India and growing gig Economy

What is the gig economy?
The gig economy refers to a job market in which temporary and part-time roles are prominent, often occupied by independent contractors and freelancers instead of individuals in permanent, full-time positions.

This economic model yields cost-effective and efficient services, exemplified by platforms like Uber or Airbnb.

Some more examples :

  1. Food Delivery: Services like Zomato, Swiggy, and Licious allow people to deliver food from restaurants to customers' homes. Delivery drivers can choose when to work and accept delivery requests based on their availability.
  2. Freelance Platforms: Websites such as Upwork, Freelancer, and Fiverr enable individuals to offer their professional skills, such as writing, graphic design, programming, or marketing, on a freelance basis. Clients post job requirements, and freelancers bid or apply for the projects that match their expertise.
  3. E-commerce Companies: like Flipkart, Amazon, and various logistics providers employ a significant number of delivery personnel on a gig basis to fulfil customer orders.
  4. Online Marketplaces: India has seen the rise of online marketplaces like UrbanClap (now Urban Company), TaskRabbit, and others, which connect customers with service providers for various tasks such as home services, repairs, and more.
  5. Rural Gig Economy: The gig economy is not limited to urban areas in India. Rural gig work has also gained traction, with platforms like Gram Vaani and Vrutti Livelihoods Resource Centre providing gig opportunities to rural workers in areas such as agriculture, healthcare, and education. 

Gig Workers typically work on a project-by-project basis, offering their skills and services to clients or customers without traditional long-term employment contracts.

Types of gig workers-

  1. Platform based gig workers - Those whose work is based on online software apps or digital platforms.
  2. Non-platform gig workers - They are generally casual wage workers and own account workers in the conventional sectors, working part-time or full time.

India’s Statistics and Estimates-

  1. A recent NITI Aayog study revealed that in 2020-21, around 7.7 million workers were part of the gig economy.
  • The gig workforce is projected to reach 23.5 million workers by 2029-30.
  • Currently, 47% of gig work falls under medium-skilled jobs, 22% in high-skilled, and 31% in low-skilled jobs.
  • The data suggests a decline in medium-skilled roles while the numbers of low-skilled and high-skilled workers are increasing.
  • This indicates a shift in the distribution of skills within the gig workforce.
  • It is expected that medium-skilled roles will remain dominant until 2030, but opportunities for gig work requiring different skill sets will also emerge.

  1. As per a report from the International Labour Organization (ILO), India possesses one of the most substantial gig economies worldwide. It projected that by 2022, approximately 24% of India's total workforce would be employed in the gig economy.
  2. Online Freelancing: According to a report by PayPal and Ipsos, in 2020, India secured the second position in terms of the number of freelancers, with approximately 15 million individuals engaged in freelancing, making it one of the largest freelancer markets worldwide.

Labour Code for the Gig Economy-

  Existing Legislation-

  •  The Code on Wages, 2019, provides for universal minimum wage and floor wage across organised and unorganised sectors, including gig workers.
  •  The Code on Social Security, 2020, recognises gig workers as a new occupational category.

A gig worker is defined as an individual who carries out work or engages in work arrangements and earns income from such activities, independent of the conventional employer-employee relationship.

  Key Drivers of Gig Economy-

    • Flexibility to Work from Anywhere: This flexibility enables employers to choose the most skilled and suitable talent for their projects
  • Changing Work Approach: The millennial generation displays a distinct attitude when it comes to their careers. They prioritise  pursuing work that aligns with their personal interests and passions, their focus is on creating a balance between work and personal life, and they are more willing to explore different career paths and take risks to find work that resonates with their values and aspirations.
  • Business Models & Technology:
    • Gig employees operate under different compensation models, including fixed-fee agreements established at the beginning of a contract, time-based payments reflecting the effort invested, payment based on the actual work delivered, and compensation tied to the quality of the final outcome.These various compensation models provide flexibility and accommodate the diverse needs and preferences of gig workers and their clients.

    •  Technological change has made contracting far easier which is making it possible for workers to find work and for companies to sort of work closely with those who are not employees but contractors.
  • The Emergence of a Start-up Culture:
    •  The start-up ecosystem in India has been developing rapidly. For start-ups, hiring full-time employees leads to high fixed costs and therefore, contractual freelancers are hired for non-core activities.

    • Start-ups are also looking at hiring skilled technology freelancers (on a per project basis) in areas such as engineering, product, data science and Machine Learning (ML) to bolster their tech platforms.
  • Rising demand of Contractual Employees:
    • Multinational Corporations (MNCs) are adopting flexi-hiring options, especially for niche projects, to reduce operational expenses after the pandemic.

    • This trend is significantly contributing to the gig culture in India.

