WASHINGON, 7th September, 2023 (WAM) – The ‘gig economy’ accounts for up to 12 percent of the global labor market—much higher than previously estimated—and holds particular promise for women and youth in developing countries. Demand for online gig work is growing rapidly, however, social protections for workers in this segment are still lacking, according to a new World Bank report.
While developed countries currently dominate the demand for gig workers, the report, Working Without Borders: The Promise and Peril of Online Gig Work, found that the demand in developing countries is growing at a much faster rate. For example, in Sub-Saharan Africa, job postings on the largest digital platform grew by 130 percent, while the growth rate in North America was just 14 percent. And almost 60 percent of firms surveyed in poorer countries reported increased outsourcing to gig workers. In wealthier countries, less than half said the same.
Unlike earlier studies, the report included local and regional platforms, not just global platforms. And it reached beyond those who work only in English. As a result, the report found that the gig economy is vast with a total of 545 online gig work platforms across the globe, with workers and clients located in 186 countries. Interestingly, close to three-quarters of the platforms are regional or local rather than global. And underlining the significance of this sector for developing countries, the report found that together, low- and middle-income countries account for 40 percent of traffic to gig platforms.
“Online gig work could provide people in low- and middle-income countries an additional path out of poverty,” said Mamta Murthi, Vice President for Human Development, World Bank. “It can help address youth unemployment and it can support increased labor market participation for women. It can also help address inequalities in job opportunities across regions and—for entrepreneurs, startups and small firms—it can provide flexibility in hiring talent that is critical for business growth and job creation.”
The report found that young people are attracted to gig work to earn income, learn new skills, or have the flexibility to combine work with school or other jobs. It highlights that women are participating in the online gig economy to a greater extent than they are participating in the general labor market and that six in 10 gig workers live in smaller cities, outside the largest population centers.
However, the report also warned of potential perils. In low-income countries, most people work outside the purview of labor regulations and lack access to social insurance and benefits. And a considerable wage gap still exists with women earning just 68 percent of men’s wages on one major online platform reviewed. The report lays out recommendations for policymakers to help realize the potential while limiting the associated risks.
“Digital platforms can help increase the visibility of informal workers, supporting efforts to expand social protection coverage for all,” said Namita Datta, Lead Author and Program Manager, Solutions for Youth Employment (S4YE), World Bank. “By investing in digital infrastructure, partnering with digital platforms to provide support and training for workers, and experimenting with new social insurance, as well as collective bargaining models, developing countries can leverage this growing part of the labor market to create more opportunities, expand economic inclusivity, and increase prosperity for their people.”