Gig Economy's New Frontier of Work, the Regulatory Hurdles

Feb 10 , 2024
By Brook Kebede

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The gig economy is emerging as a force to be reckoned with in reshaping Ethiopia's labour market. A model of flexible, temporary, or freelance employment, which gained momentum globally following the financial crisis of the late 2000s, it is now carving out significant space in sectors ranging from ride-hailing to creative freelancing.

As Ethiopia struggles with high youth unemployment rates, the gig economy presents an opportunity and a challenge, offering innovative job avenues yet pointing to the need for robust legal frameworks to protect workers. The digital platform economy, driven by technology-focused companies, has become a source of new employment patterns. It encompasses a wide array of services, including driving, delivery, tutoring, and graphic design, facilitated by platforms such as GoodayOn, Findall, Mogzit, Freelance Ethiopia, and Yango.

Each of these platforms caters to specific needs within the market. GoodayOn connects households with domestic helpers, tutors, and nannies; Findall curates stock images and design assets that reflect Ethiopian culture; Mogzit and Yango streamline delivery and ride-hailing services, respectively, enabling competition within the transport sector against established players like Ze-Lucy, Ride, TaxiVa, Zayride, Feres, and ETTA.

The allure of the gig economy lies in its promise of independence for workers. It allows individuals to set their own schedules, work independently, and earn a flexible income. This autonomy can significantly contribute to Ethiopia's economic growth by providing employment for thousands of young and skilled workers, encouraging innovation, and prompting entrepreneurship.

The government's role in crafting an enabling environment cannot be overstated. By establishing clear legal guidelines, providing tax incentives, facilitating access to finance and digital infrastructure, and promoting skill development, Ethiopia can harness the potential of the gig economy to fuel economic growth and innovation. At the same time, it is imperative to implement dispute-resolution mechanisms and promote social dialogue to address the concerns of all stakeholders.

The industry is not without its drawbacks.

The absence of social protection, job security, and bargaining power for gig workers poses problems. The potential for platform exploitation, which may leverage workers' vulnerabilities, calls for an urgent regulatory intervention. Despite the budding growth of digital platform businesses, primarily in Addis Abeba, there is a vocal call from business owners and gig workers alike for the state to establish a legal framework governing their operations.

Ethiopia's labour law, which was revised in 2019 and defines employment as a traditional employer-employee relationship, fails to encompass gig workers due to their independent working conditions. The exclusion from the social security scheme shows a pressing need for legal reforms that provide equal protection to temporary or part-time workers and ensure fair compensation, training opportunities, and career development pathways.

The legal ambiguity surrounding the gig economy not only affects worker protection but also raises broader societal concerns. The blurring lines between public and private spaces, driven by the expansion of gig economy activities, mandate legislative attention to prevent potential disruptions to the social fabric. Stakeholders within the gig economy — from workers to consumers — have voiced frustrations over inadequate regulations, unfair pricing practices, and the absence of social security measures.

The diversity of business models within the gig economy and the tensions among different players compound this regulatory absence, featuring the complexity of establishing effective oversight and support mechanisms. While offering advantages such as autonomy, flexibility, and the potential for large-scale employment, also signals a shift away from traditional employment contracts. The unclear legal relationship between gig workers and platform owners raises critical questions about the sustainability of this employment model and the potential for exploitation. The situation reveals that some business owners may be leveraging the regulatory vacuum to their advantage, reaping substantial profits at the expense of gig workers' rights and welfare.

Addressing these challenges requires a concerted effort to develop specific regulatory frameworks tailored to the gig economy. The International Labour Organization (ILO) has indicated the necessity of such frameworks to enhance the quality of non-standard jobs, advocating for policies that ensure fair treatment, adequate social protection, and the promotion of workers' rights. For Ethiopia, this means embarking on a path of legislative reform that not only nurtures the growth of the gig economy but also safeguards the interests of its participants.

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PUBLISHED ON Feb 10,2024 [ VOL 24 , NO 1241]

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