The impact of of Covid-19 wrecking ball is being felt across all industries in South Africa, with analysts warning that the unemployment rate may jump up to 50%.
E-hailing drivers and delivery workers are earning at least 50% less than they were before the lockdown, while having to financially support more people
One of the sectors that has been hard hit is the country’s fledgling gig economy, which encompasses those who work as freelancers, consultants, independent contractors and professionals, and temporary contract workers. Due to technology, barriers to “gigs” have become more accessible.
International venture firm Flourish Ventures focuses on South Africa in its The Digital Hustle: Gig Worker Financial Lives Under Pressure research report for July 2020.
It finds that e-hailing drivers have been impacted the most by the national lockdown, followed by delivery workers.
A total of 82% of e-hailing drivers suffered a large decrease in income, and 47% of them reported a large decline in their quality of life.
“Yet delivery workers were also hard hit. While we expected greater reliance on e-commerce and delivery during the lockdown, 57% of delivery workers still reported a large decline in income,” the report reads.
More than 600 respondents were interviewed on their financial situations, concerns and aspirations in June, when South Africa entered lockdown level three.
The research finds that the quality of life of those working in e-hailing services has declined by 47%, and for delivery workers 26%.
Obstacles have included drivers who rent cars having to return them because there has been no work, and deliveries dropping dramatically as people cannot afford to shop online as frequently as they used to.
The economic impact on these workers has been substantial, with nearly four out of five now earning less than R4000 a month, compared to less than one in five pre-lockdown before March 27.
The situation is aggravated further as 50% of the respondents are supporting more people financially.
“Some gig workers have a financial cushion, but the majority live on the edge. If they lost their main source of income, 58% of respondents reported that they could not cover household expenses for a month without borrowing money,” the document reads.
Coping mechanisms have varied to adapt to their new reality.
- 71% have used savings
- 51% have cut consumption
- 47% have borrowed money
- 30% have reduced or stopped debt payments
- 23% have found new or additional work
The respondents are mainly concerned with their ability to earn a sustainable income over the next six months. Four out of five of them say they are not concerned about health risks as they start returning to work or finding new jobs.
Immediate financing and long-term financial planning have kept these gig workers awake at night. They include planning for emergencies and saving for old age; while three out of five are focusing on how to optimise their incomes and new skills – especially in financial planning and the digital skills.
While the research comes at a time when South Africans are struggling to access finance and Covid-19 relief measures, it does provide insight on how platforms and financial services providers can best serve this emerging digital workforce.
The report was compiled in partnership with research firm 60 Decibels and locals start-ups FlexClub and Picup.
By: Amy Musgrave