Can Flexible Jobs Drive the Future of Work? Lessons from MENA

The evolving nature of work is prompting a global shift towards more adaptable and flexible employment practices. Work is no longer only a place you go to for a 9 to 5 job – it is transforming into a dynamic concept as an ever-growing number of people are gravitating towards flexible employment models, often referred to as non-standard forms of employment (NSEs). Growing evidence shows that as people increasingly value flexibility, particularly after the COVID-19 pandemic, countries are recognizing this shift, presenting new challenges for policymakers, and prompting them to implement reforms that foster environments capable of supporting NSEs.

However, NSEs face obstacles due to their unique nature of fluctuating income, instability, and administrative barriers that complicate their inclusion in labor and social protection systems. Let’s take a look at recent steps taken by countries in the Middle East and North Africa (MENA) region, showcasing a proactive response to these emerging needs and setting an example that may inspire similar actions elsewhere.

This year, Saudi Arabia and Jordan announced regulatory reforms, designed with support from the World Bank, that formalize flexible work arrangements while ensuring worker protection through social insurance coverage.

• Saudi Arabia announced a package of reforms for the regulations of the MRN (Arabic for flexible) contracts. Most significantly, the reform now covers MRN (flexible) workers by social insurance and is subject to the specific rules and regulations set by the General Organization for Social Insurance (GOSI).
• Jordan also announced its new flexible work bylaw, expanding the variety of employment types allowed under the law to include options such as remote, part-time, flexible hours, and compressed workweeks. The new bylaw also offered all individuals and not only specific groups of workers the flexibility to choose options that best suit them, subject to business needs and the employer’s approval, whilst providing them with access to social security coverage.

These new reforms are a milestone not only for Saudi Arabia and Jordan but also for the MENA region, demonstrating a proactive approach to evolving labor market trends, notably the rising prevalence of NSEs. And these reforms are set to mainly benefit youth and women in Jordan, Saudi Arabia, and elsewhere in MENA, a region that has the highest youth unemployment rate and the lowest female labor force participation in the world. A recent World Bank study shows empirical evidence that flexible employment arrangements, such as online gig work, significantly enhance female labor force participation.

A Global Framework for the Future of Work

All countries, especially developing and emerging economies, should consider similar reforms. As highlighted in a recent note by the World Bank on the gig economy and the future of work, labor and social security systems around the world are rigid as they were built to serve standard forms of employment, which typically involve full-time, indefinite, subordinate, and on-site work. These traditional systems are now struggling to include the new forms of employment such as gig work, telework, and other NSEs.

The emergence of NSEs is a relatively new phenomenon, but without updated systems and regulations, many workers will continue to enter the labor force without social insurance against unemployment, occupational hazards, and old-age poverty. This situation is particularly concerning given that, according to the International Labor Organization, over 60% of the world’s employed population is in informal employment, lacking social protection, labor rights, and decent working conditions.

The World Bank note offers a policy framework to address the challenges and opportunities presented by NSEs. Within this framework, countries can aim to achieve two primary goals:

1. Harmonize rules across different types of employment. The aim is to establish an integrated labor market by accurately classifying workers and harmonizing related costs. This approach ensures that employment choices are driven by labor market needs, rather than attempts to avoid costs related to benefits or taxes.
2. Use the opportunity to update social protection systems to include NSE workers by extending protections such as occupational hazard insurance, unemployment benefits, parental leave, and portable benefits savings schemes. This requires innovative policy solutions that ensure social protection systems are adaptable, inclusive, and responsive to the diverse needs of all workers, regardless of their employment status.

The integration of non-standard forms of employment into formal labor markets in Saudi Arabia and Jordan presents a significant opportunity for other countries to follow suit. By adopting comprehensive policy frameworks that address the unique challenges of NSEs, countries can create more inclusive, resilient, and dynamic labor markets. By doing so, countries in MENA and around the world can ensure sustainable economic growth and improved worker protections, setting a benchmark for labor market reforms worldwide.