Gig Economy: Freedom of work or Modern wage slavery?

However, everything has its fair share of advantages as well as downsides, with Gig work being no exception. In the next section, we assess these from the perspective of both workers and employers:

Advantages and Disadvantages of Gig work?

Freedom and choice of work are the prime advantages that lure freelancers, which enables them to work ‘on-demand’, and choose the project they’d like to work on, as per their flexibility.

Additionally, Gig work has made it possible for millions to enhance their earning prospects. It is common for students to freelance  alongside their studies, or for working professionals to earn a supplemental income, without having to take the traditional  route of setting up a business.

On the other hand, companies and clients save a lot of expenses as they don’t have to hire someone full-time, pay them irrespective of whether they are working or not, give employee benefits or social security.  In return, some of the cost savings are transferred to consumers in the form of lower prices.  Firms don’t require huge amounts of working capital as they can expand and contract their operations anytime, and save the long, exhausting, and expensive recruitment and selection process.

But everything isn’t hunky-dory here. The Freelance Economy has several shortcomings too. Listed below are a few of these cons:

The lack of social security and ‘employee welfare’ measures are leading to problems in the industry; since workers are not full-time employees, companies do not provide them with proper insurance covers, or other social security provisions such as the  Employee Provident Fund (EPF) or pension support, paid leaves, etc. Even though the government is framing policies to mitigate this, their proper implementation on ground is yet to be seen.

The inadequate pay offered by companies often forces Gig workers to work for inhuman hours. Platforms like Uber, Ola, Zomato, and many more, offer a variable pay structure:  when an order is delivered or a ride is completed, the worker gets a small payment, and when the worker reaches a ‘milestone’ of say, 15-20 deliveries or rides, he is entitled to a  hefty bonus. These incentive-driven payment models are a form of modern exploitation which forces Gig workers to toil for long hours to meet targets, in order to earn a minimum living wage.

Similar problems are faced by freelancers who take up project-based work. Workers are often unfairly expected to perform small tasks free of payment, alongside their main project, in order to get a good rating or review. Since a good review, in turn, determines their ‘employability’ in the future, these workers find themselves in an unfair bind.

Impact of Covid-19 on the Gig Economy

The Covid-19 induced slowdown has had a significant impact on the market for jobs, with many economies going into recession. Nearly 90 percent of Indian Gig workers have lost their incomes during the Covid-19 pandemic, according to a survey by Flourish Ventures. While most Indian Gig workers earned over Rs. 25,000 per month (approximately $340) before the pandemic, by August nearly 9 in 10 were making less than Rs. 15,000 per month ($200). More than a third of Gig workers were earning about $ 2.3 per day or less.

Interestingly, while  many were struggling to find work, others witnessed a massive surge in  employment opportunities. Delivery personnel for online platforms such as Big Basket and Zomato have experienced demand skyrocket as consumers preferred to order food and supplies home, rather than go to physical stores, obeying quarantine rules.

Government Policies: The Safety Net Debate

In September 2020, the Code on Social Security Bill was pushed in Parliament, amidst growing concerns about the lack of benefits for personnel providing ‘essential services’ within this economy. It came into force on 3 May 2021. The Social Security Code, 2020, brings the unorganised sector- of which the Gig workers are a part, into the ambit of various Social Security schemes such as life insurance, disability insurance, health and maternity benefits, provident insurance, pensions, and skill up-gradation etc.

Furthermore, Gig workers are entitled  to a contribution of 1-5 percent of an aggregator’s revenue. In addition, a Social Security Fund would be established to provide support in the event of death and disability, as well as old-age benefits. Notably, the bill makes benefits mandatory rather than optional.

Many individual platforms have already taken steps to provide the necessary benefits to their employees. For example, Urban Company has reduced the commissions it charges employees and allowed up to two no-penalty cancellations. 

How are India’s Gig Economy and its $5 trillion target by 2025 linked?

Today, India’s work culture is undergoing a seismic shift. Young people do not want to be trapped in jobs that require them to work long hours for little pay. These individuals are finding long-term employment in the country’s rapidly expanding Gig Economy. According to a joint report by the Boston Consulting Group and the Michael and Susan Dell Foundation, the Gig Economy can support up to 90 million jobs in India’s non-farm economy alone. This equates to more than $250 billion in work and may contribute an additional 1.25 percent to India’s GDP.

In the coming years, technology could replace some mundane tasks at digital-first platforms. But, the demand for human workers would still increase. The BCG-Dell Foundation said in its report that in the near-medium term, nearly 24 million jobs could migrate to technology-based Gig platforms. It also predicts the creation of 1 million new jobs over the next two to three years by aligning the needs of employers and workers.

In conclusion, India’s goal of becoming a $5 trillion economy, necessitates large-scale job creation. The Gig Economy, as it has demonstrated in recent years, has tremendous potential when it comes to bridging the income-employment gap, and therefore, is bound to play a critical role in the achievement of the above target.