The Sharing Economy

by Amira Salah-Ahmed | 02 March 2017

 

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The shared economy concept has taken off globally and already has a track record of creating job opportunities and providing solutions to longstanding challenges. As it has made its way to Egypt, the concept has naturally been modified and localized, and so its results have also been particular to the country's political and economic context.

Up to now, there has not been research that can quantify the impact the shared economy has had on Egypt's job market, but just this week, the results of the first survey of its kind have been released and we finally have some numbers to build and improve on.

Perhaps the most significant takeaway from the survey results is that it shows how the shared economy can provide jobs and solution to the youth age bracket, which suffers the most from high unemployment across the Arab world.

When looking at the events of the last six years in the region, it is clear that structural unemployment, particularly among the youth, poses a persistent problem.

The study found that more than 70 percent of the Uber drivers surveyed are between the ages of 18-35, while 96 percent are hold a high school diploma or above. More than half of those surveyed are university graduates.

The study, which surveyed 810 Uber drivers based in Cairo, was conducted by the Access to Knowledge for Development Center (A2K4D) at the American University in Cairo (AUC).

As Nagla Rizk, founding director of A2K4D and a professor of economics at AUC, writes in a blog post about the findings, "Viewed against the staggering figures of unemployment of the youth and the educated, a significant fraction of driver-partners on the Uber platform come from a demographic group that is at high risk of unemployment."

Of the survey sample, 64 percent are married and 72 percent support families of three people or more.

The significance is clear given the rise in unemployment to 12.5 percent in mid-2016, a surge of more than 3 percent pre-2011. When it comes to the particular youth age bracket of 15-39, that number rises higher to 19.2 percent, according to recent findings, which also noted that unemployment for university degree holders is around 25.7 percent.

To fully grasp the impact and potential, it is vital to place the findings in the broader context of Egypt's economic conditions of the past few years, with a decline in its main revenue earners, mainly tourism, remittances and Suez Canal revenues. This is coupled with weakened purchasing power due to the economic slowdown, as well as higher poverty rates.

Taking the tourism sector as an example, the findings show that around one-fifth of these surveyed used to work in tourism before it took a series of hits, bringing revenues down to $6 billion in 2015 compared to more than $12 billion in 2010. This has resulted in inevitable direct and indirect layoffs and closures of businesses.

As Rizk notes in her writing, whereas employment in tourism accounted for 8 percent in 2005, this has declined to reach 5.2 percent of total employment in 2014.

Uber launched in Egypt in November 2014 and now has more than 40,000 active drivers and more than 1 million riders. The survey findings showed that what makes Uber attractive is the flexibility and independence it offers, as well as a source of higher or additional income and being affiliated with a well-known company in the market.

"The paper is the first to explore the story of Uber in Egypt as a form of the sharing economy and its function to incumbent socio-economic challenges on the macro-level, " Rizk writes, while highlighting that "further research is needed to probe the many facets of the sharing economy and fully capture its nuances in the Egyptian context."