
Commentaries | Jan 03,2021
June 22 , 2019
By Olga Morawczynski ( Olga Morawczynski is senior program manager at the Mastercard Foundation. ) , David Porteous ( David Porteous is founder and chair of the consulting firm BFA and co-founder and chair of the Digital Frontiers Institute. )
Olga Morawczynski is senior program manager at the Mastercard Foundation. And David Porteous is founder and chair of the consulting firm BFA and co-founder and chair of the Digital Frontiers Institute.
By introducing portable benefits for gig workers, African governments and digital platforms can help to power the continent’s future growth. Otherwise, these platforms will lose top talent, countries will miss out on potential tax revenue, and Africa will fail to reap the full benefits of the digital revolution.
The growth of digital platforms in Africa could offer new opportunities to bridge the current gap between often-insecure 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 was established in Nigeria and now 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 Labor Organization, 85% 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, all of which are vital for boosting the productivity of the workforce and sustaining broader economic growth.
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. For example, drivers working for ride-hailing company Lyft in the United States get a voucher giving them a discount when they visit a doctor, while TaskRabbit workers are provided with liability protection of up to one million dollars. But these perks are still a far cry from the health care and retirement benefits that companies traditionally offer their full-time employees.
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.
Digitization could enable the formal sector to offer a spectrum of benefits for workers and responsibilities for employers. African labour-market regulators and tax authorities can play a significant role in recognizing and incentivizing progress along this spectrum. This means taking stock of which benefits workers value most, and then designing effective policies that encourage digital platforms to offer them. Moreover, such policies should ensure that benefits are portable and tied to the worker rather than the platform so that people can choose the ones that suit them.
Digital platforms should also consider how to include portable benefits in what they offer to potential employees, such as by setting aside a portion of their revenues to finance these perks. Such benefits could become an increasingly important recruitment tool as platforms grow and compete for labour. And unless digital firms take the lead on this issue, they face the risk that governments will force them to adapt their business later on – which will likely be much harder.
By introducing portable benefits for gig workers, African governments and digital platforms can help to power the continent’s future growth. Otherwise, these platforms will lose top talent, countries will miss out on potential tax revenue, and Africa will fail to reap the full benefits of the digital revolution.
PUBLISHED ON
Jun 22,2019 [ VOL
20 , NO
999]
Commentaries | Jan 03,2021
Featured | Jan 26,2019
Fortune News | Nov 21,2018
Commentaries | Dec 14,2019
Commentaries | Aug 24,2019
Commentaries | Jun 08,2019
Fortune News | Dec 05,2018
Sponsored Contents | Nov 22,2021
Fortune News | Oct 02,2021
Radar | Oct 24,2020
Photo Gallery | 52950 Views | May 06,2019
Fortune News | 45931 Views | Jul 18,2020
Fortune News | 44697 Views | Sep 01,2021
Photo Gallery | 44683 Views | Apr 26,2019
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
August 28 , 2021 . By HAWI DADHI
The streets of Addis Abeba are as varied as they are many, although too many of them have yet to be named. From the narrow alleyways of the...
June 25 , 2022
It is not the best of times to be in charge of governance in Ethiopia, whether at the...
June 18 , 2022
Some of Ethiopia's economic policymakers may take solace from realising that inflatio...
June 11 , 2022
The stereotype many people have of parliamentarians is as clueless seat fillers who exist to rubber stamp legislative bi...
June 4 , 2022
It was an institution confident in its mission, capabilities and progress that was on...
June 25 , 2022 . By TSION HAILEMICHAEL
Regional state officials and cement distribution agents are in an uproar over new rul...
June 25 , 2022 . By BERSABEH GEBRE
Mayor Adanech Abiebie has won the approval of the Addis Abeba City Cabinet to give re...
The Addis Abeba City Administration is undergoing an extensive reshuffling leading th...
June 25 , 2022 . By RUTH TAYE
Dashen Bank has rolled out a data centre for nearly a quarter of a billion Birr. Installed by two local firms, the centr...
Put your comments here