‘Gig’ economy gains traction

Lack of payment gateways, like PayPal, limit growth potential for freelancers

KARACHI:

Despite challenges, the adoption of the gig economy is gaining ground in Pakistan where people work flexible hours as entrepreneurs and are essentially their own boss.

While traditional employment may have lost some of its lustre across certain segments of the population, Pakistan still has a long way to go in relation to gig economy. The gig economic model is not well understood and continues to be largely adopted only for supplementary income.

Speaking to The Express Tribune, FoodPanda Director of Policy and Communications, Hassan Arshad said, “One of the key challenges that exist today is to help the gig economy labour force capitalise on their existing skill sets, instead of considering up-skilling.”

“There is a disconnect between the current digital skills training program and policies surrounding freelancing. Also, with the expanding start-up ecosystem in the country, there is an urgent need to formulate a comprehensive policy framework to protect freelancers working within our growing gig economy,” he observed.

“Gig economy can be bifurcated in national and international sectors. Internationally, we lack payment gateways, especially PayPal, resulting in sluggish growth,” noted Shahzad Khan, a Gig Economy Expert.

“We do have payment solutions such as Payoneer and Skrill but foreign clients do not use these platforms. When we tell them to use these for the purpose of payment, clients hesitate. It is not easy to build trust especially when it is a matter of money. Normally, foreign clients use PayPal which is unavailable in Pakistan. This hinders freelancers from unlocking their full potential,” he explained.

“The majority of Americans use PayPal for digital payments. When you give them an account of an app that is new, they are hesitant to go ahead with the transaction. Freelancers based in Pakistan also struggle to understand the cultural nuances of foreign markets. Until we bridge this gap, a majority of Pakistani freelancers will not perform at par with the global industry,” apprised Khan.

Of late, Pakistan has introduced many payment solutions, however, public adoption of these remains slow.

According to the Organisation for Economic Co-operation and Development (OECD) estimates from 2018, Pakistan has approximately 2% of its labour force engaged in the platform economy through online and location-based services. Experts continue to ponder as to how Pakistan can increase this abysmally low number with its significant youth bulge.

According to the United Nations Development Programme (UNDP), approximately four million young people enter the working age in Pakistan every year. However, only one million are able to secure employment.

“There is an urgent need to create the right conditions for more young people to join the gig economy. In addition to improving country-wide Internet access, there also needs to be a robust payment transfer method in place for gig workers,” urged Khan.

“A public-private partnership that has the right key components can help create further opportunities and empower the youth to leverage the gig economy. For example, the government can partner with the private sector to train people with the right skill set (for example, driving) which can then be leveraged by offering sustainable livelihoods (through working gig platforms) as well as via support offered through other financial and youth empowerment packages,” he added.

“Unfortunately, freelancers are not provided with social security by the government and are also not treated as proper employees by organisations,” expounded Khan.

“The independent gig working model offers economic and financial opportunities that empower these riders to pursue sustainable livelihoods,” explained the FoodPanda director.

“On average, FoodPanda riders’ earn over Rs150 per hour. This amount does not include the tips that riders receive from customers. Fuel and other associated costs can vary between 10-15% of their basic earnings,” added Arshad.

“While there are full-time riders as well, nonetheless, working flexibly as freelancers with FoodPanda gives riders the option to supplement their income from other full-time (existing) jobs. On average, riders who commit 8-10 hours a day (essentially working full-time) and work six days a week are able to earn anywhere between Rs38,000-45,000 per month. This is at least 35-40% more than the minimum wage rate in Pakistan, as per the existing law,” Arshad underlined.

Published in The Express Tribune, November 10^th, 2022.

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