The online gig economy is “rapidly” growing and has become a “non-negligible part” of the global market, as it encourages a more inclusive labour participation, a World Bank study has revealed.
The share of online gig workers in the global labour force ranges from 4.4 per cent to 12.5 per cent, which is much higher than previously projected, and holds particular promise for women and youths in developing countries, the Washington-based lender said in its latest Working Without Borders report.
However, the World Bank acknowledged that there was no reliable data source to estimate the size of workers in the gig economy.
Using a combination of mixed methods, data science, proprietary firm databases and a web survey in 17 countries, it puts the number at between 154 million to 435 million.
Gig work is also an important means of earning supplemental income as it has become a secondary activity for four in 10 workers, it said.
Demand for online gig workers has risen faster in developing countries than in developed nations, the report said, citing a survey involving more than 20,000 companies.
Young people – those under the age of 30 – are attracted to gig work as it allows them to earn income, learn new skills or have the flexibility to combine work with school or other jobs, the study said.
Women in most regions, on the other hand, are participating in the online gig economy to a greater extent than they are in the general labour market or the services or informal sectors, according to the study.
“Online gig work could provide people in low and middle-income countries an additional path out of poverty,” Mamta Murthi, vice president for human development at the World Bank, wrote in a release accompanying the report.
“It can help address youth unemployment and it can support increased labour market participation for women.
“It can also help address inequalities in job opportunities across regions and – for entrepreneurs, start-ups and small firms – it can provide flexibility in hiring talent that is critical for business growth and job creation.”
The online gig economy can also provide opportunities for relatively low-skilled workers and people in areas with insufficient local jobs, while also widening the talent pool for micro, small and medium enterprises, the World Bank said.
The gig economy is often described as a free market where companies hire freelancers to provide services, most notably ride-hailing and food delivery, to cut costs.
The arrangement benefits both parties. For employers, it reduces human resource costs while workers are able to choose the gigs they want and even switch between several professions as long as it is convenient for them.
The global gig economy is projected to surge to about $919 billion by 2028, from an estimated $414 billion in 2022, at a compound annual growth rate of 14.2 per cent, a study by US data platform Industry Research showed this week.
“More research is needed to explore different methodologies to understand and monitor the development of the gig economy in the absence of reliable labour market survey data,” the World Bank said.
Despite the growth of the online gig economy, the World Bank has warned of challenges and potential risks.
One of the most obvious hurdles is that people without access to the internet and digital devices such as smartphones, laptops and tablets remain excluded from opportunities.
Also, in poor countries, most people work outside the purview of labour regulations and lack access to social insurance and benefits.
The study also acknowledged that there was still a considerable wage gap between men and women, with women earning about 68 per cent of men’s wages, it said.
Another “surprising finding” is that six in 10 gig workers live in smaller cities, which points to the role that online gig work could play in addressing regional inequalities in job opportunities.
“Besides, gig jobs are sporadic, do not always provide clear career progression pathways for youth and leave many people spending long hours searching for gig tasks without success,” it said.