Gig economy represents 12% of global labor market, says World Bank

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A new report from the World Bank reveals a significant growth in the gig economy, now accounting for roughly 12% of the global labor market. The study, titled 'Working Without Borders: The Promise and Peril of Online Gig Work', was published on Wednesday. It highlights that the demand for gig workers in low and middle-income countries has been rising faster than in developed nations, with particular potential for unemployed youths and women.

The report finds that job postings for gig workers in Sub-Saharan Africa increased by 130% from 2016 to 2020, while North America saw a growth rate of just 14%. This rise aligns with the expansion of the digital economy and a global spirit of innovation.

The World Bank also noted that lower-middle-income countries contribute more to the demand for online gig workers than upper-middle-income ones, primarily driven by Micro, Small, and Medium Enterprises (MSMEs). In poorer countries, almost 60% of firms reported increased outsourcing to gig workers, compared to less than half in wealthier nations.

The report also emphasizes that women are participating in the online gig economy more than they are in the general labor market. Additionally, six out of ten gig workers live in smaller cities, away from densely populated centers.

The study identifies a total of 545 online gig work platforms across the globe, with workers and clients located in 186 countries. Approximately three-quarters of these platforms are regional or local rather than global. Low- and middle-income countries account for 40% of traffic to gig platforms.

Despite these promising figures, the report warns about potential risks. Most people in low-income countries work outside the purview of labor regulations and lack access to social insurance and benefits. The authors of the report noted that social insurance coverage among gig workers is low, as almost half do not subscribe to a pension or retirement program. In countries such as República Bolivariana de Venezuela and Nigeria, this proportion can be as high as 73% and 75%, respectively.

The World Bank also highlighted the role of companies like AXA Mansard Insurance in Nigeria and Catch in the United States, which are adapting their models to support gig workers. These companies offer services such as insurance plans, tax return filing support, and more to self-employed artisans and freelancers with infrequent gig earnings. Local platforms like Findworka in Nigeria and SheWorks in Latin America and the Caribbean are specializing in specific tasks and providing training to build skills among local gig workers.

Despite potential challenges, the World Bank maintains that online gig work could provide an additional path out of poverty for people in low- and middle-income countries. "It can help address youth unemployment and support increased labor market participation for women. It can also help address inequalities in job opportunities across regions," said Mamta Murthi, World Bank’s vice president for human development.

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