Gig work, also known as freelance or contract work, refers to short-term/temporary (sometimes informal), flexible, and often project-based employment arrangements outside the standard, long-term employer-employee relationships. Gig work has been broadly categorised into two categories: online gig work (e.g., freelance writing, designing, or programming, image tagging, online tutoring or teaching, website design, or even affiliate marketing) and location-based gig work (e.g., ride-hailing/sharing, delivery and logistics, domestic care, etc.). 

Recent trends indicate that the gig economy is becoming an increasingly important part of the overall economy as more people choose flexible, non-traditional work arrangements over or in addition to traditional employment. According to the World Bank, there are 545 online gig-work platforms globally, with headquarters in 63 countries and platform workers and clients in 186 countries. Online gig-work accounts for 4.4-12.5% of the global labour force, with an estimated 154 to 435 million online gig-workers worldwide. 

According to the Nigerian Bureau of Statistics (NBS), in Q3 2023, 87.3% of employed Nigerians were primarily self-employed, with only 12.7% being primarily engaged as employees. 

Source: National Bureau of Statistics 

Statistics also show higher self-employment rates in females than males and in rural areas compared to urban areas. 

Source: National Bureau of Statistics 

While not all self-employed individuals can be classified as gig workers, there are overlaps between these worker arrangements as both are diverse and fluid. Also, most gig workers are treated as independent contractors, meaning they are essentially small businesses unto themselves, which brings them into the broader “self-employed” bucket. 

The shift towards gig work in Nigeria is driven by a combination of factors, including a growing youth population, high unemployment rates, economic pressures, technological advancements, and workers' desire for flexibility and autonomy. As the unemployment rate continues to rise, more individuals seek alternative means of earning income, and the gig economy has emerged as a viable solution.

According to the NBS, the unemployment rate in Nigeria increased from 4.2% in Q2 2023 to 5%, with youth unemployment standing at 8.6%. Surprisingly, the data also shows that unemployment rates are lower in rural areas (4.0%) compared to urban areas (6.0%) and lower among individuals with no formal education (2.7%) or primary education (4.8%). However, as educational attainment increases, so does the unemployment rate, reaching 7.8% among those with post-secondary education.

Table 3: Unemployment Rate by Education Level 

Source: National Bureau of Statistics 

Another critical factor in the growth trajectory of the gig economy is the COVID-19 pandemic. Interestingly, the COVID-19 pandemic had a mixed effect on the gig economy's growth. Reports show that while demand for certain types of gig work, such as ride-hailing, tourism, and hospitality, shrunk significantly as governments imposed travel restrictions and people stayed home, the demand for others, like delivery, logistics, and online education soared. According to a survey by Appsjob, in the early days of the pandemic in 2020, 52% of workers in the gig economy lost their jobs due to the pandemic, and another 26% had their hours decreased. Uber reported a 70% decline in ride requests in some cities during the pandemic. On the other hand, the food delivery market grew by over 52% during the pandemic.

The Trade-offs of the Gig-Economy

The gig economy presents both immense benefits and challenges for workers, businesses and the government alike. On the one hand, gig workers enjoy flexibility and autonomy, access to remote international opportunities, and broader earning potential. The barrier of entry is also lower, especially for ride-hailing and logistic services, which typically do not require specific education qualifications. Gig employment also provides an opportunity to supplement income from more traditional employment. The gig economy also gives workers access to a global market for services otherwise inaccessible. According to the World Bank, as of 2023, there were about 17.5 million online gig workers in Nigeria, Kenya, and South Africa, accounting for 80.6% of Internet traffic flow to online gig platforms from Sub-Saharan African countries.

However, amidst these benefits lie significant challenges for gig workers. A long-standing challenge is the legal status of gig workers. Workers' legal status determines the safety nets and protections owed to them by their employers. Where workers are classified as employees, they are entitled to benefits like paid time off, sick leave, health insurance, and pension remittance. 

