Future Of The Gig Economy In India

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27 Aug 2022
6 min read

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The term "Gig Work" is used to describe the work that is done on demand and within a set timeframe with no formal contracts that are signed by two parties. In this scenario, the informal economy in India (with plenty of blue-collar, day-to-day salaried people) has been around for a long time and isn't new to gig work. But gig work have gained momentum in India due to the growth of companies that are platform-based such as Ola (taxi and rikshaw service), Workflexi (technical, creative and non-technical solution) Zomato (food delivery service).

According to the BCG report also notes that the proportion of workers who work in the gig-based economy greater in developing countries such as India than in advanced countries. The report also forecasts that gig and platform-based jobs are likely to develop and a portion of that will require workers with high-skilled skills. In other sectors, like healthcare small and medium-sized businesses are expected to have a greater need for highly skilled freelancers in India is expected in the near future.

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The Gig Economy is a flexible temporary, short-term, or freelance work arrangement in which a service seeker i.e. an individual connects with a service provider i.e. a gig worker, to complete the task. They earn their earnings in full or in part through contracts that are short-term in which they receive compensation for specific tasks or assignments. The exchange of services usually involves interacting with consumers through an online platform. The fast-growing gig economy could help businesses, workers as well as consumers in general in that it makes the work process more flexible personalized, and adaptable to changing circumstances. It has proven its durability and even potential aftermath of the Covid-19 pandemic by allowing millions of jobs while maintaining the connection between communities.

In the years 2020-21, 7.7 million people in India were thought to comprise the Gig Workforce. It is predicted to increase to 23.5 million in 2029-30. This will comprise 6.7 percent of the non-agricultural workforce or 4.1 percent of the total income in India. The elasticity of GDP to employment growth of gig workers was consistently higher than one from 2011-12 through 2019-20, which indicates a higher demand for gig workers. This elasticity was always greater than the general elasticity of employment and further suggests a slowing demand growth rate for non-gig employees, as well as the transition of non-gig jobs to gig-based work.

According to the industrial classification, around 2.7 million workers worked in sales and trade in retail, 1.3 million in the transport sector, 0.6 million in manufacturing, and 0.6 million engaged in the finance and insurance sector. Between 2011-12 and 2019-20, the transportation, retail, and manufacturing sectors witnessed a growth in the amount of 1.5 million, 0.8 million, and 0.4 million employees, each. The gig workforce within the education sector grew from 66,000 to more than 1 lakh by the year 2019-20. Presently, around 47 percent of the gig workforce is moderately skilled jobs, while 22 percent are high-skilled positions and 31 percent of the jobs are low-skilled. But gig work could increase the degree of skill polarization because the proportion of workers with moderate skills is decreasing as the percentage of high-skilled and low-skilled are increasing.

India's government has taken a number of steps to increase the gig economy's growth in India. In January 2022, the Ministry of Labour and Employment held a webinar in conjunction together with V. V. Giri National Labour Institute, International Labour Organization (ILO), BRICS Network of Labour Research Institutes, and the International Training Centre (ITC) of the ILO. The purpose of the webinar was to provide a cross-cultural perspective on two crucial concerns namely: (a) opportunities and challenges of the Gig and Platform Work as well as (b) Policy Environment to create new ways of working. Beyond opportunities, new concerns regarding terms of service, the all-inclusive Social Security benefits suitable dispute resolution forums, and so on. were also addressed.

In 2021, the Ministry of Labour and Employment has launched the e-Shram portal in order to establish the first-ever national database of workers without a job that is populated with the individual's Aadhaar. The information includes names, occupations, addresses education levels, types of skills, family details, and more. In May 2022, more than 94 percent of 27.69 crore workers in the informal sector that are registered through the e-Shram portal earn an annual salary in the range of INR 10,000 or less, and over 74 percent of the workforce enrolled on the portal is from the scheduled castes (SC) and tribal communities known as scheduled Tribes (ST) as well as other classes of backward (OBC). The primary goal is to establish a central database of each contractor, worker, worker platform and gig worker street vendor or domestic worker, agriculture worker, etc. to understand their ability to work, as well as extend benefits by implementing the social security programs to them and sharing the data with various parties involved in implementing the welfare programs.

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In March 2022 The Code on Social Security, 2020 was passed in the parliament as one of four labor codes which was the first time it included provisions for platform and gig workers. The Code envisages the provision of social security benefits via the creation of platforms and gig workers that could be implemented by the Employees Provident Fund Organisation (EPFO) and the Employees State Insurance Corporation (ESIC). The Social Security Fund has also been established pursuant to the Code to increase the benefits offered through the scheme.

On June 20, 2022, NITI Aayog also published the report 'India's expanding platform and Gig Economy. It provides comprehensive views and suggestions on platforms and gigs within India as well as outlines the possibilities and challenges that are arising from this sector. It also highlights top practices from across the world in initiatives to provide social security as well as strategies to develop skills in a specific category and the creation of jobs for employees in the industry.

To maximize the potential of the industry it is recommended to speed up access to financing by creating products specifically for platform users connecting self-employed people who are involved in selling rural and regional food items, street food, etc., and appropriate food-tech platforms that can give the market to expand in cities and towns. The report offers suggestions for the use of platforms to transform and develop skills based on outcomes. It also highlights the importance of promoting social inclusion by promoting gender awareness and accessibility awareness training for families of workers. Other important recommendations include implementing an additional enumeration process to assess the extent of the platform and gig workforce and gathering data during official censuses (Periodic Labor Force Survey) to find gig workers.

Utilizing all the reforms already implemented and the many others to be implemented, India is expected to change the way it operates its gig and workforce through centralized opportunities, more employment with a stringent labor code, and higher wages for the non-organized workforce. With its dividend on population of half a billion workers with the world's smallest population as well as rapid urbanization and increasing use of smartphones and related technology, India is poised to be the latest frontier in gig-based work.

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