The Promise and Peril of Online Gig Work in Developing Countries
Global Director for Social Protection and Jobs
Christine Zhenwei Qiang
Director, Digital Development Global Practice
Good, inclusive jobs provide the surest path out of extreme poverty while boosting shared prosperity for all. But as new technologies transform our global economies, we must expand our way of thinking about job opportunities in the developing world.
The online gig economy, in which digital platforms match workers to tasks posted by clients already accounts for up to 12 percent of the global labor market. In developing countries gig platforms are opening unique avenues of employment, with significant potential for young people, women, and people in remote areas that may have been left out of more traditional job markets.
Besides, online gig work provides a much-needed source of income during periods of shock or transition, helps build the digital skills of younger workers, and offers flexible earning opportunities for all. What’s more, online gig platforms also provide a cost-effective source of talent for small businesses and startups, thus supporting firms to remain productive and agile, and adapt to rapid shifts in market demand.
High growth in gig workers in developing countries
In line with the growth of the digital economy and the spirit of innovation around the world, the demand for gig workers in low- and middle-income countries has been rising and faster than in industrialized nations. For example, in sub-Saharan Africa, job postings on a large digital labor platform grew by 130 percent, while the growth rate in North America was just 14 percent from 2016 to 2020. Interestingly, among middle-income countries, it is the lower-middle-income countries that are contributing more to demand for online gig workers than the upper middle-income countries, mainly driven by the need from MSMEs (Micro, Small, and Medium Enterprises).
Yet the impact of gig work in emerging economies is little understood and needs more attention to reach its potential. What are the best policies to maximize the benefits of gig employment in developing economies? What regulations are needed to protect gig workers? What role do local and regional gig platforms play?
A new World Bank report, Working Without Borders: The Promise and Peril of Online Gig Work, has tracked online gig workers worldwide, including those working on local platforms or using languages other than English, often overlooked in most research. It has revealed that the prevalence of online gig work globally is much larger than previously estimated, with up to 435 million people who engage in online gig work, often as secondary employment.
How to reap benefits and avoid risks of online gig work
Yet, too many workers are still locked out of opportunities online gig jobs can bring—nearly three billion people globally were not using the internet in 2022, mostly in developing countries. To address this challenge, the World Bank is working with governments and the private sector to close the gap. This includes policy reforms, public and private financing, and smart subsidy schemes for specific population groups to spur digital infrastructure deployment in rural areas and increased affordability and uptake of high-speed internet services and digital devices. In addition, building digital skills is essential. In Bangladesh, Malaysia, and Kosovo, governments are providing online gig work trainings to specifically support youth, women, and those in the bottom 40 percent of the income distribution.
Social protection for gig workers is crucial. A large majority of gig workers, like most informal workers in developing countries face risks – including unstable incomes, poor working conditions, and limited saving capacity. Most online gig workers lack access to social protection, particularly in low-income countries, where over 90 percent of the workforce does not contribute to social insurance and remains outside the purview of labor regulations. As outlined in the World Bank’s Social Protection Compass, governments should pursue innovative ways to extend coverage to informal workers and the self-employed, including gig workers.
Digital technology can enable new types of solutions and gig platforms can help increase the visibility of informal workers, aiding government efforts to expand social protection. Many countries are taking steps in this direction and working with platforms to encourage workers to enroll and contribute. For example, in Malaysia, the government collaborated with a digital labor platform to provide a 5 percent matching contribution to gig workers who pay into the government’s retirement savings program.
In addition, there is a need to design more modern forms of collective bargaining for workers outside formal employment like gig workers. Crowd ratings of employers and platforms or using social media to bring together dispersed worker communities – are examples of using technology to create new models and solutions.
Even though more women are engaged in the online gig economy than in the general labor market mainly due to the flexibility it offers, the gender wage gap persists. For instance, on some gig platforms in developing countries, women earn less than men–in Argentina, women earn as little as 68 percent of their male counterparts.
Creating a virtuous cycle of more jobs and business growth
While gig work is still a new, fast-evolving form of work, it has clearly found a firm foothold in low- and middle-income countries, and provides a potential pathway out of poverty, and connects workers to job opportunities globally.
It’s also an opportunity for a growing cadre of young people eager to learn and expand digital skills while earning income and an increasingly viable option for women who face considerable constraints in traditional labor markets. And it is rapidly becoming an agile source of talent needed by entrepreneurs and firms to grow their businesses, and in turn, create more jobs.
By focusing on expanding digital connectivity, building digital skills, and supporting broader coverage of social protection programs, more people can thrive in this new world of work.