Understanding the Gig Economy from an Indian Perspective

Why It is in News?

• Rajasthan Assembly Passes bill extending social security to gig workers
• Karnataka Government has announced Total of Rs. 4 lakh coverage of Life insurance and Accident Insurance for Gig Workers.

What is GIG Economy :

        A Gig economy is a free market system in which organisations contract with independent workers outside the traditional employer-employee relationship, for short term temporary engagement.

Who is GIG Worker:

According to the code on social security, 2020 A GIG worker is a person who performs work or participates in work arrangement and earns from such activities, outside of the traditional employer - employee relationship.

They can be broadly classified into platform and non platform workers.

• Platform workers are those, whose work is based on online software applications or digital platforms such as Ola, Uber, Swiggy, Zomato etc.

• Non platform Workers, these are generally casual wage and own account workers in conventional sectors engaged part time and full time.

Insights on India's GIG economy:

        According to report by Boston Consulting group (BCG), India's GIG workforce comprises 15 million workers employed across Industries such as software, shared services and professional services

According to NITI Aayog's report titled "India's Blooming GIG and Platform economy

• The Report estimates that in 2020-21, 7.7 million (77 lakh) workers engaged in GIG economy. They constituted 2.6% of non agriculture workforce or 1.5% of the total workforce in India.

• At present about 41% of the gig work is in medium skilled jobs, about 22% in high skilled, and about 31% in low skilled jobs.

• The gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029-30.

• Trend shows the concentration of workers in medium skills is gradually declining and that of the low skilled and high skilled is increasing. It may be expected that while the domination of medium skills would continue till 2030, gig work with other skills will emerge.

The Growth Divers for GIG economy in India :

The gig economy in India has witnessed significant growth in recent years, driven by a various factors as explained below;

• Technological Advancements: The proliferation of  internet and mobile technology has revolutionised the way people work and connect. With the widespread adoption of smartphones and high-speed internet, individuals can now access gig opportunities on digital platforms, breaking geographical barriers and expanding the talent pool.

• Economic Liberalisation: The Indian government's economic liberalisation policies have created a more competitive and open market. This environment has encouraged the growth of the gig economy by fostering innovation, entrepreneurship, and new avenues for work.

• Changing Work Culture: The modern workforce seeks job satisfaction and flexible work arrangements that align with their passions and interests. The gig economy offers individuals the freedom to pursue fulfilling opportunities, thus shifting the traditional work culture towards more dynamic and rewarding career paths.

• Demography:  The increasing number of young, educated, and ambitious individuals looking to enhance their livelihoods through supplementary income sources has been a key driver. These individuals are drawn to the gig economy as it offers them the flexibility to balance personal and professional commitments while pursuing their aspirations.

• Evolving Business Models & Technology: Technological advancements have streamlined gig work processes, making it easier for freelancers to find opportunities and businesses to collaborate with independent professionals. Diverse compensation models and seamless contracting processes further attract talent to the gig economy.

• Emergence of Start-up Culture: The rise of start-up companies in India has led to an increased demand for gig workers, particularly in technical areas such as product development, data science, Artificial Intelligence, and machine learning. Freelancers provide cost-effective and flexible solutions for non-core tasks, enabling start-ups to thrive.

• Rising Demand for Contractual Employees: Post-pandemic challenges have prompted multinational corporations (MNCs) to adopt flexible hiring options, including contractual talent. This rising demand for specialised skills and expertise has contributed significantly to the gig economy's growth.

The collective impact of these drivers has fuelled the expansion of the gig sector, with more individuals opting for freelancing opportunities and businesses leveraging gig workers to meet their specific needs efficiently.

Advantages of the Gig Economy:

For Workers:

• Flexible Nature of Work: Gig economy offers workers the freedom to choose when and where they work, allowing them to optimise their time and income. This flexibility enables them to balance work with personal commitments, leading to a better work-life balance.

• Freedom to Choose Work: Workers can select the type of projects they take on, giving them greater autonomy and control over their career path. The gig economy provides a diverse range of opportunities from companies worldwide, expanding their options and exposure.

• More Opportunities for Higher Income: Gig workers can take on multiple jobs simultaneously, diversifying their income streams. They can focus on a significant project while supplementing their earnings with smaller tasks, providing potential for higher overall income.

For Businesses:

• Cost-Effectiveness: Embracing the gig economy allows businesses to reduce operational costs significantly. By hiring off-site workers, there is no need for expensive office spaces, which leads to substantial savings for the company.

