For corporate employers, the nature of work is changing, and as organizations worldwide are recognizing that the rise of gig workers will have a significant impact on their workforces, they are turning to the gig economy.
While organizations in Kenya can adopt different approaches for handling their employment contracts, such as full-time contracts or a blend of full-time and part-time contracts, this is largely based on the nature and demands of their business.
Barriers to demand for gig work amongst organizations in Kenya include current business processes not being task or project-based, making it challenging to understand what human resource processes would be required if they were to engage gig workers. There is a need for information on how other organizations are approaching gig work and successfully integrating gig workers into their organizations.
The Towards A Digital Workforce: Understanding The Building Blocks Of Kenya’s Gig Economy report by Mercy Corps’ Youth Impact Labs, shows that by engaging gig workers, organizations have the ability to benefit from three types of flexibility: (i) numerical flexibility refers to firms’ ability to rapidly adjust their workforce size, or the number of hours worked, in response to changes in product demand; (ii) functional flexibility refers to the ability of firms to apply their workforce to different tasks as required, necessitating a variety of skills, and; (iii) financial flexibility refers to firms’ ability to adjust their HR costs in response to changes in the external price of labour.
The growth of globalization and technology makes it possible for workers to perform work anywhere and overcomes geographical barriers. The gig economy is beneficial to Kenyan organizations as it allows them to easily access talent with niche or specialized skills for particular projects and tasks without having to ‘hire’ them. Leveraging the gig workers can enable Kenyan organizations to save costs.
Corporate employers can save on money, time and resources spent on recruiting and engaging full-time employees. Using gig workers can help reduce the time it takes to complete a project and can be cheaper than hiring.
This flexibility can allow organizations to also add new capabilities, supplementing the core team when they lack particular expertise, and thereby easily scale up or down on a project by project basis. The use of gig workers can allow companies to focus on their core operations. This frees owners, managers and employees to spend their time on their core income-generating activities.
Donors have a unique role to play in reducing unemployment and fostering entrepreneurial growth. There are a range of donors working in Kenya that are funding organizations and interventions to overcome youth unemployment and foster the growth of digital employment opportunities.
These organizations are implementing programs focused on youth in both rural and urban areas of Kenya that enhance the skills of youth thereby enabling vulnerable, disadvantaged youth to engage in entrepreneurship, leverage digital gig works to sustain their livelihoods and increase earnings opportunities. Donor investment can contribute to the creation of jobs at scale as the gig economy offers new opportunities to improve the irregularity and insecurity of informal work.
Specifically, donors can contribute to the growth of the gig economy by:
- Enabling geographic inclusion in the gig economy by facilitating partnerships between the private and public sector to provide digital infrastructure in the Kenyan market.
- Advocating for the creation of an enabling policy and regulatory environment.
- Focusing on gender inclusion through interventions aim to address the specific challenges that women face in joining the gig economy.
- Developing soft and digital skills that increase the employability of Kenyan youth in the gig economy.
Investors have a key role to play in supporting the growth of platforms in Kenya. There has been a significant rise in the levels of venture capital funding that is supporting early-stage and platforms in the growth stages across industries in Kenya.
There is a need for investors to offer support to start-ups during inception to prove the business case and overcome the high risks of failure. The provision of flexible and favourable funding for platforms in the early stages of development can help overcome challenges to resources where traditional forms of funding would view these businesses as high risk.
Limited investment opportunities can result in a high turnover of platforms inhibiting their potential to serve a key role in facilitating the matching of supply and demand in the gig economy.
Supporting platforms can help grow the number of online gig workers in an attempt to create a functional informal sector.
Given that there is a larger number of offline gig workers in comparison to online gig workers, investing in platforms will enable gig workers to join online work. Increasingly available investment can enable Kenyan platforms to expand their service offering and provide value-added services such as training and benefits to gig workers that operate on their platforms.
The nature of gig work is such that it is independent where gig workers have a high degree of control and flexibility in determining either what work to perform, when to perform the work, and in some cases, where to perform the work from.
It is the short-term nature of work and gig workers perform work on a short-term or task-by-task basis, for example, transcribing a set of data, designing an application, fixing a burst pipe, or giving someone a ride. Both the worker and the client/employer recognize the limited duration of the employment relationship.
Again, it is on payment per task and gig workers are paid by the task, as opposed to those workers who receive a salary or hourly wage.
The investment opportunity in the gig economy
Kenya’s economy is largely defined by a large informal sector which accounts for 82 per cent of the working population.
Despite steady economic growth, the country still faces high unemployment. Unemployment in the country presents a particularly difficult labour market experience for youth. The country is experiencing a ‘youth bulge’ with approximately 20 per cent of the country’s population made up of youth between the ages of 15 and 24-years old.
This ratio of youth is above the world’s average and Africa’s average of 15.8 per cent and 19.2 per cent, respectively. While the youth population continues to grow, a key concern for the Kenyan economy is the rise in youth unemployment.
On average, 500,000 to 800,000 young Kenyans enter the job market annually but the economy is unable to provide employment opportunities – formal and informal alike.
With the opportunities that the gig economy offers, investing in the sector is a potentially high return prospect that investors can consider.