Fortune News | Jun 10,2021
When Abraham Fanathun enrolled on a diploma programme at Rift Valley University four years ago, his intention was to join the ever-growing workforce as an accountant. He comes from a family that had always urged him to focus on his education to get a good-paying job at a reputable firm. He went into the programme thinking it was the most viable option to climb the ladder of success in life.
During his studies, however, he observed a turn of events that opened his eyes to a new realm of possibilities. Some of his friends, who were his seniors in high school, were making less at their professional jobs than others who made a living doing short-term gigs independently. Though it was a surprise for him, Abraham did not react brashly. He waited until completing college. After graduation, he made the decision to drop his plans to pursue postgraduate studies in accounting.
He joined the army of taxi-hailing drivers roaming in the city. He is a registered driver for Feres and Ride, leading taxi-hailing service providers among the 40that have joined the market in the last half-decade.
Says Abraham: "I'm making my classmates' monthly salary in a week."
The gig economy run by people like Abraham is growing fast. It now embraces everyone from housemaids, daily labourers and plumbers to web developers, research consultants and graphic designers. All of them are considered independent contractors. Their work is short-term and does not require their presence in a permanent workspace. The expansion might be unsurprising for a country where employment opportunities are few and far in between.
Vacancies in the formal sector lag far behind the growing adult population and the flood of university graduates joining the workforce annually. Every year, two million people enter the workforce, with the unemployment rate hovering at 25pc, according to the latest survey from the Central Statistics Agency (CSA).
Combined with the thousands of youths graduating from universities and colleges every year, it is a heavy burden on the economy and a bumpy road for those seeking employment. The gig economy offers an alternative, albeit unpredictable solution. Though short-term work has been around for some time, those who took part did so informally, excluded from social protection and susceptible to various risks.
Yet, it appears their way of doing business has also been changing in recent years.
Tiruwork Getahun`s experience is telling. Coming to Addis Abeba from Wello almost five years ago, she found her first job as a full-time housemaid. Her employers covered her meals, and she could save the whole of 1,000 Br in monthly salary.
However, as the years rolled by, she saw her friends making five or six times more, working part-time, doing the same job. She decided to follow suit, joining the gig economy.
"I earn more money and I also have more time," says Tiruwork.
It is a sentiment widely shared by those in the gig economy, particularly in the digital industry. Digital gig work is growing at a blistering pace, with the growth in internet users and improving connectivity. A fourth of the country's over 100 million population is online.
It may seem exaggerated for a country ranked last among the 110 countries in the digital quality of life index compiled by Sufrshark, a cybersecurity firm. But the gig economy is becoming a landing place for many in the youth. It is benefiting those graduating from universities but unable to secure work in the formal sector.
They prefer the gig economy not only because it provides a source of income. It allows them to work on projects from multiple employers.
Adam Sileshi, a gig worker involved in web and application development and graphic design, sees the opportunity depends on the worker's portfolio and their network.
"It gives them better bargaining power," said Adam.
Figures to determine the size of the gig economy are hard to come by. However, on a much larger scale than Ethiopia`s, the global digital gig economy registered 204 billion dollars in revenues in 2018, according to Mastercard. The figure is forecasted to double in three years. The advent of technology, coupled with the decentralisation of operations, has prompted organisations to change their human resources principles while encouraging many professionals to opt for independent work.
Close to 40pc of executives of corporate companies expect gig workers to account for an increased share of their organisation’s workforce, a study conducted by Boston Consulting Group (BCG) in partnership with Harvard Business School found. This is a testament to the growing appetite to hire independent contractors instead of sticking with the traditional practice of hiring full-time professionals.
"It helps employers cut down on administrative expenses and improves the timely delivery of work if all they want is the final output," said Tewodros Tadesse, a consultant and founder of the start-up incubation company, X-hub.
Digital platform developers have already understood the growing demand for gig workers and its benefits.
One of them is G-Online Digital Advertising Plc, the developer of an app for gig workers dubbed 'Gudayon.' In the works for almost three years, the app was active last year with its workforce pool growing to over 7,000. Nearly 5,000 of those registered have verified profiles corroborated with government issued kebele IDs and passports, according to Alem Abraha, its founder and Chief Executive Officer (CEO).
Receiving 80,000 gig service requests thus far, the app has more than 25,000 users and focuses on workers with skills that do not require advanced training, such as plumbing, satellite dish technicians, cooking, chauffeuring and cleaning. It recently started connecting tutors with parents, with the aim to immerse the company in sourcing skilled gig workers.
"Though it requires time, serving as a bridge between gig workers and employers will pay off at a later stage," says Alem, whose company is now providing services free of charge to build up the workforce pool. "Introducing payment is not among our short-term goals. Our plan is to come up with a premium service for those who want priority and unlimited access to our services."
Yet, companies like G-Online or the gig workers they serve can only succeed if the digital ecosystem grows more conducive for market players. Conceding that there have been changes from the government in supporting the digital economy, Adam advises policymakers not to follow business-as-usual approaches towards the gig economy. He wants to see gig workers exempted from tax, although setting up a supportive legislative and regulatory framework is critical.
Officials are aware of the urgency to do so.
The Ministry of Technology & Innovation, in cooperation with the newly-restructured Ministry of Labour & Skills, is drafting a proclamation for start-up and innovating businesses. The challenge facing start-ups and the aim of setting up a conducive regulatory environment, including how they should be taxed and incentivised, are behind the initiative, according to Bernard Laurendeau, an advisor to the Labour Ministry.
"The government believes today's gig workers or start-ups can disrupt the economy at a certain point," says Bernard, asserting this is a significant departure from the past when their importance was overlooked. That, however, is not enough for him. Bernard advises start-ups to serve as a bridge between gig workers and employers, sharing information and even forming a larger establishment to reach more areas.
The advice particularly applies to the life of Abraham, who has the desire to offer trips from the capital to neighbouring towns, had there been taxi-hailing service providers working elsewhere.
PUBLISHED ON Oct 23,2021 [ VOL 22 , NO 1121]
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