• Access to Diverse Talent: Businesses can choose from a pool of skilled individuals globally, tailoring their selections to fit the company's budget. The gig economy offers a wide array of talented workers, both locally and internationally, giving businesses more options to find the best fit for their projects.

Challenges of GIG Workers:

• Lack of job security, irregular wages, and uncertain employment status: Gig workers often face the uncertainty of not having a stable job or a fixed income. Their earnings can vary significantly from one gig to another, making it difficult to plan for the future and create a stable financial situation.

• Limited access to the internet and digital technology: Gig work is often reliant on digital platforms and the internet for finding opportunities and communicating with clients. Gig workers without reliable access to the internet or digital technology may face challenges in accessing work and competing in the market.

• Limited workplace entitlements: Gig workers are usually classified as independent contractors, which means they are not entitled to the same workplace benefits and protections as traditional employees. This can include paid sick leave, overtime pay, and workers' compensation.

• Inequality and exploitation: In some cases, gig workers may face exploitative practices from platforms or clients, such as low pay rates or unclear contract terms, leading to financial struggles and increased vulnerability.

• Limited access to benefits and protections: Gig workers may struggle to access benefits like healthcare, retirement plans, and unemployment benefits, which are typically provided by employers to traditional employees.

• Limited access to Skills upgrading and career progression: Without employer-sponsored training and development programs, gig workers may find it more challenging to upgrade their skills and advance their careers compared to employees in traditional workplaces.

Measures to Streamline the GIG economy : 

        NITI Aayog's proposed measures to streamline the gig economy, with the goal of promoting inclusive growth and economic empowerment, can be outlined as follows:

• Promote Platformisation: Introduce a Platform India initiative to accelerate the growth of the gig economy. This initiative should focus on simplifying and supporting the creation of platforms, providing funding and incentives, and facilitating skill development and financial inclusion. Drawing inspiration from the successful Startup India initiative, Platform India can pave the way for a thriving gig ecosystem.

• Enhance Financial Inclusion: Strengthen access to institutional credit for gig workers by developing financial products tailored to their needs. This will supplement the government's efforts to promote financial inclusion. Additionally, leveraging FinTech and platform businesses to offer cash flow-based loans instead of collateral-based loans will be beneficial for those new to credit.

• Skill Development for Gig Jobs: Adopt outcome-based, platform-led models of skilling to equip the youth and workforce with employable skills. Integrating platforms with employment and skill development portals like E-shram, National Career Services, or Udyam can further streamline the process and ensure efficient job placement.

• Empowerment through Platform-led Skilling: Collaborate with the Ministry of Skill Development and Entrepreneurship, and the National Skill Development Corporation (NSDC) to create structured skilling programs. These programs, supported by platforms, can enable upskilling and diversification of the gig workforce, leading to better opportunities for micro-entrepreneurship.

• Promote Gender Sensitisation and Accessibility Awareness: Partner with civil society organisations (CSOs) and NGOs to conduct gender sensitisation programs and raise awareness about gig opportunities, particularly among women from marginalised backgrounds. This will empower them to explore non-traditional livelihoods and participate actively in the gig economy.

RAISE Framework for Operationalising the Code on Social Security (CoSS), 2020: 

As Central and State governments draw up rules and regulations under CoSS 2020, they could adopt the five-pronged RAISE approach to ensure realisation of full access to social security for all gig and platform workers: 

• Recognise the varied nature of platform work to design equitable schemes. 

• Allow augmentation of social security through innovative financing mechanisms. 

• Incorporate, while designing schemes, the specific interests of platforms, factoring the impact on job creation, platform businesses and workers. 

• Support workers to subscribe to government schemes and welfare programmes through widespread awareness campaigns. 

• Ensure benefits are readily accessible to workers.

        In conclusion, the rise of the gig economy in India is significantly transforming the nation's workforce landscape. Reports indicate that the gig economy has the capacity to generate approximately 90 million jobs in non-farm sectors, offering the potential to contribute 1.25% to the GDP over the long term. As India pursues its ambitious goal of becoming a USD 5 trillion economy by 2025, the gig economy emerges as a crucial building block that can effectively bridge income disparities and reduce unemployment gaps in the country.With well-defined policies and measures, embracing and nurturing the gig economy can play a pivotal role in propelling India towards greater economic growth and prosperity.