Impact of cash transfers on the lives of gig workers: Case for cash transfers

Mercy Corps Youth Impact Labs
4 min readAug 18, 2020
Lynk gig workers

Evidently so, the Covid-19 pandemic has exposed gaps in social protection for informal workers, globally. It is said that some 1.6 billion people employed in the informal economy — or nearly half the global workforce — could see their livelihoods destroyed due to the continued decline in working hours brought on by lockdowns to curb the spread of COVID-19. This turn of events necessitates the need for cash transfers (conditional and unconditional) to support informal workers in catering for their basic needs such as food and shelter. Following the Covid-19 pandemic, cash transfer, as a social protection mechanism, remains the most widely used intervention by governments: these include 143 programs in 81 countries, with 65 new initiatives introduced specifically as COVID-19 responses in 43 countries. Currently, cash transfers are being leveraged to reach informal workers in several ways, for example by building on existing national social registries (e.g., Brazil); introducing new online platforms (Thailand), connecting to databases in health (Morocco) and energy (El Salvador) sectors; making cross-checks with taxation information (Colombia, Argentina); establishing city-level schemes (Germany); and introducing one-off cash transfer payment programs (Cabo Verde, Ecuador, Malaysia, Namibia, North Macedonia, Philippines and Vietnam).

Cash transfers in Kenya: Intervention of Mercy Corps

In Kenya, through the National Treasury, USD 100M equivalent of cash transfers is being utilized by the government to support the elderly, orphans and other vulnerable members. Humanitarian organizations, which have always utilized cash transfers during a crisis, have also stepped up to support their beneficiaries and ward off the negative financial impact of the pandemic. Mercy Corps, through its Youth Impact Labs program, pivoted its activities to provide cash transfer assistance to the most vulnerable gig workers. The gig workers received a USD 100 unconditional cash transfer via mobile money to support them towards meeting their basic needs. The decision to provide cash transfers was steered by the fact that gig workers are among the most vulnerable population to shocks due to the absence of social protection. According to a survey conducted by Youth Impact Labs, gig workers were employing negative mechanisms to cope with the Covid-19 pandemic. Based on the research, 62% of the households surveyed, had to borrow money while 75% had used up all their savings to survive. Another 24% had been forced to borrow food and money from complete strangers. As a result of the scarcity of resources, 80% of the households surveyed also reported that they were behind on rent payments. Additionally, some gig workers reported that they had been forced to halt ongoing projects in their rural homes while others succumbed to depression due to surmounting pressure from relatives upcountry.

Impact of cash transfers on gig workers

Two weeks following the cash transfer assistance, Youth Impact Labs conducted a survey to establish the impact of this support on the gig workers. Based on the program’s findings, there was a 62% decline in the utilization of negative coping mechanisms while the percentage of households depending on strangers to support them financially moved down from 24% to 11%. Having received the cash transfers, the gig workers utilized the funds in different ways and among these, house expenditure, rent and debt payments stood out. One gig worker managed to pay a two-month outstanding rent payment and purchased two months' worth of food supply for his family. In some households, however, funds were directed towards clearing medical bills and purchase of medicine for family members who were ailing.

“ The cash transfer was a positive financial boost for me,” one gig worker mentioned. “Before the cash transfer, I had rent arrears and debts. I paid these arrears as well as an advance on rent. In addition, I purchased a gas cooker that should sustain me for the next two and a half months as opposed to using kerosene.” he added.

While most gig workers utilized the cash transfers towards meeting their basic needs, a number of workers also started small businesses. One female gig worker, a beautician, used USD 50 to start a small business of selling second-hand shoes. Using the funds, she bought 15 pairs of shoes, sold half of them, re-stocked and ultimately sold out the initial stock, making a net profit of USD 20. She now plans to set aside USD 5–10 per month towards meeting the cost of education for her children when schools re-open. In another part of Nairobi City, a hairdresser who was experiencing a decline in service requests, set aside USD 10 to purchase adequate ingredients to set up a mandazi (Local Kenyan snack) business. Retailing at KES 10 per mandazi, she is able to earn a profit worth KES 600 which caters for her household needs where she is the only breadwinner. In light of their recent investments, the two gig workers intend to continue running their businesses as a post-covid19 recovery strategy.

The case for cash transfers

Based on the findings from Youth Impact Labs, cash transfers, as a social protection system, are useful in warding off financial crises for gig workers as well as facilitating opportunities for investment. Highlighting the gaps in social protection for gig workers, this article emphasized that an ecosystem-wide approach is needed to design a solution that guarantees social protection for workers.



Mercy Corps Youth Impact Labs

Funded by, Youth Impact Labs identifies and tests creative, tech-enabled solutions to tackle global youth unemployment and accelerate job creation