we view employment, especially in big cities. This new economy offers unprecedented flexibility and opportunities for additional income, allowing individuals to balance personal and professional endeavors. Digital platforms play a crucial role in addressing economic participation challenges in Mexico.

Digital platforms, characterized by flexible assignments, have grown significantly. A recent study by Mordor Intelligence projects Mexico's ride-hailing market to reach US$3.34 billion in 2024, growing to US$4.45 billion by 2029. This growth is driven by digital opportunities offering significant advantages to users.

Fueling expansion is the increasing availability of digital opportunities, which offer distinct advantages to hundreds of thousands of users who choose platforms daily to generate income. Moreover, it keeps growing: e-commerce for goods and services contributes 5.9% to Mexico's GDP, as reported by the National Institute of Statistics and Geography (INEGI) based on 2022 data.

Candid and open dialog with decision-makers and communities across our regions will be essential to ensure a sustainable, innovative environment in the years to come. 

A New Paradigm

In the context of big cities, where living costs and competition for employment are high, the digital economy provides an attractive alternative. It allows individuals to engage in multiple income-generating activities without the constraints of traditional employment. For example, drivers who connect to ride-hailing platforms can set their schedules, juggling their other commitments effectively. This flexibility is particularly beneficial for individuals who might otherwise struggle to find full-time employment that accommodates their personal needs.

The digital economy also helps absorb fluctuations in traditional employment markets. INEGI's data shows that 4.2 million people were underemployed in January 2024. Digital platforms provide immediate solutions, allowing these individuals to earn income and alleviate financial strain. This phenomenon has been crucial for economic recovery in the region following the COVID-19 crisis. For example, during the pandemic's peak in March 2020, delivery platforms like DiDi Food and others increased connections by 50%, varying by country based on confinement measures.

The pandemic highlighted the importance of flexible income opportunities with low entry barriers. According to several internal data, so far, 67% of couriers and 62% of drivers have seen an increase in their income compared to their previous activity.

Empowering Marginalized Groups

One of the most significant advantages of this economy is its potential to empower diverse groups. Women, for instance, often face tough barriers around traditional employment due to several duties they unfortunately face on their own. Digital platforms provide opportunities for women to connect freely and flexibly, thus contributing economically without compromising their care responsibilities. This shift not only enhances their economic independence but also fosters a more inclusive labor force.

Similarly, young people entering the job market can benefit from these opportunities. By leveraging their knowledge of platforms, they can gain diverse experience, build skills, and enhance their employability. This is crucial in a competitive market where traditional entry-level positions are scarce, allowing them to explore different roles to understand their preferences more easily.

People Earning Income Through The Digital Economy Are Not Informal

Informality remains a challenge in Mexico's labor market, affecting a significant portion of the economically active population. To address this issue and the growth of the digital economy, the government implemented a Tax Withholding policy in 2020 to tax income generated by platforms and their users. This policy allows people earning through platforms to meet their financial obligations and improve their legal certainty. From January to June 2024, Mexico collected MX$15.8 billion (US$813 million)in taxes from these platforms, according to the Tax Administration Service (SAT).

Enhancing Urban Mobility and Services

The mobility sector, a key part of this economy, has transformed urban transportation. Ride-hailing services offer earnings opportunities and improve citizens' quality of life by providing reliable and affordable transportation, reducing the need for car ownership, and contributing to less congested and polluted cities. This growth also benefits sectors like food delivery and logistics, driven by digital platforms.

In Mexico City, ride-hailing services are vital to urban mobility, helping millions navigate the metropolis efficiently and complementing public transport. These platforms continuously innovate to enhance user experience and safety with features like ride tracking, driver verification, and cashless payments. Additionally, collaborations with authorities ensure better tracking of origin-destination routes.

Conclusion

The digital economy represents a transformative force in big cities, offering new economic participation and empowerment opportunities. As highlighted, its impact on economic stability is substantial. By embracing and supporting this new economic and social model, we can address the challenges that growingly complex societies meet, empowering a diverse range of individuals to achieve economic independence and contribute to a more dynamic and modern urban economy.

As we move forward, it is clear that digital opportunities will continue to play a pivotal role in the years to come. By recognizing its potential and addressing its challenges, we can ensure that it remains a positive force for change, driving economic growth and improving the quality of life for millions of people in big cities across Mexico and beyond.