On the gig economy | Encore

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ave the dynamics of Pakistan’s labour market changed irreversibly for the highly educated youth? Until recently, it was the public sector that the educated youth eyed for coveted jobs because of job security, the ‘not too demanding working conditions’ and the after-retirement perks. It seems that the situation has changed. Lately, highly educated young people have been considering careers in the private sector. This change may well be inspired not as much by supply-side factors as the demand-side factors.

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There is a massive mismatch between the jobs created in the economy and the growth in the labour force every year. According to the Pakistan Economic Survey 2020-2021, 1.96 million students were enrolled in 218 universities. To simplify things, let’s assume that we are dealing with undergraduate programmes consisting of eight semesters, and one-eighth of the students (roughly 245,000) join the labour force every year. A recent labour force survey suggests that 1.61 million jobs were added to the economy in 2020-21, out of which 450,000 were created in the urban areas. Let’s assume further that the share of good quality jobs in the newly created employment pool is commensurate with the share of university graduates in the education sector, roughly 4.43 percent. This translates into creating 19,935 highly paid jobs for 245,000 new university graduates. In other words, 92 percent of the new university graduates remain jobless for this year at least. This is mortifying.

Additionally, at times, terms of the job available in the private sector are highly adverse to the interests of the employees. It is not uncommon to find university graduates working for Rs 20,000, which is less than even the legal minimum wage.

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Why should the fewer educated youth eyeing government jobs may also be driven by supply-side factors? The growth in the online labour market has created a wide variety of jobs, including freelancing and remote jobs. But other factors may have played their part. Over time, the patterns of balancing work life and family life have undergone significant changes. Only a few people in a regular job may be content with what they are doing. Most people have to strive continuously to diversify their sources of income, including investment in real estate, trying their luck in the stock market, establishing small-scale business enterprises online and offline, moonlighting or freelancing. Does such a change in the working preferences arise from a massive increase in the cost of basic necessities; a continuous decline in permanent jobs with guaranteed pension and after-retirement benefits; or has a consumerism culture overtaken the popular imagination?

Just as the internet has created new job opportunities, it has also created new soft skills, including ubiquitous motivational speakers and influencers. The motivational speakers come in many varieties: some have proper training and the expertise needed to guide people; many others have their improvised cookbook recipes to provide simplistic answers to complicated questions. Still others do motivation for the sake of motivation. In the process, they mislead the public. The motivational speakers routinely tell their bemused audience tales of online workers making large fortunes overnight. Outliers inspire but the median best represents the ground reality.

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Because correct information is critical for making an informed decision about one’s future, it is essential to keep a close eye on what advice motivational speakers give to the youth. It is important because the motivational speaking industry is highly unregulated, and there is little accountability for the consequences.

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It is important that the young generation clearly understands the opportunities and challenges of the online job market. Like a real economy, the gig economy may have business cycles. It may also be sensitive to developments in the traditional sectors. A recession in some economies may reduce people’s purchasing power. This may in turn reduce their demand for some services that freelancers provide. Thus online and offline activities no longer run parallel to each other, they are often intertwined.

Social media and freelancing platforms have made it possible to enter the job market with any skill whatsoever (some TikTokers have shot to fame for no better reason than the originality of their expletives). This has raised many questions about the need for formal education as opposed to receiving hands-on skills for making a quick buck. One of the favorite pieces of advice offered by many motivational speakers for the uninitiated is to learn Canva for designing logos.

Just as a sub-optimal education in a traditional setting can keep individuals at a disadvantage throughout their professional life, the absence of proper training and education can also keep one at a disadvantage in the online world. The lure of earning online is very compelling for the young people who idealise earning through creating video content for platforms like TikTok and YouTube. Though it is hard to deny the legitimacy of the showbiz profession, if the life years that would be best spent on achieving quality education are wasted in creating inane online content this may have a long-term adverse impact on the economy and people’s lives.