Advantages of Gig Economy-

Benefits for Gig Workers:

  1. Flexibility: They are not bound by fixed work hours or strict attendance requirements. 
  2. Supplemental Income: Many gig workers take on gig jobs part-time to supplement their income from regular employment or other sources. It provides an opportunity to earn extra money and improve financial stability. 

Benefits for Companies:

  1. Cost Savings: Companies can save costs by hiring gig workers instead of full-time employees. They do not have to provide benefits like healthcare, paid leave, or retirement plans, resulting in potential cost efficiencies.
  1. Economic Services: The gig economy enables companies to provide services more economically to users. By leveraging gig workers, companies can offer competitive prices and cater to a larger customer base.

 Benefits for Low-Skilled Workers:

  1. Employment Opportunities: The gig economy offers job opportunities for low-skilled and semi-skilled workers who may face challenges in finding traditional employment. It provides a platform for them to utilise their skills and earn income.

 Benefits for Individuals:

  1. Skill Development: Engaging in gig work allows individuals, especially young undergraduates, to gain valuable work experience and develop skills that can enhance their employability in the future.
  1. Cost Savings: Many gig workers have the advantage of working remotely, eliminating the need for commuting to an office. This can result in cost savings on transportation expenses, such as fuel or public transportation fares.

 Overall, the gig economy brings various benefits, such as flexibility, cost efficiencies, job opportunities, skill development, and economical advantages, for both gig workers and companies operating within this model.

Disadvantages of Gig Economy-

  • Job Security: Gig workers often face job insecurity as they work on a day-to-day basis and can be terminated without prior notice. This lack of stability was evident during the pandemic, as many gig workers experienced layoffs and income loss.
  • Lack of Benefits: Gig workers typically do not receive social security benefits such as Employee State Insurance (ESI), Provident Fund (PF), or insurance coverage. They also lack paid leaves, meaning that any time off work results in a loss of wages.
  • Working Conditions: In order to make their work financially viable, many gig workers are compelled to put in long hours. A significant portion of their wages is often tied to incentives, which can pressure workers to work extended hours. This diminishes the promised flexibility of gig work. Additionally, there is a lack of transparency regarding incentive structures, creating further uncertainty for workers.
  • Low Bargaining Power: Platform workers have limited or no voice in decision-making processes. The power dynamics heavily favor platform companies due to technological advancements, resulting in gig workers having minimal bargaining power.

 These concerns highlight the downsides of the gig economy, including job insecurity, lack of benefits, challenging work conditions, hidden charges, and a power imbalance between platform companies and gig workers.


Way Ahead

Gig economy has transformed various industries, providing flexible work opportunities for individuals to earn income outside of traditional employment arrangements. However, it's important to note that gig work often lacks benefits and stability associated with traditional jobs, and workers may face challenges such as inconsistent income and limited employment protections.

Here are some recommendations and steps to be taken in order to support the growing Gig sector in India-

  1. Platformisation of Gig sector

 A potential initiative called Platform India could be introduced, drawing inspiration from the successful Startup India initiative. It would focus on accelerating the Platformisation process through simplified procedures, providing guidance and support, offering funding assistance and incentives, promoting skill development, and ensuring social and financial inclusion.

  1. To accelerate access to finance for platform workers
  • A suggested approach to improving access to institutional credit for platform workers and aspiring platform owners is to create financial products that are specifically tailored to their needs. These customised financial products should consider the unique income patterns and requirements of individuals in the platform economy, taking into account the nature of their work and income flows.
  • In addition, classifying unsecured loans for first-time borrowers participating in the platform economy as Priority Sector Lending (PSL) can have significant benefits. PSL classification would prioritise these loans and make them eligible for certain benefits and incentives offered by regulatory authorities.
  • By introducing specialised financial products and incorporating priority sector lending for platform workers, the barriers hindering their access to institutional credit can be diminished. This approach promotes entrepreneurship, stimulates economic development, and fosters financial inclusion by enabling platform workers to obtain the necessary financial support to thrive in the platform economy.
  1. Enhancing social inclusion
  • Platform businesses can collaborate with Civil Society Organizations (CSOs) to implement Gender Sensitization and Accessibility Awareness Programmes for workers and their families. These initiatives aim to promote inclusivity and equal opportunities within the platform sector.
  1. Skilling of workers
  • Periodic assessments: Conducting regular skill assessments can help identify the specific areas where skill gaps exist among women workers and persons with disabilities. 
  • By actively addressing skill gaps, fostering partnerships, and promoting transparency, platform businesses can create a more inclusive and equitable environment for women workers and persons with disabilities. These measures can help maximise their participation and contribute to their success within the platform economy.

 Practise question :

Q.) As India is striving towards becoming a financial hub and a global exporter of services, what role is the emerging gig economy playing in this scenario? Also highlight the ways in which Indian society is adapting to the changing work culture. (250 words)

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