19 Aug The End of Stable Work: How should social protection evolve when the majority of workers were never formally protected to begin with?
Productivity is rising. Algorithms optimize supply chains, robots assemble goods with precision, and AI systems manage logistics in real time. Yet across much of the Global South, livelihoods remain precarious or are disappearing altogether.
Globally, more than 2 billion people, around 60% of the world’s employed population work in the informal economy, according to the International Labour Organization (ILO). In Sub-Saharan Africa, informal employment accounts for nearly 85% of total employment; in South Asia, the figure exceeds 70%. Informal workers include street vendors, smallholder farmers, domestic workers, day laborers, and gig-based service providers.
Unlike formal employees, they lack written contracts, social insurance, unemployment benefits, or pension coverage. For them, work is not just income; it is survival infrastructure.
Automation enters this context unevenly. While advanced robotics may not directly replace subsistence farming or street vending, AI-driven platforms, digital marketplaces, and global value chain restructuring reshape demand patterns and labor bargaining power. The disruption is often indirect but profound.
Automation Without Absorption
Historically, technological change displaced some jobs but created others. Industrialization shifted labor from agriculture to manufacturing; globalization expanded export-oriented employment. Today, however, automation threatens labor-intensive manufacturing itself, which is the traditional ladder for developing economies.
The World Bank estimates that up to 66% of jobs in developing countries are susceptible to automation based on task composition. In export manufacturing hubs such as Bangladesh or Vietnam, where apparel and electronics assembly dominate, increased use of robotics and AI-enabled quality control systems is already reducing labor intensity.
Yet unlike previous transitions, new digital jobs demand advanced skills. The World Economic Forum projects that while 97 million new roles may emerge globally by 2025, they will disproportionately require digital literacy and technical training. In countries where large portions of the population lack access to secondary education or broadband infrastructure, absorption capacity remains limited.
The Platformization of Informality
Digital platforms have expanded rapidly across the Global South. Ride-hailing, food delivery, freelance marketplaces, and micro-tasking platforms promise flexibility and income generation. In India alone, government estimates suggest that gig workers could number 23.5 million by 2029–30, up from roughly 7–8 million today.
However, platform work often replicates core features of informality: no guaranteed wages, algorithmic management, and limited social protection. Workers are classified as independent contractors, shifting risk from firms to individuals. Algorithmic systems optimize routes, allocate tasks, and adjust compensation dynamically. While this improves efficiency and consumer convenience, it also compresses earnings through surge pricing volatility and performance-based incentives. A 2023 ILO report found that in many low- and middle-income countries, after accounting for vehicle costs and platform commissions, gig workers’ net hourly earnings frequently fall below local minimum wage equivalents.
In effect, automation does not eliminate work, but it restructures it into hyper-flexible, on-demand micro-labor. Stability becomes the casualty.
Care Economies Under Strain
Unpaid care work, like childcare, eldercare, and household labor, accounts for an estimated 9% of global GDP if valued at minimum wage rates, according to the ILO. Women in the Global South perform over 75% of unpaid care work, limiting their labor force participation.
Automation intersects with care in two ways. First, as formal employment opportunities shrink or become precarious, households rely more heavily on unpaid labor to buffer shocks. Second, limited public investment in care infrastructure constrains women’s access to emerging digital opportunities. While AI-driven productivity gains may increase aggregate GDP, without redistributive mechanisms, they risk deepening gender and income inequalities. When livelihoods disappear in formal sectors, care burdens intensify in informal ones.
When Productivity Decouples from Livelihoods
Economic history suggests that productivity growth typically correlates with rising wages. Yet in many regions, this linkage is weakening. Between 1995 and 2022, global labor productivity grew significantly, but labor income shares declined in numerous developing economies.
Automation accelerates this decoupling. Capital owners and technology-intensive firms capture disproportionate gains, while low-skilled labor faces wage compression. In highly informal economies, where taxation capacity is already constrained, governments struggle to redistribute gains effectively. Informal workers who are already outside contributory social insurance systems are left exposed to economic shocks, climate disruptions, and health crises.
Rethinking Social Protection for a Post-Stable Era
If stable, long-term employment can no longer be assumed as the foundation of social protection, policy frameworks must adapt.
- First, decoupling benefits from formal employment status is essential. Expanding universal or quasi-universal social protection floors, including basic income guarantees, child benefits, and universal health coverage, can reduce exclusion errors. The ILO estimates that establishing basic social protection floors in low-income countries would cost, on average, 3–6% of GDP, which is a significant but potentially transformative investment.
- Second, portable benefits for gig and informal workers can align with platform-based labor realities. Contributions could be prorated per transaction and pooled into individual social security accounts, blending flexibility with protection.
- Third, investment in skills infrastructure must target not only advanced digital competencies but also mid-level technical and care-related skills less susceptible to automation. The care sector itself represents a labor-intensive growth frontier; the ILO estimates that investing in care services could generate nearly 300 million jobs globally by 2035.
- Finally, digital taxation and corporate accountability mechanisms may be necessary to capture productivity gains from automation. As multinational tech firms expand in emerging markets, ensuring fair tax contributions can finance expanded safety nets.
The Strategic Imperative
From a strategic advisory perspective, governments and multinational corporations operating in the Global South face a shared risk: growth without inclusion undermines long-term stability. Markets depend on purchasing power; social cohesion underpins investor confidence.
The end of stable work, particularly in regions where stability was already fragile, demands a reimagined social contract. Productivity gains must translate into broader welfare improvements, not merely shareholder returns. In the age of AI, the question is not whether machines will augment output, because they will. The question is whether societies can redesign institutions so that when productivity rises, livelihoods do not disappear with it.
Blog by Shreya Ghimire,
Research Analyst, Frost & Sullivan Institute
