The emergence of the gig economy is transforming labor markets around the world by providing alternatives to traditional employment. Several online platforms offer small and large enterprises access to workers with specialized skills and flexibility who can cater to different types of work ranging from technical projects, professional services, physical delivery, and ride-sharing services, and small microtasks. Uber, Upwork, and Airbnb are popular examples of such platforms. Workers benefit from the gig economy through easy access to jobs, flexible working hours, and good income and employers save costs by supplementing or substituting standard employment with temporary gig work.
According to the Online Labour Index (OLI), the first economic indicator that provides an online gig economy equivalent to conventional labor market statistics, the online gig economy has grown around 67% over the past five years (see figure 1). A growing number of Nepalis are also joining the gig economy including millennials and Gen-Z employees, who aren’t satisfied with a single job but prefer holding multiple jobs, college students who’re looking to earn pocket money, as well as people who were affected by the downsizing and pay cuts during the pandemic and are in between jobs or can only work part-time. In Nepal, the most popular occupation is software and technology development which makes up 43% of the online freelance workforce according to the OLI.
Figure 1: Online Labor Index, July 2016 – July 2021(28-day moving average
In Nepal, Tootle and Pathao are popular examples of physical or local gig economy jobs that have limited competition due to the nature of their service. Tootle is a platform that allows bike owners to earn money by renting out their back seats to riders. Pathao is another ride-hailing and food delivery service provider. Tootle has more than 50,000 riders or ‘Tootle partners’ and 400,000 customers as per the company’s website. Pathao, which has 92,000 bike riders, was doing 60,000 trips daily before the COVD-19 lockdown in Nepal, according to the company.
Apart from these, Nepali workers also participate in the digital gig economy which includes platforms such as Fiverr and Upwork where Nepali freelancers can offer their services ranging from graphic design, web development, online consultations, and translation jobs to companies across the globe. Upwork’s client rating rates Nepali freelancers 4.9 out of 5 and some of Upwork’s top freelancers in Nepal earn anywhere between USD 5 to USD 60 per hour.
Conversations with Nepali gig workers revealed that young Nepalis from urban centers tended to join the gig economy. Platforms such as Tootle and Pathao have also provided new opportunities for women to challenge gender stereotypes. In Nepal, only 22% of women are employed outside the home and these platforms offer simple employment opportunities that can empower women.
Challenges with the gig economy in Nepal
Nepal’s current laws and policies are not very supportive of businesses in non-traditional industries and serve as a barrier to innovative companies such as Tootle and Pathao. In the past, traffic officers have fined Tootle and Pathao riders for violating the Motor Vehicles and Transport Management Act 1993, according to which it is illegal to use private vehicles for public transportation. Following protests from the public, Prime Minister KP Sharma Oli issued a statement directing traffic officers not to take action against Tootle. The legal status of such companies remains ambiguous and has left authorities and entrepreneurs in a dilemma.
Competition and payment difficulty in the digital gig economy
Sites like Upwork and Freelancer have professionals competing globally with bids for their services. The high level of competition from around the world makes it difficult for Nepalis to find work and could take up months of bidding at minimum rates until they get a job. These sites also have a ‘rating system’ that tracks reviews of completed jobs, where digital gig workers hope to get enough positive feedback to find regular work or clients. Furthermore, Nepal’s rules on foreign currency transactions are also quite stringent. In early 2020, Nepal Rastra Bank issued a notice warning against making or receiving foreign currency payments through informal channels like hundis, so most freelancers have to go through formal banking channels and receive payment through direct wire transfer to the bank account.
Challenges in the physical gig economy
Workers in the physical gig economy in Nepal face lesser competition than in the digital gig economy, as competition is limited by geography and local population and the services provided often have a fixed rate. However, people working for Tootle or Pathao have shared difficulties in finding clients on days with bad weather conditions, of the pollution and health hazard to them in the city, or the limit to how many rides they could physically give in a day. These factors lead to inconsistent earnings for workers in the physical gig economy, where they could earn a lot in one month and nothing in the next.
Impact of the COVID-19 pandemic
Compared to traditional jobs, jobs in the gig economy do not offer long-term stability or security during market fluctuations or crises. Gig workers sign zero-hour contracts that do not usually include benefits such as pensions and their ability to find employment is heavily dependent on the demand in the market. During the COVID-19 pandemic, the demand for services that require physical contact decreased to a large extent. People were reluctant to use ride-sharing services such as Uber or Tootle or stay in Airbnb apartments. Moreover, if the gig workers fell sick or needed to isolate themselves, they would lose out on their income.
On the other hand, change in certain behavior patterns due to the COVID-19 outbreak had a positive impact on jobs such as online teaching, delivery of food and other essential items sold online, and jobs that require technical skills. Furthermore, some people may continue to embrace the flexibility to live and work from anywhere mindset that has grown during the pandemic and is offered through gig economy jobs and this could also increase demand for short-term accommodation in various locations.
Future of gig economy in Nepal
The gig economy in Nepal is relatively new and has been developing rapidly. As new jobs and opportunities emerge, the government needs to modify and amend laws that don’t hinder employment opportunities or innovation and that keep up with the changing business landscape. Nepal can also learn by looking at its neighboring countries, India and Bangladesh, and their laws surrounding the gig economy such as the legal classification of workers, job benefits and mandates to ensure workers are not being exploited, and other issues.
In conclusion, the gig economy ensures opportunities for many people, including women and students, to utilize and build their skills to connect communities and share resources and as these digital platforms continue to expand with technology and innovation, the gig economy continues to grow in importance.
Sara is pursuing her bachelor’s degree in Economics at Mount Holyoke College, USA. Her areas of interest are economic consulting, macroeconomic research, and data analysis. She was a former intern at Beed Management.