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MasterCard Study Illustrates Digital Divide In EA Gig Economy

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The digital gig economy favours the young.

Mastercard has released a white paper revealing how gig work across East Africa is helping to drive economic growth by facilitating economic opportunities, improving livelihoods, and acting as a buffer against unemployment.

However, for the gig economy – which is based on short-term, temporary and flexible independent contractors – to reach its potential and unlock prosperity for millions of people, the digital divide must be bridged through connected devices that power the digital economy, and value adds like access to capital and access to market.

Mastercard’s white paper titled The Gig Economy in East Africa: A Gateway to the Financial Mainstream, explores how digital inclusion is a prime enabler of the gig economy. Connected devices, which are already proven to be vehicles of inclusion and development in Africa, can help gig workers overcome some of the biggest challenges they face, ultimately driving financial inclusion and leading to improved economic possibilities.

Know thy gig worker and know them well

The paper, based on research from in-depth face-to-face interviews with gig workers in Kenya, shows that the gig economy is nascent, buoyant, and continues to grow, with almost two-thirds (60 per cent) of gig workers joining the gig economy between 2017 and 2019.

It describes the average gig worker as male, about 30 with a high school degree, speaking both English and Swahili, owns a smartphone that connects him to his gigs, with over two years experience doing gig work. He has learnt, through gig work, “to keep his
expenses flexible because he may earn anywhere between Kshs 10,001 and Kshs 30,000 ($100 – $300) each month.”

His wife, the white paper says, is a “nanny-cum-household help” who gets called in for chores as well. Her gig allows her to enjoy a flexible work schedule such that she can take care of their young, budding family. “If only, the couple says, there was some stability and continuity of income, they would be able to plan their lives around their work – acquire a better mobile device with a more reliable internet connection, train as a driver, perhaps obtain a car on a loan to join a gig platform.”

This, it notes, is the profile of a typical gig economy worker in Kenya in 2020. Branded jua kali, the informal sector is described as a job-creation engine. The 2019 Economic Survey by the Kenya National Bureau of Statistics discloses that it was responsible for 762,100 of the 840,600 new jobs created in 2018.

It describes the average gig worker as male, about 30 with a high school degree, speaking both English and Swahili, owns a smartphone that connects him to his gigs, with over two years experience doing gig work.

How much is the gig worth?

The gig economy powered by digital tools like mobile, is the latest addition to this sector. The report reveals that the global gig economy stands at $193 billion and growing at a projected annual rate of 17.4 per cent. By the end of 2023, it will be worth $455 billion. This digital gig economy hosts 40.7 million freelancers on digital platforms across the globe, generating $193 billion in gross volume and $127 billion in disbursements to freelancers.

Research estimates from 2019 peg the total size of the Kenyan gig economy at $19.7 billion employing 5.13 million workers in six key sectors: agriculture, manufacturing, trade and hospitality, construction, transport and communications, and community, social and personal services.

However, like much of the informal sector, uncertainty is a fact of life, with the biggest challenges being around continuity of income. More than half (55 per cent) said that not knowing when the next gig contributes to instability. And close to 60 per cent of respondents said that fluctuation in income from week to week is a cause for frustration.

Currently, the online gig economy (the portion of gig work that is attained through digital platforms), is a tiny portion of the overall gig economy. Research-based estimates in 2019 put the total size of the online gig economy in Kenya at $109 million, employing 36,573, while the offline gig economy comprises 5.1 million workers, and accounts for $19.6 billion. Despite this, online gig economy work is preferred.

More than half (55 per cent) said that not knowing when the next gig contributes to instability. And close to 60 per cent of respondents said that fluctuation in income from week to week is a cause for frustration.

Online gigs for the win

Mastercard’s report found that almost 60 per cent would prefer online gigs to offline. This is because online gig work enables end-to-end management of projects. A third (over 35 per cent) said that finding gig work was easier on a platform, and about 30 per cent said platforms made faster payments possible, helping connect to other workers.

“Gig work is present everywhere in East Africa, but now, with the growth of digital technologies and connected devices, there is a real opportunity to help gig workers quickly connect to consumers to meet their demands for services, and overcome significant pain points such as inconsistent work, financial planning challenges and late payments. If each key player in the gig economy ecosystem comes together – from the platform to the mobile industry and the payments provider – we can ensure that the end-to-end journey of the gig worker is both smooth and profitable, and realize the true potential of inclusive, sustainable growth across the continent,” said Jorn Lambert, Chief Digital Officer, Mastercard.