Over the years, employers have classified gig workers as independent contractors, a categorisation that the gig workers have vehemently opposed. This dispute is particularly prevalent in the ride-hailing sector, where drivers have instituted court actions in several jurisdictions to be recognised as employees rather than independent contractors. In the UK, the courts ruled in Uber BV & Ors v Aslam & Ors that Uber drivers are employees and should receive corresponding rights. In contrast, the California Supreme Court in the US upheld a law classifying gig workers as independent contractors. In Nigeria, the Labour Act provides no clear guidance on the classification of workers as employees or independent contractors, leading to reliance on court decisions in this respect. Over time, the courts have developed various tests, including control, the nature of remuneration (wages vs salary), who supplies tools and equipment, provision of office, fixed/flexible work hours and others. The National Industrial Court had an opportunity to put the debate about the status of gig-workers (ride-hailing drivers) under the Labour Act to bed in the case of Oladapo Olatunji & Anor v Uber Technologies System Nigeria Limited & 2 Ors. Still, the case was dismissed without being decided on its merits. Therefore, in Nigeria, the uncertainty continues. 

Other challenges for gig workers include the potential for exploitation, irregular payment cycles, and infrastructure limitations. According to a survey by Gouruu, the greatest challenges faced by gig workers in Nigeria are poor electricity supply and internet access. An assessment of the challenges highlighted above shows employers are getting the longer end of the stick in this gig arrangement. 

However, this is not the case, as the gig economy presents its own unique challenges even for employers.  For example, managing a distributed workforce with team members in different geographic areas can be complex. Businesses will have to manage compliance with labour laws and regulations across multiple jurisdictions, challenges around quality control, high churn rates for contract roles, talent retention concerns, difficulty in building corporate culture and duplicity of training/capacity development. That said, businesses also get to enjoy benefits like reduction in wage bills and labour costs associated with traditional employment arrangements (e.g. employee benefits, cost of office space, etc), which can be substantial. The gig economy also gives businesses access to specialised talent as needed, enabling them to tap into expertise that may not be available in-house. Businesses also enjoy the benefit of maintaining a lean and nimble organisational structure, which is better equipped to respond to shifting market conditions and customer needs. 

A thriving gig economy also has broader national economic benefits. The gig economy can bridge the urban-rural area development gap by giving persons in rural areas the platform and opportunity to offer services to clients nationally or globally through digital platforms. Interestingly, according to the World Bank, as of 2023, more than 6 in 10 gig-workers lived in smaller cities. This highlights the role that online gig-work could play and is already playing in addressing regional inequalities in access to jobs. To fully harness this potential, rural access to digital infrastructure and devices is crucial. 

The gig economy also encourages entrepreneurship and supports the growth of small businesses. Similarly, its reliance on digital platforms and technology drives digital transformation and technological advancement. It can also help reduce unemployment rates and stimulate economic growth. This, in turn, should lead to increased tax revenue for governments as more individuals earn income and contribute to the tax base. 

However, the reality is more complex. On the surface, a booming gig economy should be a significant government tax revenue source. But the truth is, a substantial part of the gig economy sits outside the income tax net, and much of this income is likely to go unreported. The nature of gig work makes it difficult for governments to track income and ensure taxes are paid. Many gig workers operate on a freelance or contract basis, which means they may not be subject to traditional employment taxes like pay-as-you-earn, which is remitted by employers. As a result, governments risk losing out on significant revenue, which can undermine the tax system's integrity. 

Looking Forward

As the Nigerian gig economy continues to grow and evolve, it is clear that its impact on the world of work will be profound. Nigeria’s government and policymakers are vital to harnessing its potential and addressing its challenges. The government must invest in digital infrastructure to bridge the rural-urban divide and ensure equal access to opportunities in the gig economy. Effective regulation is also crucial, not only to protect workers' rights but also to foster innovation and growth in the sector. The nuanced challenges of the gig economy call for innovative solutions, around social insurance and collective bargaining. For example, the government of India established the e-sharam portal in India, the first national database of unorganised workers, including migrant workers, construction workers, gig and platform workers. The portal extends the benefits of the social security schemes to these unorganised workers.

Another important consideration for the future of work is the growth of artificial intelligence. According to the IMF, 40-60% of workers worldwide are in AI high-exposure occupations. In the near future, millions of jobs will be destroyed by AI, but new types of jobs will also emerge. One thing is sure: as we look to the future, workers will need to prioritise upskilling and reskilling to adapt to the changing labour landscape. 

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