By Jimson Mwikamba and Virginia Ngei
Introduction
The gig economy, characterized by flexible, short-term tasks facilitated through digital platforms, is a major source of employment in the global labour market. The economy is valued at approximately US$ 455 billion globally, accounting for around 1.25 billion workers, or 15-20 per cent of the global workforce. This sector is expected to grow substantially, with its value projected to reach US$ 873 billion by 2025 as more people transition to digital work platforms.
This notwithstanding, policies, such as the Employment Act (2007) and the NSSF Act (2013) that regulate the traditional job market fail to address the unique challenges faced by gig workers, such as fair pay, social protection, and legal clarity. As a result, gig workers are highly exposed to economic risks. This blog explores the status of the gig economy while proposing policy recommendations to boost its potential in job creation.
Status of the Gig Economy
Jobs in the gig economy
The gig economy in Kenya has rapidly expanded, particularly in sectors such as ridehailing (Uber, Bolt), delivery (Glovo, Jumia), hospitality (Airbnb), and freelancing (Upwork, Freelancer.com). These platforms have created millions of jobs globally, with Kenya experiencing a surge in employment opportunities for the youth. For instance, ride-hailing platforms and Airbnb provide jobs for over 23.4 million and 10.2 million people worldwide, respectively. Freelancing, especially in the digital space, offers great employment potential, as more than 70 per cent of global freelancers are under 35 years old.
Enabling environment for employment creation in gig economy
The Government has invested in several enablers for the gig economy. This includes the Digital Economy Blueprint (2019) and Kenya National Digital Masterplan (2022-2032), which provides a framework to enhance Kenya’s economic growth.
Kenya has invested in expansion of the national fiber optic infrastructure and targets to establish 25,000 hotspots to enhance digital inclusion and innovation across the country. As a result, Internet subscriptions have increased from 48.8 million in 2022 to 52.3 million in 2023, enhancing access to digital platforms.
The Digital Literacy Programme and Ajira Digital Programme are equipping youth with digital skills to secure online jobs. Additionally, mobile money transfers increased from Ksh 4.6 trillion in 2022 to Ksh 5.5 trillion in 2024, providing affordable platform for realtime payments of gig work. Further, improved electricity coverage (75%) has provided power for computer and Internet devices, facilitating gig work.
Challenges in the Gig Economy
However, the gig economy faces constraints:
- Inhibitive labour policy framework
The Employment Act (2007), Labour relations Act (2007) and OSHA Act (2007) do not cater to gig workers. Gig workers are not recognized as formal employees, excluding them from protections including minimum wage and safe working environment. Additionally, the National Transport Policy (2009) does not cover the ride-hailing sector, while the Digital Service Tax (DST) does not fully address gig workers’ tax obligations.
- Limited social safety nets
Gig workers often lack income security and benefits such as pensions and health insurance. NSHIF covers only 24 per cent of the population, while the NSSF reaches just 14 per cent of formal and informal sector workers, leaving the majority including the gig workers unprotected.
- Digital divide
Despite technological advancements, a digital divide persists at various levels, including among rural populations, women, and marginalized groups who experience limited access to the Internet and digital opportunities. About 56 per cent of men access the Internet compared to 44 per cent of women, while only 35 per cent of rural residents use the Internet compared to 74 per cent in urban areas (Kenya Demographic and Health Survey, 2022).
- Career growth and compensation
Gig workers lack a clear career path and compensation is inconsistent. Ride-hailing drivers often face low pay due to high commission rates taken by platforms they register with. Consequently, 14 per cent of gig workers earn less than the minimum wage (US Economic Policy Institute, 2024).
Opportunities in the Gig Economy
- Job creation for youth
The gig economy presents a significant opportunity to address youth unemployment by providing employment avenues through global and local digital platforms. Youth between 18 and 34 years dominate online gig work (World Bank, 2023). They find employment in freelance writing, content creation, virtual assistance and data entry on platforms such as Upwork while some find opportunities in Airbnb as short-term rental property managers and co-hosts. In ride-sharing platforms such as Uber and delivery services such as Glovo, they get employment as drivers.
- Building a talent pool for organizations
Organizations can leverage the gig economy to access specialized skills quickly and flexibly. Short-term gigs allow businesses to respond to project needs rapidly, bypassing traditional recruitment processes.
- Skill development and flexibility
The gig economy allows workers to gain diverse skills and enjoy flexible work arrangements, enabling more people, including women and marginalized communities, to participate in the labour market.
Recommendations
The gig economy offers a promising solution to youth unemployment in the country. However, for it to reach its full potential, it requires targeted policy intervention and supportive infrastructure.
- Establish a comprehensive regulatory framework for gig work
The Government to recognize gig workers as employees with legally defined rights and obligations. Regulatory frameworks for gig economy to prioritize locally owned platforms.
- Expand social protection schemes to include gig workers
Gig workers be incorporated into existing social security and health insurance schemes, such as NSHIF and NSSF, through innovative, portable and flexible contribution and benefits payments models.
- Bridge the digital divide
The Government to invest in digital infrastructure and resources to ensure equal access to gig opportunities, especially in rural areas. Expanding Internet access and offering affordable, high-speed connections will enable more youth to participate in the gig economy.
- Invest in enablers for gig work
Increased investments in electricity, Internet access, mobile money services, and digital skills training such as through the Ajira Digital Programme, will support the growing demand for gig work and enable more youth to access high-value job opportunities.
