Convenience vs Exploitation: Egypt’s Informal Labour Market

With the emergence of new technology, platforms and the marketability of convenience, it is inevitable that new business models will emerge outside the scope of virtual services. This shift has given rise to the ‘gig’ economy. The gig economy is an ‘on-demand’ mode of providing and consuming goods and services. It is centred around providing project or task oriented work that is able to cope with on-the-spot demands. As the fourth industrial revolution has proven, automation is an inevitable outcome for traditional industries - but what makes the gig economy so disruptive is that, with every new technological advancement, it becomes more accessible rather than exclusionary. Anyone could download an app, or sign up for a job-sharing platform and participate in the gig economy, and it is exactly this unprecedented accessibility that makes it so vital to understand.

Given the current rate at which technology is changing the way we analyse production and consumption, we should also be examining the way it is changing the way we do work. The growing size and scope of the gig economy signals a turning point for the traditional job model, and ushers in an era of flexible work where short-term projects could become the norm. A report from The World Bank published in 2023 estimated that job postings on digital platforms grew at a rate of 130% in developing countries between 2016 and 2020, making their impact on local job markets substantial.

The gig economy should be a main area of focus given Egypt’s broader strategy for reducing unemployment by addressing structural challenges to the labour market. Gig-based work is playing a vital role in easing the burden of Egypt's high youth unemployment, which UNICEF reported at 19.7% in 2021. With young people facing numerous barriers to securing traditional jobs, the flexibility and accessibility of gig opportunities have become the alternative in Egypt. A CAPMAS survey conducted in 2022 estimated that around 40% of graduates remain unemployed for up to two years after graduating, despite having sufficient qualifications. Alternatively, it found that 60% of Egyptians under the age of 30 had accessed gig-based platforms like Uber, and other freelancing sites to make up for income gaps, demonstrating the gig-economy’s role in absorbing the employment needs of young workers.

However, operating in an ‘on-demand economy’ means that there is a higher risk of becoming obsolete. The gig economy is by nature a highly disruptable ecosystem, and so gig-based businesses constantly need to reinvent and adapt their goods and services to stay ‘competitive’ in their respective industries, making them highly unstable working environments for already vulnerable labour.

According to the Edison Research Center, 30% of workers in developing countries use task-sharing platforms to make additional income, mostly operating in sectors like delivery services, and ride-sharing apps. However, the downsides are substantial. Since they don’t function as regular employees, they also aren’t afforded the same protections. Gig workers don’t receive social security benefits, including health insurance, sick leave, or oftentimes even a base salary. The gig economy is a “produce or perish” sector, where workers are not tied to corporate norms, but are still burdened with the sole responsibility of generating enough income to sustain themselves. The "pay-per-task" structure places immense pressure on gig workers, especially those relying on it as a primary income source, since it ties their financial stability directly to their ability to secure and complete continuous tasks. For workers who engage in this kind of labour full time, this results in constant job insecurity and a heightened risk of financial strain during slow periods or even personal setbacks, making stability highly elusive.

Given that the gig-based mode of work is often praised for its potential to increase the inclusion rate of women, youth and people with disabilities in the labour force, it's crucial to critically assess the actual working conditions that different groups of gig workers face. Participants in the gig economy are typically classified into "skilled" and "unskilled" workers, and this distinction reveals a deeper issue. On one hand, the gig economy can serve as a convenient option for those with access to high quality education and relevant life experiences, enabling them to participate from a position of leverage. On the other, for individuals from underprivileged backgrounds, the gig economy can be highly exploitative, offering low pay, no benefits and little job security. The reality for many of these workers is that with no resources to advance, they are funnelled into precarious roles, reinforcing existing inequalities within an already fragile labour market.

While developing economies could benefit greatly from the emergence of the gig economy by regulating its activities, by achieving higher value GDP and more tax revenue, the same issues of informality emerge. Most “shared economy” businesses are registered and pay taxes on profit, however, with structural irregularities and no regulatory framework to protect workers’ interests, there will remain a sizable portion of income and output that is not accounted for in the official economy. The government’s role in formalising gig work is essential in providing workers with the leverage they need to demand full labour protections. By creating a regulatory framework that clearly defines gig workers’ rights and obligations, the government can establish much-needed baseline protections, including minimum wages, social security, health benefits, and workplace safety standards.