India’s Gig Economy

• 28 Jun 2022

For Prelims: Platform Workers, Startup India Initiative, Code on Social Security 2020

For Mains: Potential of India's Gig Sector, Challenges associated with the Gig Sector, Recommendations of NITI Aayog to improve social security of the workforce.

Why in News?

NITI Aayog today launched a report titled ‘India's Booming Gig and Platform Economy’.

• According to the report, India's gig workforce is expected to expand to 2.35 crore by 2029-30.
  • The report estimates that in 2020–21, 77 lakh (7.7 million) workers were engaged in the gig economy. They constituted 2.6% of the non-agricultural workforce or 1.5% of the total workforce in India.
• NITI Aayog recommended extending social security measures for such workers and their families in partnership mode as envisaged in the Code on Social Security.

What are the Major Issues Raised by the Report?

• Accessibility:
  • Even though the gig economy, with the wide variety of employment options it offers, is accessible to all those who are willing to engage in such employment, access to internet services and digital technology can be a restrictive factor.
    • This has made the gig economy largely an urban phenomenon.
• Job and Income Insecurity:
  • Gig Workers do not get benefit from labor regulations pertaining to wages, hours, working conditions, and the right to collective bargaining.
• Occupational Safety and Health Risks:
  • Workers engaged in employment with the digital platforms, particularly, women workers in the app-based taxi and delivery sectors, face various occupational safety and health risks.
• Skills Mismatch:
  • Varying degrees of vertical and horizontal skills mismatch can be observed on online web-based platforms.
  • According to International Labour Organization (ILO) surveys, workers with higher educational achievements are not necessarily finding work commensurate with their skills.
• Challenges faced due to Terms of Contract:
  • Working conditions on digital platforms are largely regulated by the terms of service agreements. They tend to characterize the contractual relationship between the platform owner and worker as other than one of employment.

What is the Gig Economy?

• A Gig economy is a free market system in which temporary positions are common and organizations contract with independent workers for short-term engagements.
  • Gig Worker: A person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship.
• According to a report by Boston Consulting Group, India’s gig workforce comprises 15 million workers employed across industries such as software, shared services and professional services.
• According to a 2019 report by the India Staffing Federation, India is the fifth largest in flexi-staffing globally, after the US, China, Brazil and Japan.

What is the Potential of India's Gig Sector?

• An estimated 56% of new employment in India is being generated by the gig economy companies across both the blue-collar and white-collar workforce.
• While the gig economy is prevalent among blue-collar jobs in India, the demand for gig workers in white-collar jobs such as project-specific consultants, salespeople, web designers, content writers and software developers are also emerging.
• The gig economy can serve up to 90 million jobs in the non-farm sectors in India with a potential to add 1.25% to the GDP over the "long term".
• As India moves towards its stated goal of becoming a USD 5 trillion economy by 2025, the gig economy will be a major building block in bridging the income and unemployment gap.

What are the Key Drivers of the Gig Sector?

• Flexibility to Work from Anywhere:
  • In the digital age, the worker need not sit at a fixed location—the job can be done from anywhere, so employers can select the best talent available for a project without being bound by geography.
• Changing Work Approach:
  • The millennial generation seems to have quite a different attitude to careers. They seek to do work that they want to do rather than have careers that may not satisfy their inner urges.
• Business Models:
  • Gig employees work on various compensation models such as fixed-fee (decided during contract initiation), time & effort, actual unit of work delivered and quality of outcome. The fixed-fee model is the most prevalent, however, the time & effort model comes a close second.
• 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 ML to bolster their tech platforms.
• Rising demand of Contractual Employees:
  • 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.

What are Platform Workers?

• About:
  • A platform worker implies a worker working for an organisation that provides specific services using an online platform directly to individuals or organisations.
  • Examples: Ola or Uber drivers, Swiggy or Zomato delivery agents, etc.
• Concerns:
  • They fall outside of the purview of the traditional dichotomy of formal and informal labour.
  • Platform workers are independent contractors as they cannot access many aspects of workplace protection, and entitlements.

What are the Recommendations?

• ‘Platform India Initiative’:
  • On the lines of the ‘Startup India initiative’, accelerating platformization, skill development and social financial inclusion, can provide a framework to balance the flexibility offered by platforms and social security of workers.
    • Self-employed Individuals engaged in the business of selling regional and rural cuisine, street food, etc., can be linked to platforms so that they can sell their produce to wider markets in towns and cities.
• Funding support:
  • Access to institutional credit may be enhanced through financial products specifically designed for platform workers and those interested in setting up their own platforms.
  • Venture capital funding, grants and loans from banks and other funding agencies should be provided to platform businesses of all sizes.
• Gender Sensitization:
  • Encouragement of behavior modification through raising awareness of gender equality concerns.

Source: TH