Navigating the world’s transition to a gig economy

Gigs, not jobs. That’s what tomorrow’s labour market will increasingly become, the newly-published World Development Report (WDR) 2019 tells us. The report’s message to stakeholders in developing countries, including the private sector, is clear: invest more in human capital to remain competitive in a global economy where, in addition to some kinds of jobs being eliminated, others created and others altered, the very nature of work is changing.

For some people, the idea of workers untethering themselves from an office cubicle or factory floor is exciting, offering a brave new world ripe with possibility. For others, it’s a downright scary prospect. They may be wary of casting away the perceived safety net that their traditional nine-to-five job gives them in exchange for a series of individual freelance gigs. More importantly, they may not possess the skillset to navigate this open terrain.

There is plenty of hype about how the world is transitioning to the gig economy. The WDR usefully puts the hype in global and historical context and provides much-needed nuance to a narrative than can feel overwhelming. Flexible work arrangements have taken a steadily growing share of labour markets over past decades, partly facilitated by technological progress.

While each country and each region has unique characteristics, there are two common undercurrents:
  • • Part-time, temporary and freelance work is on the rise at the expense of full-time, permanent jobs provided by a single employer. Advances in information and communication technologies are largely driving this shift, as more and more jobs can be performed at any time in any place.

    According to the WDR 2019, the largest freelancing website, Upwork, noted that nearly two-thirds of US companies employ workers today, primarily to ensure that they can attract top talent, but in a flexible manner that aligns with their needs. LinkedIn reports that 170 US companies run fully on remote workers. This trend may quickly extend to developing countries.

  • • We see a worrying trend towards job polarisation – a hollowing-out of mid-skill jobs. For example, clerical and inventory control jobs historically done by humans are increasingly being taken over by machines and automated algorithms. On the other hand, demand for both high-skilled and low-skilled labour has been more constant.

    Job polarisation in advanced countries is well documented. The WDR 2019 reports that with the exceptions of Mexico, Brazil and Indonesia, job polarisation has not been observed so far in developing countries. But there is a risk these changes will also unfold in low- and middle-income countries as well with the spread of technology.

How can we, as individuals and societies, adapt to these changes? We would be foolish to try to predict with perfect precision what the labour market will look like in 20 or 30 years. But we would be equally foolish to ignore the undercurrents.

The International Finance Corporation (IFC), the member of the World Bank investing in private sector companies in emerging markets, is conducting a global survey of employers, to be published in 2019, of predictions for what digital skills tomorrow’s labour markets will need and how workers can equip themselves accordingly. More broadly, some useful navigational pointers are emerging.

    Embrace alternative credentials: Few expect the traditional undergraduate degree to disappear, but employers are giving more credence and weight to alternative credentials. This can be a great opportunity for a low-income person in a developing country. They can build skills through a growing number of more affordable alternative learning programmes that take less time to complete, such as online courses, nanodegrees, micro credentials and stackable credentials. Course formats are quickly adapting to a growing need for flexible delivery models tailored to working adults seeking to access further education.

    Encode lifelong learning in your DNA: 65% of kids starting school today will end up in jobs that don’t even exist yet, the World Economic Forum has estimated in its report, The Future of Jobs and Skills. While lifelong learning has long been encouraged, it is no longer just desirable, it’s essential to remaining gainfully employed. The advent of digitally-delivered education is, fortunately, making lifelong learning more convenient and affordable. Promoting lifelong learning requires flexible pathways to general education while providing ‘second chance’ channels for adults who might have been forced to leave the education system for various reasons but might be willing to come back at a later stage.

    Encourage enterprise education: In a gig economy, having a risk-averse mindset is a hindrance, not a help. If you instil entrepreneurial spirit in students, starting in primary education, right through to university, they will enter the job market equipped not just with specific knowledge and skills of how to run a business but, more importantly, with a mindset of being willing to take risks to succeed.

    Teach grit: This idea, encapsulated so well by psychologist and thought leader Angela Lee Duckworth, is that kids should be taught to be gritty, or resilient, with the capacity to stick to a very long-term goal. This quality, even more than how fast or how easily a person can learn new things, will equip them to thrive in a world of shifting skill requirements.

    Invest in people: Governments, aided by the private sector, should prioritise investing in human capital as a proven way to end extreme poverty and promote shared prosperity. The World Bank recently created an index that measures the human capital a child born today can expect to attain by their 18th birthday, given the risks of poor health and poor education in their home country. The index underscores the importance of investing in human capital in a strategic way.

    Combine general and technical skills: The net effect of new technologies is unlikely to be massive job destruction but rather a change in the skills demanded by the labour market. Socio-emotional skills, shaped by beliefs and personality traits such as innovation, problem-solving, collaboration and empathy, need to be combined with more task-specific technical skills, which will be ever-evolving.

    Learn how to learn: What is most valuable in a jobs market where in-demand skills are ever-changing is the ability to learn a new thing. Education systems must place greater emphasis on ‘learning to learn’ and focus less on rote learning of specific content. Reinventing oneself will be the norm in the gig economy, and even more the case for the current generation of school children. Many schools are starting to think about this shift.

Surprises are always around the corner. The scouts’ motto ‘Be Prepared’ is as pertinent for adults as for kids. We need to alert workers to what changes are coming and how they can prepare for them. If we do this, we’ll have workforces that advance towards the future, not recoiling in fear and trepidation but brimming with optimism and confidence.

Alejandro Caballero is principal education specialist at the International Finance Corporation.