Here’s Why Egypt’s Youth Are Turning To Freelance Economy

March 14, 2024


This article first appeared in March’s print edition of Business Monthly.

With over a quarter of the population classified as Gen-Z (born between 1997 and 2012), according to data aggregator Statistica, Egypt’s corporate life is primed for inevitable change. “‘Boomers and Gen X [born between 1946 and 1980] have the mentality of: ‘If you work really hard, you’ll get a great lifestyle in return,'” Harriet Minter, the author of “WFH (Work from Home): How to Build a Career You Love When You’re Not in the Office,” told Metro, a UK publication, in February.

However, “for the younger workforce, the [increasing] cost of living and rising house prices mean that work can’t provide that lifestyle anymore,” Minter noted. They “make the most of the small stuff – a lovely breakfast and time spent with friends – because they simply can’t afford the big stuff anymore.” With such low expectations and targets, “the payoff of working an 80-hour work simply isn’t worth it.”

An ideal solution for those job seekers is the freelance (aka gig or digital platform) economy, where skilled youths seek project-based jobs at their convenience, according to a June 2023 report from the Economic Research Forum (ERF), a local think-tank. In April, ICT Minister Amr Talaat estimated 30% of Egypt’s labor force was “self-employed.”

Those youths access the digital platform economy by posting their CVs and work portfolios on specialized platforms, responding to listings, or directly communicating with company decision-makers via social media.

Egypt’s government and private sector are encouraging the digital platform economy by offering training initiatives, building platforms for submission of portfolios, and raising awareness that a gig career option is viable and can be lucrative.

Freelance Egypt

The ERF report said technology tools and the growing acceptance of remote work during COVID-19 lockdowns brought the gig economy into the spotlight. Those are “professional services that connect freelancers directly with businesses to complete projects,” the ERF report said. It “covers all white-collar professions, which include digital duties or tasks that rely significantly on technology.”

Locals who can access that economy include university graduates, many of whom hold professional certificates or postgraduate degrees with advanced language and technology skills, the ERF said.

Choosing a gig career is increasingly popular in Egypt. The ERF report estimated highly educated youths accounted for 3% of informal work in Egypt in 2012. By 2018, they had reached 17%. Meanwhile, “the percentage of tech-enabled employment among [university] degree holders tripled” between 2012 and 2018, ERF said.

Accelerated growth

A May news report by Ahram Online said Egypt’s ongoing economic woes and the foreign currency shortage were the primary reasons local professionals sought freelance jobs. The dollar’s exchange rate in the black market has been double the official rate.

Such harsh economic realities led private-sector companies to create fewer jobs. The January S&P Global Egypt Purchasing Managers Index said new job growth in the non-oil private sector was down in the last quarter of 2023. An uptick in the January report was only enough to increase Egypt’s overall PMI score by 0.1 points.

Another factor fueling Egypt’s gig economy is the rising cost of living, said Sarah Elhossary, who wrote the Ahram Online report. The annual headline inflation rate was above 30% from February 2023 until December, only breaking that benchmark by 0.2% in January. Elhossary also interviewed workers whose employers reduced their salaries for 2024 in response to lower revenue forecasts.

Meanwhile, digital platform work seekers can earn significantly more than many local full-time jobs. “Gig workers can work for multiple companies at the same time or shift between similar companies in the same sector,” the ERF report said. “As a result of this flexibility, gig work allows workers to increase their incomes.”

According to Talaat, the average annual income of an independent professional in Egypt is $5,600, while the global average is $6,000. At the official exchange rate, current gig income is nearly 2.5 times the national minimum wage updated in February.

Additionally, working for an overseas company means local gig seekers will get paid in foreign currency. Further, they could increase their fees for each project. “Higher salaries are among the reasons why workers choose to work informally … even though the higher salaries might be unstable,” the ERF said.

Good for employers

The ERF report noted local employers prefer digital platform workers “because the cost of recruiting someone informally is far lower than the expense of hiring [them] formally.” Local labor law requires compensation for dismissing employees with permanent contracts, and employers must cover social benefits and insurance.

Another reason for choosing gig workers is that full-time hires in Egypt are legally entitled to paid vacation days, official holidays, and time off for emergencies and maternity. The local law also requires companies with 100 or more females working full-time to open a nursery on the premises. Those benefits don’t apply to project-based contracts.

Local employers also would have easy access to international talent if they tap into the digital platform economy. That is a clear advantage as “the persistent skill gaps in Egypt’s workforce constitute one of the main operational challenges and a prime bottleneck for ongoing growth and development,” a 2020 EBRD report said.

Gov’t support

The ICT Ministry (MCIT) is working to promote, support, and upskill youth to help them find freelance opportunities on digital platforms. During an April event, Talaat said the ministry’s five-year strategy aims to quintuple the number of those seeking freelance opportunities abroad.

Programs the ministry is running to support the local gig economy include Our Future is Digital, a training initiative launched in January 2020. There is the self-employment program Maharah-Tech also announced in January 2020. Under it, Vodafone Egypt established a platform called Vodafone Begin in cooperation with the Information Technology Institute, MCIT’s training arm.

Also in 2020, Vodafone Egypt signed an MoU with Microsoft Egypt to add the latter’s Tawar w Ghayar (Develop and Change) training initiative, announced in 2013 in cooperation with the MCIT, to the Vodafone Begin platform.

There currently are two MCIT incubator programs suitable for freelance job seekers. The first is Digital Egypt Innovation Centers, announced in September 2020. The other is Digital Creativity Centers (Creativa). In March 2021, the ministry launched the Freelancing and Remote Work Initiative to train interested job seekers.

During the April event, Talaat stressed the importance of formalizing the gig economy. In addition to paying their taxes, Talaat said formal freelancers can find more lucrative projects locally and abroad. Accordingly, the ministry is working with the IT Development Agency and General Authority for Investment to “simplify one-person company registration procedures.”

Lastly, Talaat said the MCIT is developing a comprehensive platform to help local freelancers register with the government, find gigs with foreign companies, open bank accounts, and access the government’s digitized services.