Nicola Mawson | Freelance Strategist | Public Relations | Content Creator | Former Financial Journalist | NAP-Logic | mail me |
One of the outcomes of the latest issue to swamp the world – low growth, high interest rates and the threats of recessions – which will remain a driver for the growth of new ways of working and alternative business models for many years to come, is the increasing development of the side gig economy.
After COVID-19, more people turned to working for themselves as the threat of a global recession loomed large, with worries that the US would not achieve a soft landing in its bid to bring its inflation rate under control through incrementally increasing the interest rate.
Inflation in the United States has yet to be brought under full control, rising 3.2% in the year to February, up slightly from January’s 3.1% and above economists’ expectations. Of course, the US sneezed and the whole world caught a cold.
The UK has only just moved out of a technical recession, with gross domestic product gaining a mere 0.2% in the first month of the year, after a decline of 0.1%.
Locally, the situation is somewhat different, with an undervalued Rand caused by internal issues, leading to little wiggle space when it comes to higher food and fuel prices – two main drivers of inflation. With the cost of living at 5.3%, it’s still risky for the South African Reserve Bank to look at dropping interest rates from their 15-year high.
The outlook for the economy is also not good. The recent National Budget speech, presented by Finance Minister Enoch Godongwana, didn’t even mention potential economic growth. The South African Reserve Bank puts it at 1.2% for this year as of January. That’s a far cry from the 5% needed to create meaningful jobs.
The role of the gig economy
Enter the gig economy – the side hustle in many cases. Globally, the shift to a labour market that is driven by short-term contracts or freelance work, is growing.
Business Research Insights says the alternative to permanent work in the US is set to grow at a compound annual growth rate of 16.8% in the decade between 2021 and 2031. Investec’s research indicates that more than 33% of the US workforce is involved in some form of side hustle or temporary work.
In South Africa, this figure is more difficult to pin down. We could look at the difference between the official unemployment figure and that representing the broader jobless situation and assume that everyone who has given up looking for a job (the difference between the two figures) works for themselves in one form or another. This is hardly a reliable way of looking at it because this number would include people who have been reduced to begging.
Global Data’s research puts the number of self-employed people in South Africa at 5.3 million in 2021, a figure that has grown by 75.4% between 2010 and 2021. That’s about on par with the US’ figure of a third of the workforce, although this number is skewed because the question comes up as to whether freelancers count as part of the workforce as measured by Statistics South Africa. Then, there’s the question as to how many full-time workers also have a side hustle. It doesn’t actually matter how we try measure this economy. It’s there and it is growing.
Replacing the independently run outlets
From entrepreneurs selling paintings and wire pink flamingos on the side of the road to people who bake cakes on the weekend and everything in between, our side hustle economy is gaining ground.
The gig economy is perhaps replacing the independently run outlets of many years ago. The tuis industries. It’s a shift from a physical outlet to people making and selling their own products and services from home, sidewalks, and markets as they try survive in a socio-economic environment that is hardly of use to anyone because it’s just not growing fast enough.
It’s an economy we should all rally behind because we should be supporting local businesses and entrepreneurs. When we help grow the side hustle economy, we create the potential of new jobs; people who find they need someone to sell items or make more of what they produce. Or answer the phone. Regardless of what new positions are created, they’re jobs. And small businesses are the lifeblood of our job market.
Let’s go local. Local is lekker.
