Online Gig Work in Developing Countries: A Double-Edged Sword

The promise and peril of online gig work in developing countries is a topic that is gaining increasing attention as new technologies continue to transform global economies. Good, inclusive jobs are seen as a crucial pathway out of extreme poverty, while also boosting shared prosperity for all. The online gig economy, where 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 up unique avenues of employment, with significant potential for young people, women, and individuals in remote areas who may have been excluded from traditional job markets.

Online gig work not only provides a source of income during periods of shock or transition but also helps build digital skills for younger workers and offers flexible earning opportunities for all. Additionally, gig platforms serve as a cost-effective source of talent for small businesses and startups, enabling them to remain productive, agile, and adapt to rapid shifts in market demand.

The growth of gig workers in developing countries has outpaced that of industrialized nations, with job postings on digital labor platforms in sub-Saharan Africa growing by 130 percent compared to just 14 percent in North America from 2016 to 2020. Lower middle-income countries are driving this demand, particularly driven by the need from Micro, Small, and Medium Enterprises (MSMEs). However, the impact of gig work in emerging economies is still not fully understood, and more attention is needed to maximize its benefits.

A new World Bank report, Working Without Borders: The Promise and Peril of Online Gig Work, has shed light on the prevalence of online gig work globally, with up to 435 million people engaging in such work, often as secondary employment. The report emphasizes the need for policies to maximize the benefits of gig employment in developing economies, regulations to protect gig workers, and the role of local and regional gig platforms.

To reap the benefits and avoid the risks of online gig work, it is essential to address the digital divide that still exists, with nearly three billion people globally not using the internet, mostly in developing countries. The World Bank is working with governments and the private sector to close this gap through policy reforms, financing, and subsidy schemes to spur digital infrastructure deployment and increase the affordability and uptake of high-speed internet services.

Social protection for gig workers is crucial, as many lack access to such benefits, particularly in low-income countries where the majority of the workforce does not contribute to social insurance. Governments should pursue innovative ways to extend coverage to informal workers, including gig workers, and collaborate with platforms to encourage enrollment and contributions.

In conclusion, online gig work presents a promising opportunity for individuals in developing countries to earn income, build skills, and connect to job opportunities globally. 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. It is a pathway out of poverty and a source of talent for businesses, creating a virtuous cycle of job creation and economic growth.