It is important that the young generation clearly understands the opportunities and challenges of the online job market. Like a real economy, the gig economy may have business cycles. It may also be sensitive to developments in the traditional sectors. A recession in some economies may reduce people’s purchasing power. This may in turn reduce their demand for some services that freelancers provide. Thus online and offline activities no longer run parallel to each other, they are often intertwined.

Let’s look at some online opportunities and how Pakistanis have capitalised on those. Pakistanis have by and large done a good job in the online market. According to recent estimates, Pakistanis provide 14.7 percent of the services in the global online freelancing market. Given that Pakistan’s population share in the global population is 2.7 percent, Pakistan’s contribution to the online economy is five times the share of its population. This speaks for the robustness of Pakistan’s educated youth. The government must support the online community in a big way. This may take the form of bringing in an online payment system such as PayPal and clarity on taxation. The government may also devise a strategy to smooth out the consumption of the freelancing industry when the demand for freelance work goes down. This could be done by setting up pension funds for the freelancers.

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While Pakistan’s share in the global online market is 14.7 percent, it is not clear what the share of Pakistanis in the total income from the global online market is. Some statistics, however, are sobering. According to recent government estimates, the Pakistani online community earned around $0.5 billion from freelancing activity. Given that Pakistan’s GDP was estimated to be $346 billion in 2021, half a billion raised from freelancing makes up only 0.15 percent of the GDP.

Some other catches become apparent on critically scrutinising the data. A breakup of the online jobs shows that the share of Pakistan in online services is 22.2 percent in the category of writing and translation jobs, followed by the category of professional services (18.4 percent), clerical and data entry (16.7 percent), software development and technology (12.2 percent), creative and multimedia (10.6 percent) and sales and marketing support (7.9 percent). Data also show that around 33 percent of the online freelancing work done by Asian workers is in the category of software development and technology, but in Europe, 64 percent of the freelancers provide services related to software development and technology. On the face of it, most of the high-paying jobs in the online market are held by the Europeans.

India’s share in the global software development and technology jobs is 26.8 percent. However, the comparison between India and other developed countries is no less revealing. the share of global software development and technology workforce ranges from 0.2 percent in France, 0.5 percent in China, 1 percent in Germany, 1.6 percent in Canada, 2.5 percent in the United Kingdom and 3.7 percent in the United States. It may have specific explanations. First, the returns from software development and technology-related jobs are so low for the workers in the developed economies that they do not find them worth their effort. Second, the distribution of the jobs may depend on how complex the job is. Relatively simple tasks carrying unattractive price tags may be awarded to workers in developing countries, and more complicated high-end jobs may be awarded to experts in the developed world. Third, even some highly specialised jobs requiring a high level of expertise are outsourced to the workers in the developing world because of significantly lower labour costs.

A significant takeaway from the preceding discussion is that despite the large numbers of freelancers from Pakistan and a rosy picture (Pakistan being the fourth most rapidly growing freelancing economy (47 percent), online jobs is no milk and honey proposition. Young people must be taught about the challenges. Around 45 percent of the freelancers in the United States have a postgraduate degree; 70 percent of full-time freelancers regularly participate in skills training. What chance is there for semi-skilled freelancers to win lucrative projects when freelancing markets are dominated by a highly skilled workforce? There are some other challenges too. The sedentary lifestyle of freelancers is associated with increased health risks, including cardiovascular diseases, anxiety, depression and negativity, social isolation, and disorientation routinely accompanying working late hours and going out of touch with the biological clock. Freelancing has a social cost too. Over 60 percent of the freelancers globally believe there is a general lack of respect for the freelance work and freelancing community.

Even if the government feels comfortable with the fact that fewer people now look for government jobs, it still has the responsibility to provide direction to the young people so that they contribute significantly to the national and international economy according to the best of their potential.


The writer holds a PhD in Economics and is an Associate Professor in the Department of Economics, COMSATS University Islamabad, Lahore Campus. He can be reached at rafi.amiruddin   @gmail.com



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