Egypt’s Gig Economy: Thriving Amid Uncertainty

Updated 11/19/2024 8:00:00 AM

The rapid evolution of technology and the shifting economic landscape have given rise to a new paradigm of work: the gig economy.

Characterized by short-term and flexible jobs, this innovative model has been steadily gaining traction worldwide, and Egypt is no exception.

Although this development helps alleviate youth unemployment, it also subjects workers to uncertain and unstable working conditions.

The Rise of Gig Economy in Egypt

The rise of digital platforms has facilitated the gig economy’s expansion in Egypt. Many young professionals now leverage technology to find freelance opportunities, with platforms enabling them to showcase and connect their skills with potential employers.

Nirmeen El Sayyad, a UN Women project manager at the American University in Cairo (AUC) and an economic expert, tells Arab Finance: “Taking a gig career is becoming popular in Egypt due to the prevailing economic status. Educated and tech-savvy workers are drawn to freelance jobs.”

This rise can be attributed to various economic pressures, changing workforce dynamics, and the increasing acceptance of freelance work among young professionals.

Samar, a 33-year-old freelance online tutor, says, “Right now, freelance jobs are the perfect fit for women and mothers who left the workforce to take care of their children.”

In Egypt, the gig economy is not only reflected in freelancing jobs but also in jobs via digital platforms like grocery services and food deliveries, ride-hailing services, and home services, including electricians, plumbers, and cleaners.

In March 2022, former Minister of Social Solidarity Nivine El-Kabbag estimated the size of Egypt’s irregular workforce at between 8 and 13 million workers.

Meanwhile, Minister of Communications and Information Technology Amr Talaat in April 2023 noted that 30% of Egypt's labor force was self-employed.

The Egyptian government and private sector are actively promoting the gig economy through various initiatives. These include providing training programs, establishing platforms for showcasing portfolios, and raising awareness about the viability and potential profitability of gig careers, according to the communications ministry website.

The ministry’s initiatives include the Digital Egypt Innovation Centers and Digital Creativity Centers (Creativa), which offer incubation programs tailored to freelance job seekers. Launched in September 2020 and March 2021, these programs aim to support freelancers through training and mentorship.

Introduced in March 2021, the Freelancing and Remote Work Initiative provides training to individuals interested in pursuing freelance careers.

Moreover, Talaat announced in April 2023 that the ministry is working on establishing a comprehensive platform designed to assist local freelancers. This platform would enable freelancers to register with the government, connect with foreign companies, open bank accounts, and utilize government digital services.

Economic Benefits or a Challenging Future?

The gig economy has a multifaceted impact on Egypt's economy, both positive and negative. The gig economy can contribute to economic growth by creating new job opportunities, especially for young educated individuals. It can also stimulate innovation and entrepreneurship.

El Sayyad explains, “This employment window would help soothe unemployment rates, especially among the educated. It would also assist in boosting foreign currency flow, improving purchasing power parity of those employed.”

The gig economy can open a door for foreign currency access to Egypt as it empowers low-wage workers to earn higher incomes by taking on similar jobs in developed nations like the US and European countries. This borderless opportunity requires only access to a mobile device and an internet connection, as noted by Heba Al-Sayed Mohamed Tolba in her paper entitled 'How the Gig Economy is Reshaping the World Labor Market,' published in 2021.

However, gig employment faces a number of challenges. A 2023 report by the Economic Research Forum (ERF) underscores that this form of employment can place workers in a situation where they cannot claim social or economic rights from their employers. Informal workers can be unaware of their potential options for social insurance or the nature of the work itself.”

Income instability is another hurdle. Samar explains, “Gig income in Egypt is not that stable due to many factors. It is hard to find a reliable work provider. The workflow is not stable and does not have a consistent regularity; it depends mainly on the schedule of students.”

“Pricing is also a major issue in that business because work providers assume remote workers deserve to be paid with less rating per hour. Most trusted foreign freelancing websites do not offer freelancing jobs to Egyptians,” she says.

Additionally, gig jobs have a disadvantage as they do not include any social security benefits and retirement plans. Samar adds, “I try to save part of each task's money to secure some savings for retirement. Though it is not the best plan due to inflation.”

Another challenge regarding the gig economy is related to tax inclusion. As per El Sayyad, when taxes are applied on gig jobs, different settings should be taken into consideration for freelance jobs than those for operating inland.

“Tax regimes should be fair and encourage gig employment to report their activities. This would also increase dollar-based tax revenues to the treasury. On the other hand, an innovative bundle of social protection and even medical insurance could be formulated for this uprising employment segment,” El Sayyad notes.

Overall, the impact of the gig economy on Egypt depends on how it is regulated and managed. By implementing appropriate policies and regulations, Egypt can harness the potential benefits of the gig economy while mitigating its negative impacts.

By Sarah Samir