Author: Martijn Arets (Website - LinkedIn - Twitter)
Juan Sebastián Cadavid, CEO of Hogarù
Domestic cleaning has traditionally been an informal, fragmented and invisible sector. The work takes place behind closed doorstep, cleaners often do not know their rights and private employers are unaware of their obligations. Most households find their cleaners via-via and do not have employment contracts with them. Platforms that bring together demand (households) and supply (cleaners) are in a unique position: they have an overview and information about the sector. If they want, they can use this to help improve the working conditions of cleaners. In Colombia, government and platforms are putting this into practice together.
For The Gig Work Podcast of the WageIndicator Foundation, I spoke to Juan Sebastián Cadavid, CEO of Colombian domestic cleaning platform Hogarú. He talks about how platforms together with good public policies can lead to better working conditions and more prospects for domestic cleaners.
What is Hogarú?
Hogarú is a Colombian platform company with a mission: to improve working conditions for cleaners. Three issues are central to this:
- Formality: giving cleaners the income and security they deserve;
- Stability: ensuring that working conditions are also good in the long term, so that cleaners can, for example, buy a house or pay for their children's education.
- Motivation: job satisfaction and room for development for domestic cleaners.
It started 11 years ago when Hogarú's Spanish and Italian founders left for Colombia for work. Both expats were looking for a cleaner, but it proved difficult. The circuit was very informal and you needed contacts to find a suitable cleaner. If you were looking for a cleaner, you would ask your family, neighbours or friends. The two founders came up with a solution in 2013: 'Vosavos', freely translated: word-of-mouth. This was a platform where individuals could find cleaners, handymen and nannies.
From a marketplace to a hiring platform
The platform was a success, especially among households looking for a cleaner (90% of searches). The entrepreneurs saw new opportunities. Indeed, in 2014, cleaners in Colombia were granted formal labour rights via the World Job Organisation. Private employers, for instance, had to register their cleaner in a government database. The government also decided to actively enforce and fines could reach up to 20,000 euros. It thus forced private employers to respect the rights of cleaners.
But formalising such a working relationship with a cleaner was complicated. Therefore, households used to hire Vosavos to arrange this for them. Thus, hiring and management became part of the services of the platform, which was then named 'Hogarú'.
Two types of services
"We owe the success of Hogarú partly to the formalisation of the cleaning industry," Cadavid says. "The government saw in 2014 that something had to be done, even if most consumers would not be so happy about it. Moreover, with some 700,000 domestic cleaners in Colombia, regulation was a politically sensible choice."
Where previously the platform only mediated between supply and demand and did not take on the role of employer, Hogarú decided in 2015 to employ and train cleaners as well. In addition, the platform has a database of 300,000 people who are not employed by Hogarú but are interested in formal cleaning work. Hogarú has now employed about 9,000 cleaners for its own platform. Some 64% of them did not previously have a formal job.
Data from Hogarú shows that 96% of cleaners are women and 91% are the primary breadwinner. They often have to look after fairly large families (3 or 4 children).
Hogarú thus offers two types of service: a supply and demand platform where homecleaners are employed and a service that lowers barriers for private households to employ their regular cleaner. Both with the same goal: decent, stable and motivating work for cleaners. "The fact that we offer formal work for formerly informal workers has a positive impact on the sector," says Cadavid. "In addition, it strengthens the bond between workers. It's not that they often see each other physically, but they talk to each other via Whatsapp groups. For example, if they see each other once a year at a company meeting, you really notice that they are a community. It's an additional benefit of working via the platform."
Public-private cooperation
Enforcement of the law is still problematic, Cadavid says. "The domestic cleaning industry has traditionally been large, informal and invisible. Very few people are still registered, currently only 17% of all cleaners."
Hogarú is trying to make more cleaners aware of their rights. It is also doing so for hundreds of thousands of people who do not yet work via the platform, but for whom it has contact details. "We don't earn anything from that in the first place, we see it as our mission. But there is also a business purpose, which is that customers can hire us to regulate their compliance with the law, for example with services such as payrolling and administration."
Balancing exercise between a fair wage and price
The Colombian government continues to invest in labour rights, which is positive, Cadavid believes. "But it remains a balancing act between tariffs in the formal and informal market," he says. "Due to inflation and a rising minimum wages, the gap has widened considerably in recent years. This makes it more attractive for private employers to hire informal cleaners”"
Not only costs play a role. Regulatory burden also makes informal labour attractive. "The government should make it easier to hire someone," Cadavid believes. "In Mexico, for example, it is much easier to hire a cleaner than with us in Colombia. Yes, our company benefits from this, but I still make a case for simplifying things. Better working conditions for workers, after all, that is our mission."
Conclusion: the benefits of public-private partnerships
We can learn a lot from Hogarú's story. First, that improving the rights of domestic cleaners starts with recognising the informal nature of the market. Formalisation involves quite a bit. For instance, how do you balance a fair wage with the price households are willing to pay? In Belgium, France and Germany, for instance, the government compensates the difference with subsidies. So governments have to make a choice: will we leave it as it is, or will we formalise it? Hogarú reaches hundreds of thousands of workers, making it a valuable partner for Colombian government in, for example, improving the information position of workers as well as private employers.
Secondly, Hogarú shows that while it is indeed possible to formalise an informal sector, it does not happen overnight. The government needs to recognise the market, implement policies and actively enforce it. Also, the threshold to comply with the law should be low and the price of the formal market should not be too far away from that of the informal market. According to Cadavid, the difference between the formal and informal price should not exceed 30 per cent. The government could solve this with a combination of regulation, supervision and (dynamic) subsidy. To conclude, platforms can be valuable partners for the government to combat informal circuits.