Is Pakistan entering the age of the “gig” workers?

Hello friends, colleagues and co-conspirators! 

The nature of how we do work has been changing globally. There has been a rising trend of people foregoing more traditional jobs in favour of freelancing “gigs” which allow them greater flexibility and an opportunity to earn more money. However, for a developing country like Pakistan, with a staggering unemployment rate of 5.8% and 64% of its total population under the age of 30 (the youth, 15-29 make up 41.6% of the country’s total labor force according to the Pakistan National Human Development Report (NHDR) by the UNDP), the gig economy employment model may be a welcome solution. According to a report by the Oxford Internet Institute (OII) Pakistan ranks 4th in the global digital gig marketplace, about 8% of the total freelance work in 2017. Last year, Pakistan generated $1 billion in revenues entirely from freelancing gigs. However, the kind of labor currently employed within the gig economy in Pakistan tends to be those who are previously unemployed or have very little experience. This naturally translates to higher participation rates within this economy when it comes to women and youth. A factor that has been further favouring this trend has been a rise of on-demand startups/companies such as at-home beauty services provider Ghar Par and household help provider Mauqa.online to name a few.

While so far we haven’t seen as significant rise in workers leaving their more traditional jobs in order to participate within the gig economic model (a majority use it as a form of supplemental income if they are previously employed), a future where an increasing portion of the labor force chooses to take-on short-term contractual employment or “gigs” no longer seems to be a distant reality. This is partly due to bigger companies such as Careem and Uber entering the market and shaking-up not only the way Pakistanis travel (considering there is no extensive public transportation alternative) but also how people perceive dignified employment.

The gig employment structure is not a new phenomenon in Pakistan. Daily-wage workers or “dihari” workers have sat at popular junctions and roadsides for decades to try their luck and be picked up for odd jobs due to widespread poverty and lack of employment opportunities. However, the rise of technology and the startup ecosystem has meant that this process can now be digitised or automated in a manner that stands to  make the process much more efficient, increase the number of jobs that a worker can get and help alleviate (somewhat) the uncertainty of not making any money for days on end. This is exactly what startups like Sukoon, The Handyman and Fori Mazdoori are aiming to do.

However, if there is one thing we can learn from the success of Uber and Careem (and the rising popularity of some of our homegrown on-demand startups), it’s that the best way forward is to help people capitalise on their existing skill sets, rather than overly focusing on upskilling, especially in a country with such high unemployment rates. In a previous issue of this newsletter, I talked about the disconnect between the digital skills training programs and the policy and incentives framework around freelancing. While digital skills training have become all the rage (a low hanging fruit) and there are plans of upskilling millions of Pakistanis, there remains a significant gap when it comes to availability of employment opportunities. According to the NHDR, Pakistan needs to create 4.5 million new jobs over the next 5 years, in order to be able to absorb its youth (15-29 year olds who make-up 41.6% of the total labor force) at the current participation and unemployment levels. This can not be achieved if we are “fixated on upskilling coal-miners into data miners” as Louis Hyman, assistant professor at Cornell University and author of Temp: How American Work, American Business and the American Dream Became, notes in his medium article on fixing the Gig Economy.

One major challenge that our startups need to be working on is ensuring that they continue creating opportunities while also protecting their employees. A major allure of hiring on a contractual basis for startups and companies alike is the ability to hire resources at lower salaries than full-time employees in similar roles. While to many who subscribe to the gig economy model this represents freedom and flexibility as well as the ability to do more/diverse work and earn more, the implications of the lack of protections can not be trivialised. Employees under the gig model are not considered full-time and hence the labor laws do not extend to them. This is a major set-back in more Western economies where traditional jobs come with perks such as health insurance, 401k’s and/or pension plans etc. However, in Pakistan where only a few traditional jobs/firms will even offer these kinds of perks to begin with. the dearth of them is not felt as intensely and hence makes the switch to temporary work easier. The fast growth of internet penetration and the startup ecosystem mean that now would be the right time to start looking at laws to protect freelancers working within our growing gig economy. There are also further comprehensive policy level steps that need to be taken. Dr. Sara Khurram of Sehat Kahani, a telehealth startup, told us that the lack of any comprehensive telemedicine policy, despite multiple government initiatives operating in the space, needs to be focused upon. For Mauqa.online, according to co-founder Muhammad Mustafa, regulations around liability coverage are an obstacle. Larger organisations such as Uber and Careem cover their liabilities by way of expensive insurance coverage. However, at the scale (and margins) for a startup like Mauqa, getting covered with larger banks seems next to impossible and hence the need for reforms/schemes that would make this less unattainable for startups needs to happen sooner rather than later. For some startups, the current government regulations that mandates providing EOBI to their workers once they cross the 25 people mark may also seem like a restriction that stifles their growth.

Have more to say on the topic? Or just share some interesting research/articles with us? Give us a shout!

Cheers, 
Anusheh Naveed Ashraf
Head of Insights, Invest2Innovate

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Talking Data

• 6 – the number of gig economy based startups that have raised investment in Pakistan in the past five years. These include DoctHers, Sehat Kahani, Mauqa.online, Sukoon, Auto Genie and Fori Mazdoori.
• 8% – Pakistan’s contribution to the global digital gig economy in 2017. The total revenues generated via freelancing job were calculation at $1 billion and a majority of the jobs fell under either the software development and technology or creative and multimedia category.
• 43% – of the total work force in the United States will be engaged in the gig economy by 2020 according to forecasts based on numbers from Q3 of 2017.
• 60 – the number of young people of working age (15-29) out of a 100 that are unemployed according to the Pakistan NDHR.

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Image of Interest

In 2016 the McKinsey Global Institute surveyed 8000 people across Europe and the United States to better understand the motivations of and opportunities available to independent workers or freelancers. The resulting report, stated that about 20 to 30% of the working-age population engaged in some form of independent work. The survey also revealed that those who engage in independent work by choice (e.g. to supplement income or casual earners) tend to be more satisfied with their work as compared to those who engage in this work by necessity (e.g. those who have no other employment option or are financially strapped). Read the full report here.

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