Some of the most common types of gig work in East Africa are in artisanal and general services, which includes welders, electricians, carpenters, and domestic workers. “Independence” is the powerful motivator behind this movement. Being self-employed with the freedom to work at an individual pace is part of why gig work is growing. It is an inclusive space where people of different social and economic backgrounds can fit in and earn a living.

Research estimates in 2019 peg the total size of the Kenyan gig economy
at $19.7 billion employing 5.13 million workers in six key sectors: agriculture, manufacturing, trade and hospitality, construction, transport and communications, and community, social and personal services. It is seen as an almost natural choice for Millennials and Gen Z when fresh out of high school.

“Research backs the fact that Millennials, and by extension Gen Z, work in a technology ecosystem that includes social networking, instant messaging, video-on-demand, blogs and wikis. The digital natives are used to instantly connecting, engaging, and collaborating with cohorts and managers seamlessly, leading to better productivity.”

With the digital economy as an enabler of greater prosperity and inclusion, gig platforms have proven to be a single touchpoint for many services and opportunities utilised by gig workers. But access to gig work opportunities is often not enough to keep a gig worker afloat.

Loans, instant payments, and benefits such as insurance, are the top three perks desired by gig workers in Kenya, and 45 per cent of respondents said they are willing to pay between $1 and $5 a month for such ben­efits and services.

Over 80 per cent of respondents in Mastercard’s research said instant payments when a job is finished is the most desired feature of a gig platform. And, in step with the prevalent mobile money system, about two-thirds (62 per cent) of respondents said they prefer to receive payment through mobile money such as M-PESA or Airtel Money because it is readily available, reliable, easy to manage, secure, and convenient.

in step with the prevalent mobile money system, about two-thirds (62 per cent) of respondents said they prefer to receive payment through mobile money such as M-PESA or Airtel Money because it is readily available.

Suffer ye the disadvantages of the gig economy

However, there are still barriers to internet access that need to be over­come to realize the massive opportunity that the East Africa region represents. One is the slower speed of internet data in Africa compared to other continents.

“Traditional platforms often do not adequately serve the needs of the gig worker, who is at risk from personal accident and injury, loss in revenue from any absence from work, incomplete delivery or payments, and economic volatility. However, connected devices are bridging divides between urban and rural, rich and poor, and connecting gig workers to peers, information, opportunities and services,” points out Ngozi Megwa, Senior VP, Digital Partnerships, Mastercard MEA.

“But what’s equally as critical is establishing a digital identity for gig workers across platforms,” he continues, adding that, “There are various gig platforms currently being utilised, but it is difficult for a single platform to provide the value and benefits that workers require, such as the easy collection of payments via digital channels, and access to credit, training and insurance, particularly as they tend to move from one platform to another. A collaborative approach is called for to not just create jobs, but also a gig-worker identity that provides benefits, ensuring decent working conditions and improved livelihoods,” concluded Ngozi.

 

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Workers

Target is giving frontline workers $70 million in bonuses — but their growing gig workforce say they just got hit with a major pay cut

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  • Target just gave 350,000 frontline workers $70 million in bonuses.
  • The company announced the bonus Monday, the same day some of its Shipt gig workforce protested outside Target headquarters in Minneapolis calling for fairer pay.
  • Willy Solis, a lead organizer with the nonprofit Gig Workers Collective, said gig Shoppers were a part of why Target was able to enjoy 273% annual growth in same-day service sales — including curbside pick up, drive up, and Shipt.
  • If you are a Shipt Shopper and would like to share your story, email aakhtar@businessinsider.com.

Target announced Monday that it would offer more than 350,000 frontline employees a $200 bonus each, or $70 million in total.

Target previously gave all hourly full-time and part-time store and distribution center workers $200 bonuses in July. Eligible employees include hourly members in stores and distribution centers, seasonal hires, and hourly team members who “support Target’s guest and team member contact centers.”

Meanwhile, some gig workers for Target-owned delivery service Shipt held a demonstration Monday outside of the company’s headquarters in Minneapolis protesting a new pay model.
Pay for Shipt workers, called Shoppers, is now determined using an algorithm rather than a flat rate, the company confirmed to Business Insider. Shipt classifies Shoppers as independent contractors who are not eligible for employee benefits, including minimum wage or healthcare.

