A hope in gig economy

It’s gaining acceptance in the labour market & needs to be harnessed for the better
Representational Image
Representational ImageFile/ GK

Extreme slowdown in economic growth owing to the ongoing geopolitical crisis and the two years of pandemic-driven mayhem is a major cause of concern. If expert opinions on the economic crisis are to be summed up, then recession is knocking at our doors.

Central banks and governments across the globe are on tenterhooks as soaring inflation is continuously breaching their benchmarks. Traditional engines of economic growth as well as economic recovery seem to have lost steam in the new world order as the countries have been facing twin crises – both on demand side and supply side.

In other words, world order in the post COVID-19 era is shaping up differently from what it used to be in pre-Covid crisis. But, it is not proving to be an easy task to fall in line with the changed socio-economic landscape.

Social scientists have been warning that in the next decade many of the problems will simply be more extreme versions of those that we already confront today. While taking head-on with the emerging problems, fundamental changes in the socio-economic sphere are inevitable.

So, it is unlikely for the world to be what it was in pre-COVID times and the geopolitical tensions triggered by the Russia-Ukraine war have further complicated the global economic outlook. There are many trends already underway in the economy and are witnessing acceleration.

Let’s specifically talk about the job market. The pandemic pushed millions of households to the wall, as they lost jobs and even faced drastic cut in their incomes. Unprecedented spiraling price rise of essentials as well as non-essentials has added more woes and millions of households have slipped (and continue to slip) into poverty.

In this woeful economic scenario, it’s the job market, among other things, which has been undergoing unprecedented transformation, both in organized and unorganized sectors.

Here, the virus-driven economic catastrophe didn’t discriminate on the basis of the workers’ status. Be it in white collar or blue collar segment, both classes of workers were hit.

During the course, the pandemic also brought the plight of these workers, especially in the unorganized sector, into light. To be precise, absence of a social security cover to these workers has emerged as a major concern, which speaks of the government’s neglect towards this segment of workers.

In this employment crisis, we observed out of job workers, or those who faced drop in their incomes, crossing from one sector to another sector to ensure continuous working days and keep themselves afloat in a depressed economic scenario.

Precisely, the two years of the ongoing pandemic witnessed a substantial shift in the job market to a contract-based system, thereby giving an unprecedented boost to the gig economy.

In this changing scenario, companies, big or small, realigned their systems to prefer employing more workers on contract basis instead of going all out for their permanent absorption in their firms.

The trend is catching up fast. Gig economy is emerging as a potential economic zone in the post COVID crisis with gig workers at its center stage, to fuel the economy with growth and beat the slowdown to a large extent. In the last two years, the growing gig economy has gained acceptance in the labour market.

Notably, the gig economy is explained as a free market system in which temporary positions are common and organizations hire independent workers for short-term commitments.

The term “gig” is a slang word for a job that lasts a specified period of time. In a gig economy, workers including freelancers, independent contractors, project-based workers and temporary or part-time hires, are engaged for a specific job and are paid on assignment basis rather than a fixed salary. This is a shift from the conventional 9-to-5 job to a freelance, task-based work.

A report, India’s Booming Gig and Platform Economy, released on Monday defines the gig workers as those who are employed “outside the traditional employer-employee arrangement”. These workers broadly fall into two categories: platform and non-platform-based workers.

While platform workers are those whose work is based on online applications or digital platforms, non-platform are usually casual wage workers and own-account workers in conventional sectors, working either part-time or full time.

The report also estimates that in 2020-21, about 7.7 million workers were engaged in the gig economy, accounting for 1.5% of the total workforce in India. Interestingly, the number is expected to grow to 23.5 million workers by 2029–30, making up for 4.1% of the total livelihood in India. According to the report, at present about 47% of the gig work is in medium skilled jobs, about 22% in high skilled, and about 31% in low skilled jobs.

Precisely, the given numbers and the projections of its scale of expansion bode well for the overall economy of the country. The gig economy comprises both existing jobs that migrate to gig platforms, as well as new jobs that get created in the economy. New employment opportunities will also result from better market transparency, thus bridging the demand-supply gap, greater efficiencies in delivery resulting in lower cost, and growing demand.

Even as this segment is only a few years old in India, it’s growing bigger by the day, as more and more services move to a platform-based model, and more and more workers sign up to them to gain market access and customers. Notably, the corporate world has already started to create space to accommodate gig workers.

So the scenario reveals that the gig economy may be nascent in India, but it’s growing at a steady pace. It’s the right time for professionals to prepare themselves for exploring it all to the benefit of reviving the economic growth at least to the decent levels.

In a way, the gig economy has thrown an opportunity to drive job creation and economic growth. At the same time, it has the potential to help the workers learn new skills and build a better quality of life for themselves and their families.

So, in view of the growing economic potential of the gig economy and the welfare of men associated with it, the policy makers have to spend extra time to tailor a robust plan to capitalize on the strengths of this sector.

Here, one of the main things is formalization of this segment. So far, in the segment of the economy, which is mostly clubbed in the unorganized sector, there have been no fair and transparent terms of job contracts. The employer enjoys a sweet will to fire workers out of job in a jiffy.

To protect the gig workers against this harsh approach of employers, the government has to work out a policy where, in the first instance, the segment is brought under the ambit of the formal sector.

For this, gig workers should be insulated against any harsh ‘hire and fire’ policy through certain regulations, which will at the same time infuse a sense of responsible corporate citizen among companies or platforms.

Meanwhile, there is a good beginning. Just a few days back NITI Aayog recommended extending social security measures to gig workers and their families, including paid sick leaves, insurance and pension plans.

In its report titled “India’s Booming Gig and Platform Economy,” the NITI Aayog says such plans and policies may be uniquely designed by a firm, in partnership with insurance companies, or could be designed and offered in collaboration with the government, as envisaged under the Code on Social Security, 2020.

The report, among other things, has also suggested support to workers in a “situation of irregularity of work”. “This will be a critical step in providing assured minimum earnings and social security from income loss in the wake of uncertainty or irregularity in work.”

Last but not the least. The report has recommended accelerating access to finance through tailor-made products to harness the potential of the gig-platform sector.

To conclude, the gig economy is worth watching in the coming times.

(The views are of the author & not the Institution he works for)

Disclaimer: The views and opinions expressed in this article are the personal opinions of the author.

The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.

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