Technological innovations continue to shape the way the world functions in both production and service industries. Businesses across the globe are increasingly pushing to have a digital footprint as more people are buying and selling goods and services online. Notably, the heightened access to the internet is revolutionizing the way things are done and rendering the conventional models of business and work obsolete. Online work is often dependent on the demand and thus is temporary and involves the atypical workers. The atypical workers are the freelancers, part-timers and independent contractors that earn income from short-term online work. They fit into what has come to be known as the gig economy. The gig economy is a trending topic especially in the developed world where professionals offer their services on a short-term basis. The gig economy is also apparent in the developing world given that the world is becoming a global village on many fronts. In this post, I will focus on the rise of digital workers across the globe and the challenges they are facing.
The World Wide Web has expanded and inspired new opportunities of work referred to as digital work. Currently, digital work has been categorized into two forms crowd work and on-demand work. In crowd work, the workers are not physically present but provide online services remotely. Online companies such as Uvocorp, freelancer, Fiverr, Edusson, blogging sites, Amazon, Alibaba, eBay, and up work to mention but a few offer crowd work services. The second type is on-demand work that entails the physical presence of individuals with examples of companies such as Uber, Taxify, Lyft, Airbnb, Little cab, Easy ride, and Mondo ride. Due to the heightened challenge of unemployment across the world, more people especially the young are engaging in digital work. A Pew research conducted between July and August 2016 found that 8% of American adults had earned income as digital workers.
The gig economy is changing the labor market patterns especially at a time when there is increased automation of roles in industries. A 2013 study conducted by Oxford University and Deloitte researchers indicated that 35% of jobs in the United Kingdom and 47% in the United States of America are at high risk of automation in the next 20 years. In Africa, heightened automation will further exacerbate the challenge of unemployment. This can be evidenced by banks that are hiring fewer people and opting for automating machines to cut on labor costs.
Essentially, the gig economy is already prevalent in the African context as more people have access to the internet and earn money through online platforms. For example, in Kenya, there is a rising demography of young graduates that do not have access to decent jobs. Such graduates are either forced to low entry jobs or venture into the gig economy as freelancers, academic writers, article writers, bloggers, Vloggers or generally as online content developers. Others venture into the online taxi services while others start small businesses that they promote using social media platforms such as Facebook, WhatsApp, and Instagram. Currently, Kenya has a substantial number of social media entrepreneurs that sell goods and services online such as wedding planning services, registration of company services, delivery of wedding and birthday cakes as well as selling of products. Nonetheless, they have to compete with established companies that have cut their niche in online business services such as Jumia, Kilimall, Rupu, Masoko, and Skygarden among others.
To a substantial extent, digital work provides some opportunities such as flexibility regarding hours worked, work freedom which is very important for millennials, control over clients and jobs as well as being one’s boss. However, it also has challenges that require the input of international stakeholders. According to the International Labour Organization (ILO), the rise of the gig economy has resulted in changes touching on the organization of work. More employers are opting for short-term contractual agreements to avoid catering to the employees’ social security benefits. ILO notes that while the World Wide Web has augmented and inspired new opportunities, it has also diminished opportunities for decent jobs that protect employees in times of sickness, injury and old age. The flexibility and fragmentation of work have a double-edged sword in that on one end workers favor it, but on the other hand, it denies the employees certain rights such as joining of trade unions.
The gig economy does not consider social security benefits such as health insurance, employment insurance, pension systems as well as employment injury insurance. Currently, the financing of social security systems is mostly done through employee contributions and in some cases the employer and employee share in contributing towards the pension fund. In most instances, the contributions are automatically deducted from the employee’s salary for purposes of ensuring there is a regular flow of funds to the relevant social security organizations such as NHIF and NSSF in Kenya. However, with the rising cases of digital and fragmented work patterns, the financing of social security through payroll deductions is likely to dwindle and negatively affect the population in general. This is because a time will come when the government of the day will have an aging population that does not have a pension to help them get through retirement. Such a scenario will burden not only the government but the working generation and the family members who will be forced to finance their needs as well as for the aged.
In a bid to remedy the situation, nations across the globe are looking for innovative ways of financing social security benefits amid heightened automation, adoption of robotics and artificial intelligence. Some of the recommendations made include taxing robots and using the said taxes to offer training and re-employment of workers who are affected by the heightened automation of roles. Subsequently, some countries such as Finland, the Netherlands, and Italy are experimenting on basic income for the unemployed. Generally, most of the OECD countries have wage insurance models for the displaced workers. In Africa, countries such as South Africa, Algeria, Egypt, Tunisia, Mauritius and to some extent Nigeria have the unemployment benefit programmes. These schemes cushion the unemployed from sinking into devastating poverty levels and inspire the beneficiaries to start businesses.
In reference to the gig economy, countries are debating on the ability of digital workers to build up adequate benefits as per the contribution based systems. The discussion has identified several challenges faced by the partakers of the gig economy. To begin with, the employment status is not comparable to the conventional forms of employment on many different levels such as terms of compensation, uncertainty about payment and availability of work. Secondly, it is not clear whether freelancers or independent contractors are self-employed workers or employees. Thirdly, many digital workers get temporary gigs that make it hard for some of them to accumulate enough funds to warrant entitlement to social security benefits. As such, there is a need for a review of approaches used to finance social security benefits to cater for the growing population that does not have a steady income.
In a bid to remedy the situation, there needs to be a sustained dialogue in international and national platforms on how to ensure that the gig economy workers are offered social security benefits. To begin with, it is important for countries like Kenya to find out the number of people engaging in the gig economy, on average how much do they make on a monthly basis, what challenges do they face and how can the government develop policies to enhance their source of livelihood and contribute towards access of social security benefits. In the meantime, public and private insurance companies and pension schemes should invest in innovative models for the gig economy workers who may not have a steady income but may contribute towards social security systems occasionally. There is also need for awareness on the significance of investing in social security benefits as many are the times people use all the income earned from the gig economy without setting aside some of the money to pay for social security systems. Public awareness campaigns targeting gig economy workers should also touch on investment especially because of the dynamic nature of their jobs and thus inspire them to work towards having sustainable forms of investment.