Read more: Leaked Target memo reveals how the retailer is trying to obliterate germs in its stores by wiping down everything from ATMs and handcuffs to Bullseye, the company’s mascot

Some Shoppers have said the algorithmic pay model has lead to lower wages. Molly Snyder, the chief communications officer for Shipt, said Shoppers make $21 per shop including base pay, promo pay, and tips, which did not change on average during the new pay model, but some workers may have seen a decline in pay. Snyder also said there were more Shoppers for Shipt “than ever before” last weekend.

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One study, conducted by Coworker.org and an MIT PhD student, found the new pay model resulted in lower pay for 41% of Shoppers, and the number of people earning less is growing.

Willy Solis, a Shipt Shopper and a lead organizer with the grassroots organization Gig Workers Collective, said it felt insulting that Target give bonuses at the same time Shipt Shoppers are calling for fairer pay. Solis said Shoppers were a part of why Target was able to enjoy 273% annual growth in same-day service sales — including curbside pick up, drive up, and Shipt.
“We’re grateful and happy for Target employees to be recognized and for receiving that extra pay, but at the end of the day, we as Shipt shoppers have contributed significantly to make Target a very profitable company,” said Willy Solis, a Shipt Shopper and a lead organizer with the grassroots organization Gig Workers Collective.

Read more: Target just blew the doors off its first quarter earnings. Target CEO Brian Cornell says it was due to these two key factors.

Target bought Shipt in 2017 for $550 million to compete with Amazon and Walmart on same-day delivery. Target is currently valued at $82.5 billion.

If you are a Shipt Shopper and would like to share your story, email aakhtar@businessinsider.com.

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More Than One-Third Of Claims For Gig Workers, Self-Employed Unpaid – CBS Chicago

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TOM PURCELL: The fate of gig workers could turn on ballot question | Opinion

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Become an employee with full paid benefits, or remain a mostly independent gig worker? That debate’s raging in California as November’s general election approaches, and its outcome is likely to affect the entire country.

According to The Washington Post, “Uber, DoorDash and other gig economy companies are bombarding TV airwaves, social media and even their own apps with ads and marketing materials promoting a ballot initiative [Proposition 22] that they say would improve drivers’ financial situation and working conditions but that would also deny them the right to be classified as employees in California.”

Proposition 22 would give gig workers limited benefits and wage and worker protections, but establish them as an independent class of workers – and undo a 2019 California law, Assembly Bill 5 (AB5), that “would guarantee drivers access to the minimum wage, employer-provided health care and bargaining rights.”

I’ve long been self-employed, with the exception of some recent cybersecurity consulting contracts in which I was paid as a full-time employee with benefits, but that’s been my choice.

Being fully self-employed is not for the faint of heart. Besides cybersecurity consulting and writing a newspaper column, I have an apartment-rental business. I recently earned a real estate license and am selling properties, too.

I manage my own invoicing and taxes. I know to the penny – once my CPA explains it to me and I drop whatever mug of coffee I’m holding – how high my income taxes are. Few employees are aware of how much they pay in taxes or what their benefits cost their employers – which would be helpful to know before voting for new government policies that will increase both.

I manage my own health care insurance, which has gotten plenty expensive in recent years for individuals who don’t qualify for subsidies, in part because of government attempts to expand health insurance to everyone.

But, again, I choose to be self-employed. I like the freedom it provides. But it also makes me keenly aware of the unintended consequences of government regulations and policies.

California’s 2019 AB5 law would require Uber, for instance, to hire drivers as full-time employees with health insurance, paid sick leave and other benefits. Benefits are wonderful, but come at a price.

Uber claims that “if the company were forced to make all drivers across the country employees, for example, it could only support 260,000 full-time roles,” reports The Post. “That compares to 1.2 million active drivers the company was hosting on its app before the coronavirus pandemic.”

Uber also says fares would increase and drivers would be less available and timely – which means you might have to wait a while for your ride home to arrive after a night of enjoying the pub.

What it comes down to is that some politicians believe individuals shouldn’t have the freedom to exchange their skills and services for money from organizations, because organizations take advantage of those individuals. Joe Biden and Kamala Harris support AB5, not the watered-down Proposition 22.

Others think that in a free society, individuals should be able to offer their professional talents to anyone willing to pay for them, and government shouldn’t restrict the terms they negotiate. President Trump’s campaign supports that approach and is critical of AB5 (but has not, to my knowledge, supported Proposition 22).

That’s something else to think about when you vote in November’s election.

TOM PURCELL is a Pittsburgh Tribune-Review humor columnist and is nationally syndicated. Readers can contact him at tom@tompurcell.com.

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