Gig economy is expanding rapidly worldwide, and Nepal is no exception. According to a 2015 RAND American Life Panel survey, alternative work arrangements in the United States increased from 10.7 percent in 2005 to 15.8 percent by late 2015. Today, the US gig economy is valued at about $1 trillion and is projected to grow at an annual rate of 16 percent. By 2027, it is expected to offer nearly 100 million gig jobs—far exceeding Nepal's yearly GDP. In South Asia, the economy is booming, with India leading the way. The number of gig workers in India rose from 6.8 million in 2020 to 7.7 million in 2021, and projections suggest it could reach 23.5 million by 2029. Bangladesh follows closely, with approximately 6.5 million gig workers.

The gig economy consists of flexible, short-term jobs often facilitated online. These range from ride-sharing and food delivery to freelance work and e-commerce. Popular global platforms for ride-sharing include Uber, Lyft, Ola and Grab, as well as freelancing sites like Upwork and Fiverr. A software engineer in Kathmandu can work on projects for a tech company in the US or offer online training programmes nationwide.

Gig economy in Nepal

In Nepal, the gig economy is gaining momentum due to urbanisation, technological advancements and increased access to digital services. Platforms like Pathao, Tootle and Foodmandu are becoming commonplace, allowing workers to set their own schedules. However, as it is still developing, reliable data on its size and impact are severely lacking. Many individuals are unaware of how gig platforms function, including their advantages, risks and legalities.

Flexibility is a significant attraction for gig workers, enabling them to choose when and how much they work. Yet, this type of employment also comes with challenges such as job insecurity, unpredictable incomes and a lack of traditional benefits like health insurance and retirement plans. Despite these obstacles, the gig economy has the potential to help alleviate unemployment and poverty by offering short-term income opportunities. It offers various job opportunities for people with varying skill levels, from highly skilled positions like software engineers and programmers to semi-skilled and unskilled roles such as delivery drivers and ride-share operators. Additionally, it has been especially beneficial for women, allowing them to work flexibly, earn an income and overcome traditional work barriers.

A recent study by a team of graduate students at Tribhuvan University highlights Nepal’s gig economy structure. The researchers surveyed 385 gig workers in the Kathmandu Valley, focusing on sectors like ride-sharing, online tutoring, e-commerce delivery, food delivery and freelancing. Notably, older individuals are more likely to engage in gig work compared to younger ones. High unemployment rates may compel older workers to continue their roles, while younger people often prioritise stable, traditional jobs, missing out on potential gig benefits.

The study also found that individuals already employed are more likely to pursue gig work for extra income. Financial incentives play a crucial role; higher earnings from gig work encourage participation, indicating that families with lower incomes often rely more on these opportunities. Job satisfaction is also important for retention, with many gig workers continuing in their roles due to a sense of fulfilment.

Ride-hailing services are a major component of Nepal's gig economy, but they come with significant challenges. The study indicates that ride-hailing workers face legal and regulatory uncertainties. Despite being legally recognised in 2019, gaps in the regulatory framework still pose problems. Additionally, social security and health care issues affect many ride-hailing workers, while others struggle with low pay and finding enough customers.

This research is among the first to offer an empirical analysis of the gig economy in Nepal, providing insights into the gig workforce. Key benefits identified by respondents include earning potential, cited by 48.19 percent, and schedule flexibility, noted by 18.39 percent. However, legal and regulatory uncertainty was reported as a significant challenge by 37.56 percent of participants, while social security and health issues affected 32.64 percent.

The survey also revealed that gig workers see a strong need for improved financial and saving options, with 34.72 percent highlighting this as crucial. Other essential support measures included tax benefits, performance-based bonuses, and calls for legal protections and better working conditions.

Estimating the exact size of Nepal's gig market is complicated by a lack of legal frameworks and regulatory oversight. In developing economies like Nepal, where most financial transactions occur through informal channels, the growth of the gig economy creates an additional challenge for the government in regulating these financial activities and integrating them into legal systems. Additionally, the informal nature of the gig economy complicates tax regulations. Similarly, there is a noticeable gender gap in the gig labour market, especially in ride-sharing and delivery services, where women are largely missing, raising concerns about women's exclusion from these emerging job opportunities.

Necessary interventions

Policymakers have an opportunity to implement targeted interventions aimed at enhancing the inclusivity and sustainability of Nepal's gig economy. This could include financial incentives for workers transitioning between jobs, income support programmes, initiatives to improve job satisfaction and health and skill development training tailored to the needs of the gig market. Such measures would benefit gig workers and contribute to a more equitable and robust labour welfare in Nepal.

As the gig economy continues to grow, addressing its challenges and utilising its potential will be crucial for creating a sustainable future for workers in Nepal. With the right policies and support, this evolving labour market could provide significant opportunities for many, helping to drive economic growth and improve living standards across the country.