Online freelancing: The new frontier

The young are plugging into new kinds of jobs in the global digital marketplace. Can these networked economy jobs be significant to the future of employment in the country?

Prime Minister Ranil Wickremesinghe has pledged to create one million new jobs over the next five years (2016-2020). This goal is to be accomplished by pursuing a competitive market economy, boosting exports and increasing foreign direct investment (FDI). This ambitious programme aims to tackle both youth unemployment and significant levels of underemployment at all ages.

According to the Department of Census and Statistics, Sri Lanka’s unemployment rate was 4.6% at the end of the second quarter of 2016. But the unemployment rate among youth (15 to 24 years) of 22.2% was much higher than the national average. A closer look at labour force statistics (available at www.statistics.gov.lk/page.asp?page=Labour%20Force) shows that a majority of women are not in formal employment. Of the total economically active population of about 8.2 million in mid-2016, nearly two thirds (or 64.3%) were men and 35.7% were women. [Employed is defined as those who worked at least one hour during the reference period as paid employees, employers, own account workers or contributing family workers. This includes persons with a job but not at work during that period, e.g. those on maternity leave].

At the same time, we have heard in recent months how factories in free trade zones are struggling to fill over 200,000 vacancies. Some employers are considering recruiting foreign workers as there are no local takers.

How can this mismatch be explained? The appeal of the ‘three wheeler culture’ could account for some – but not all – of it. A more plausible explanation: today’s youth have higher aspirations for employment. They won’t accept just any kind of work for lower wages. Our labour market is maturing and diversifying, which needs to be studied and understood carefully.

Better jobs
Commenting on this trend, infrastructure specialist and Chair of LIRNEasia Professor Rohan Samarajiva noted: “If we are to escape from the middle-income trap and get established on a high-growth trajectory, it is imperative that all sectors of society understand the importance of creating jobs with the characteristics demanded by our young people and the women who are sitting out of the job market.

These characteristics include, but are not limited to, adequate salaries perhaps in excess of Rs40,000-45,000 a month as stated by the prime minister recently. Jobs that involve hard labour outdoors such as work in the booming construction industry and in commercial agriculture will require even more.”

If these conditions are met, he argued, those labouring in the Middle East and elsewhere can be attracted to return home, while those under-employed – such as those sitting in three-wheelers under trees – could be redirected to better-paying jobs. So where are such jobs? Are they available in sufficient numbers? Do our youth have the skills and aptitudes to take on such work?

These questions are well worth exploring, but let’s not stop at bashing the education system (which does need reforms, for sure). Instead, let’s look at new opportunities for work being opened up by the rise of digital technologies and networked economies.

A recent survey by think tank LIRNEasia found that more and more Lankan youth are earning money by doing online freelance work. They perform a range of services – such as web or logo designing, digital marketing, creative writing, translations, bookkeeping and accounting – and work from home or another location unconnected to who is paying for the job.

Freelancing
Freelancer is a generic term for those who are usually self-employed, work for different companies or individuals on assignments, and get paid per assignment. It is an old practice that has received a new boost with the roll-out of broadband Internet that enables freelancers to access opportunities anywhere in the world.

Online freelancing work is available at different skill levels. Better skilled professionals take on project-based work that can take days or weeks to complete. There is also ‘micro work’ that can be done by novice, low-skilled workers within a few hours. Based on a nationally representative survey conducted among 16 to 40 year olds, LIRNEasia estimates that there could be 17,000 to 22,000 freelancers in Sri Lanka registered with various platforms and selling their skills online in the global marketplace. Most work part-time and are still in their parents’ homes.

To attract and deliver work, they use web-based platforms like Fiverr, Freelancer and Upwork, where buyers and sellers of digital services can trade with some basic assurances. There are also some microwork sites like ClixSence and Gigbucks.

A recent survey by think tank LIRNEasia found that more and more Lankan youth are earning money by doing online freelance work. They perform a range of services, and work from home or another location unconnected to who is paying for the job

Fiverr – described as “the world’s largest marketplace for digital services” – is the most popular locally. Buyers pay Fiverr for orders in advance. Sellers – typically freelancers who may be located anywhere – can keep 80% of each task (known as a ‘Gig’) they successfully deliver. For example, when a seller successfully delivers a task worth $10, Fiverr accredits her account with net revenue of $8.

Freelancers have formed their own loose communities, swapping tips and experiences. An example is the Fiverr Sri Lanka Facebook page at https://www.facebook.com/groups/FiverrSri-Lanka/

LIRNEasia found that Sri Lanka’s online freelancers earn an average monthly income of approximately Rs20,000-30,000 for as little as 2-3 hours of work a day. There are exceptional cases who earned Rs50,000-200,000 or more from freelancing. “Earning from freelancing is making a drastic impact on the lives of Sri Lankan youth who are involved in it,” says Suthaharan Perampalam, LIRNEasia’s senior researcher who coordinated the study.

Awareness is low
Researchers see online freelancing as a gateway to service sector jobs. Besides significant income earning potential for creative and hard work, practitioners can improve their soft skills such as time management, effective communication (and negotiation) with local and international clients, and managing client expectations. Functional English to communicate with a client is necessary and useful, but successful freelancers have not allowed English to become a barrier.

“According to successful freelancers, building a freelance career is easy with the right mix of skills and determination. Anyone can register with an online platform. They then have to bid per project, highlighting and promoting their capacity to undertake a particular task. Getting the first job could be tough and time consuming. Once they get a few jobs and build their profile, the earnings will start to flow more easily,” Perampalam says.

Awareness of online freelance opportunities is still low. In the national sample of 5,377 of those aged between 16 and 40, only 26% knew about it. Among them, however, only 11% was actually willing to engage in freelancing.

Interestingly, those living away from Colombo had higher awareness levels: North-Western Province (44%), Southern Province (35%) and North-Central Province (30%). In contrast, only 25% of those surveyed in the Western Province had heard of it. The survey findings indicate that owning a desktop or laptop computer, and frequent Internet use can significantly increase awareness. LIRNEasia says the combination of awareness, skills and regular internet access are the drivers of online freelancing.

Barriers
Pathfinding freelancers in Sri Lanka face several challenges. Multiple and cascading taxes on data services now add up to a whopping 50%, which severely hampers everyone’s Internet use.

“One of the basic principles of public finance is that if you want to encourage something, you don’t impose additional taxes upon it and this (2017) Budget had failed to grasp its meaning in terms of the telecommunication sector,” says Prof Samarajiva. “By providing affordable network connectivity, the country is likely to see faster economic growth, stronger e-literacy and a contribution to people’s livelihoods.”

Another barrier is the non-availability of international micro payment services like PayPal for receiving remittances. It turns out that PayPal is not that keen to open up to Sri Lanka’s limited market, even if the government allows a two-way flow of funds. The uneven quality of broadband and frequent electricity disruptions can also affect freelancers’ ability to deliver quality output on time. Many have at least two Internet connections and laptops with extended batteries.

A bigger problem stems from societal perceptions and attitudes. Some seem to think that working from home is somehow not ‘as serious’ as office work. Younger people come under family pressure to get a ‘real job’ instead of playing with computers. We need greater awareness of this new frontier of work at all levels of society – from policy makers and regulators to young people and their parents. Digital dividends are within reach, if only we open our minds to them.

 

For details of research, see: http://lirneasia.net