Digital platforms are a godsend in bridging the labour gap in Africa

Wednesday July 3 2019

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The growth of digital platforms in Africa could offer new opportunities to bridge the gap between informal work and formal employment. PHOTO | FILE | NMG 

RWANDA TODAY
By RWANDA TODAY
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The growth of digital platforms in Africa could offer new opportunities to bridge the gap between informal work and formal employment.

Portable benefits, which move with a freelance worker from gig to gig, could drive this transition.

There are already about 300 active digital platforms in Africa, employing close to five million workers.

They include e-commerce company Jumia, which operates in 14 countries on the continent.

The rise of such platforms has intensified the debate about the demise of the traditional employment contract and the persistence of widespread informal employment in Africa.

This shift increases the risk of lower wages and lower-quality work. It also restricts workers’ access to critical benefits, including sick leave, health insurance, workers’ compensation, and employer-funded retirement savings plans.

Although informal work sometimes provides an adequate income, it often traps workers in a cycle of low productivity and even poverty.

In most parts of the world, government policies fail to support and protect the growing number of freelance or gig workers, forcing them to navigate a regulatory grey zone.

Furthermore, informal employment deprives governments of substantial tax revenues. According to the International Labour Organisation, 85 per cent of workers in Africa are employed informally, and therefore do not declare their income or register their businesses.

This loss of potential revenue affects countries’ ability to invest in education, health, and basic infrastructure.

Gig workers are increasingly putting pressure on employers to rethink outdated models of compensation and benefits.

Uber, for example, has recently lost a series of lawsuits in the United Kingdom instigated by drivers seeking access to basic benefits like minimum wage and holiday pay.

In an effort to appease their workers, platforms are experimenting with additional incentives for contract workers.

A growing number of experts and policymakers are therefore looking at the feasibility of portable benefits, which are not tied to a particular job or company.

Employers would pay a certain percentage toward universal benefits for all work that they commission, regardless of the nature of their contract with the worker.

For example, if an independent worker drives one hour for Uber, and walks a dog for another hour on Rover, each platform would contribute an equal amount toward his or her benefits. This would enable independent workers to accumulate and manage their benefits, and eventually acquire a safety net like that of a full-time contracted employee.

With digital commerce estimated to benefit at least 80 million young Africans by 2030, opportunities for gig workers will increase. And if access to a range of valued benefits, from health insurance to pensions, is made conditional on registering their business and paying taxes, they will have a powerful reason to formalize their work.

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