‘Hire and fire’ economy

Even as vaccination is gaining popularity as protection against Covid-19 infection, the crisis continues to remain alarming. The outbreak of the second deadly wave has proved that this global medical emergency is loaded with numerous new and unfamiliar multidimensional features, which makes it difficult even for experts of eminence to fully understand it. Though the crisis is primarily an extreme health emergency, it has forced governments across the globe to roll out a self-inflicted economic catastrophe through economic lockdowns as their only arsenal to contain the spread of the virus.

There is no denying the fact that the world order after COVID-19 is going to be totally different from what it used to be in pre-Covid crisis. It would not 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, there would be fundamental changes in the socio-economic sphere.

   

Precisely, it is unlikely for the world to be what it was in pre-COVID times. There are many trends already underway in the economy and are witnessing pandemic-induced acceleration. One of the changing trends is observed in the job market segment, both in organized and unorganized sectors. The virus-driven economic catastrophe has put millions out of jobs without discriminating the status of workers, be it in white collar or blue collar segment. It has at the same time exposed the brittle relationship of employee-employer in firms and companies, small or big, with terms and conditions governing their bond far from transparent. At the same time, the pandemic also took the lid away from the plight of workers especially in the unorganized sector, which are among the hardest hit as they either lost all income stream overnight or faced drastic cut in income.

However, the crisis triggered a change in the employment scenario, where people on a mass scale have started crossing from one sector to another sector to ensure continuous working days to keep themselves afloat in a depressed economic scenario. Precisely, there is a substantial shift in the job market to a contract-based system, indicating an unprecedented boost to the gig economy. Even companies, big or small, have started realigning their systems to prefer to employ more workers on contract basis instead of going all out for permanent absorption of workers in their firms. As the trend is catching up fast, we are all set to witness a ‘hire and fire’ economy catching up fast in the post COVID crisis with gig workers at its center stage.

Let’s first understand the gig economy. As explained by experts, the gig economy is 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. Examples of gig employees in the workforce could include.

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.

After glancing through various industry estimates, it’s interesting to note that in the on-going pandemic gig workers have been gradually gaining acceptance in the labour market. According to an estimate, India is now home to around eight million such workers.

Let me share a report by consulting firm Boston Consulting Group (BCG) and Michael & Susan Dell Foundation which pegs India’s gig economy to triple over the next 3-4 years to 24 million jobs in the non-firm sector from the existing 8 million. The gig jobs could soar to 90 million in 8-10 years, with total transactions valued at more than $250 billion, contributing an incremental 1.25% to India’s gross domestic product (GDP). Nearly 35 million gig jobs will be available for skilled and semi-skilled professionals and household demand for gig workers will be high both in the short- and long-term.

It is projected that construction, manufacturing, retail, transportation, and logistics will be the largest industry sectors with a potential to create around 70 million jobs for gig workers in the next eight to 10 years.

The report states that gig work is expected to witness increased participation of women as it will offer them flexibility. The gig economy will comprise both existing jobs that migrate to gig platforms, as well as new jobs that will 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.

In a way, the gig economy has thrown an opportunity to drive job creation and economic growth. The gig economy has the potential to help people in the unorganized sector, learn new skills and help them build a better quality of life for themselves and their families.

In the above given scenario, the potential of the gig economy seems enormous and the gig workers, be they white collar or blue collar workers, are going to be a crucial support in beating the slowdown in the economy over a period of time. In fact, the gig economy cannot be ignored in future times as this will constitute one of the vital drivers of the economic wheel as the number of gig workers is extremely going to multiply.

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. The economic opportunity thrown by the gig economic sector recently attracted experts to deliberate on it. The experts acknowledged it as a segment that is only a few years old in India but is 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. 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.

As the landscape of the gig economy is all set to expand in the post COVID era, the social security issues and ensuring fair and transparent contracts for them assume greater significance and it’s here the government has to lend its support to keep the gig economy vibrant. The government has to ensure that the work contracts do not violate their basic rights and help them to get some protection against any unilateral change in working conditions and wages.

Meanwhile, it’s encouraging that new labour codes have also taken note of the gig economy and contains a promise to provide social security benefits to contract workers.

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

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