- A gig economy is a labour market mainly reliant on temporary and part-time work filled by independent contractors and freelancers rather than full-time permanent employees.
- The gig economy, rather than being merely disruptive, can supplement efforts to boost formal employment.
- Advances in digital technology, increased internet usage, and the rise of e-commerce have increased demand for freelancers.
What is the gig economy
Full-time employment has remained the norm globally over the years. However, platform and technology businesses like Uber, Alibaba, and Google continue challenging this long-held paradigm. They have built their success on new business models that alter people’s perceptions of work.
These companies have created an industry known as the ‘gig economy’. Strictly speaking, the “gig economy” represents an all-encompassing phrase for persons who operate independently to receive compensation for each transaction or task they complete.
According to Investopedia, a gig economy is a labour market mainly reliant on temporary and part-time work filled by independent contractors and freelancers rather than full-time permanent employees. A gig economy produces cheaper, more efficient services for those willing to use them.
A gig is a broad category that includes a wide range of positions. Work can range from cab driving or restaurant delivery to writing code or freelance essays. Instead of tenure-track or tenured professors, adjunct and part-time professors are contracted employees. By recruiting more adjunct and part-time teachers, colleges and universities can save costs while also better-matching instructors to academic needs.
The gig economy also gives companies a broader choice of applicants because they are not required to hire someone based on their proximity. Furthermore, technological advancements have enabled people to work just as efficiently from home as they could in person. Working from home or remotely is becoming more widespread in today’s digital age.
During the 2020 COVID-19 pandemic, this trend accelerated. The gig economy grew significantly in 2020 as gig workers delivered basics to homebound clients. Those who had lost their jobs went to part-time and contract work to supplement their income.
One MasterCard Foundation survey revealed that the gig economy in Africa is growing at an average rate of 20 per cent yearly and is expected to reach a staggering 80 million gig workers by 2030. Interestingly, experts have often referred to this system as a disruptor in a well-established system.
The rise of Africa’s gig economy
The rise of Africa’s gig economy is frequently associated with technological advancement and a decline in conventional manufacturing and agricultural occupations, which has led individuals to seek other sources of income.
Notably, the global financial crisis of 2008 also played a role in the growth of the gig economy in Africa. The situation led to declining traditional employment opportunities, forcing people to turn to informal work. However, there is no doubt that 2020 was a defining year for the global economy. Its effects have reshaped our lives for decades on a physical, economic, and behavioral level.
Before COVID, technology was responsible for the most critical shift in civilisation. Digitalisation provides increased flexibility, freedom, and choice. Although the pandemic imposed significant changes in the way of life, it also heralded a complete reliance on technology.
Notably, these shifts have had the most significant impact on the gig economy. It also created a profitable revenue stream by allowing millions of people to apply and work as they deem fit.
Advances in digital technology, increased internet usage, and the rise of e-commerce have increased demand for freelancers. Industries such as web development, graphic design, content creation, and digital marketing lead the demand for freelancing gigs.
This rising demand has prompted African freelancers to join internet marketplaces such as Upwork and Fiverr. In this work environment, freelancers and gig workers can access the global marketplace and offer their talents and services to clients beyond their national jurisdictions.
According to research by KEPSA (Kenya Private Sector Alliance), over 1.2 million people, 5 per cent of Kenya’s adult population, now work in the gig economy.
“The shift towards remote work during the pandemic has led to an increase in demand for certain types of online work, particularly in the tech industry,” says Fabian Stephany, a research lecturer in AI & Work at the Oxford Internet Institute.
African governments are proactively developing initiatives to capitalise on the potential of the expanding gig economy in Africa. In Kenya, for instance, the Ajira Digital initiative equips young people with digital skills to compete in the global marketplace.
Furthermore, governments are positioned to address the issues facing the immense informal sector. Moreover, they can encourage upskilling through gig labour to improve the workforce’s total skill set and employability.
Africa’s unemployment challenges
For economists and policymakers, Africa’s fast-expanding employment gap has become an emotionally charged affair. A rapidly increasing youth population exacerbates the challenge. Africa’s unemployment rate is 7.7 percent as of 2023. Africa has a total population of approximately 1.4 billion people, with 7 per cent representing 112 million Africans who are either unemployed, out of work, or ineligible to work.
For generations, the conventional work economy in Africa has been the backbone of employment. It includes regular hours (usually 9 to 5), regular compensation, several legal safeguards, documented income taxes, occupational contracts, and well-established labour standards.
This industry has long been the principal source of employment for many people, and it is frequently connected with privileges like job stability, health insurance, and retirement plans. Government, finance, manufacturing, and multinational businesses are all part of the formal sector.
Uncertainty, a lack of social protections, and significant productivity and income growth inefficiencies characterise the informal economy. As a result, the gig economy comes as a gift to millions of people desperate for employment opportunities. It provides opportunities for young talents to apply their skills and knowledge to find work and earn money. Furthermore, the gig economy allows people to work and live more effectively.
Addressing employment challenges through Africa’s gig economy
Despite significant efforts by governments and investors, they cannot generate traditional employment rapidly enough to incorporate over 122 million individuals into the African labour market. Moreover, according to research, a formal career is not necessarily the best option for everyone.
Furthermore, there is emerging evidence that the gig economy, rather than being merely disruptive, can supplement efforts to boost formal employment by providing another path for meaningful engagement with the official economy.
Flexible employment for low-skilled workers can generate enormous economic benefits. The gig economy can increase labor-force participation, offer opportunities for the unemployed, and even raise productivity for millions in Africa.
However, enterprises at the forefront of the gig economy face criticism for failing to offer their employees steady incomes, social security, and benefits.
One thing is sure: gig-based businesses must accept their obligations and treat their external labour with dignity and respect. This treatment is frequently at the heart of their business models
While the gig economy may not necessarily provide the entire range of perks typically associated with permanent quality positions, it does provide several instruments. Benefits such as training, a more consistent income, and connection with a global corporation can be game changers for employees in Africa’s informal sector.
New models, such as a pension for informal employees, have also found traction. Education and skill training, such as soft skills and communication training, can mutually benefit. Contractors can use transferrable skills to raise their salary or land formal employment. Consequently, they can earn corporate benefits from increased performance per worker.
Soon, the success of Africa’s gig economy rests on embracing and improving the working conditions of independent workers. Although the informal sector has the potential to create employment opportunities, it lacks the productivity and protections for employees provided by the “stable” traditional formal economy.
Amid challenges such as limited access to resources and international biases against African gig workers, addressing issues such as financial exclusivity from Africa’s domestic banking institutions is critical.
As the saying goes, charity begins at home. As a result, stakeholders must focus on a progressive Africa by solving the issues afflicting the gig economy within.
Policymakers and digital platforms should seek to offer gig workers benefits and protections comparable to those in the traditional labour economy. Furthermore, Africa can learn from the experiences of the United States and Europe. They can embrace inclusive solutions for their development through the gig economy. Success in the gig economy opens up a new avenue for Africans to succeed in the Fourth Industrial Revolution.