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Gig Economy India and its Challenges

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In a report titled ‘India’s Booming Gig and Platform Economy’, by the think tank, Niti Aayog made recommendations on the subject of the gig economy. In this article, we are going to talk about the gig economy, related issues, and major suggestions given by NITI Aayog on the gig economy. This is one of the important topics of the economy and this might ask in exams like UPSC, SSC, State PSC, etc.

What is the Gig Economy?

  • The gig economy is a free market system in which organizations hire or contract workers for short periods. Simply put, this position is temporary to meet the company’s needs through short-term engagement.
  • According to the Social Security Regulations (India), 2020, “Gig is a worker who works outside the traditional employer-employee relationship or participates in a labour contract and earns income from such activities. It’s someone who is.  
  • Gig staff can be roughly divided into platform staff and non-platform staff.
  • Platform workers are people whose work is based on online software apps or digital platforms. Non-platform gig workers typically work part-time or full-time and are casual and self-employed in traditional industries.

What are the Benefits of the Gig Economy?

  • Benefits for employees:
    Employees can choose when, where and what they work on
    Working in the gig economy gives you the power to decide which jobs to apply for or accept, which platforms to join, where to work, and what schedule to work.
  • Beneficial for companies:
    The gig economy allows organizations to save costs both time and money.
    Firms do not hire people for long periods with all the privileges of temporary employees (paid vacation, health insurance, etc., found in some countries). Not only do they save money, but they also get the best people on board for a short period. In addition, companies save time as the hiring and selection process takes longer. This makes them more agile and responsive to market unpredictability.
  • Benefits for consumers:
    The Gig Economy Instantly Satisfies Consumers and Grows the Economy
    Thanks to gig worker-based businesses, consumer transaction costs are low, products of all kinds are delivered almost anywhere, anytime, and convenience has reached a whole new level.  
  • Benefits for the economy as a whole:
    From a macroeconomic perspective, independent work also brings many benefits as it increases labour force participation and the number of hours worked in the economy. Jobs from the gig economy are a great opportunity to raise unemployment and thereby address the unemployment problem in the economy. At the same time, people can focus on what they do best, feel more engaged, and ultimately be more productive.

Major Challenges in the Gig economy:

  • Less social protection, and no more perks in the gig economy
    Traditional jobs often offer employees many protections and perks, such as bonuses, paid time off, insurance, travel, and housing benefits, and retirement savings.
    However, freelancers don’t get this benefit because they only do temporary work. They have to pay off their retirement and health insurance and use their car and fuel. It also ends paid vacation and sick leave. Independent workers are paid per job and receive full payment only after the job is completed and delivered. So if you don’t work, you don’t get paid.
  • Bad service conditions
    Low wages, bait-and-switch incentives, opaque pay calculations, commission deductions, and constant monitoring on aggregator platforms have all contributed to massive demonstrations by gig workers against the aggregator’s terms of service.  
  • Entitlement burden
    Workers must be fully qualified. Unless they have special talents, their bargaining power is limited.
    Gig economy workers have to develop their skills at their own expense, but companies regularly invest in employee training.
    The lack of promotion opportunities within the organization has led to protests from workers at companies such as Swiggy, Zomato, Ola, and Uber.
  • Outdated regulatory framework
    It is largely unregulated, resulting in less job security and marginal returns. In other words, it is an extension of India’s informal or unorganized labour which has not yet been reformed by the government.
    India has protected workers with strict industry regulations and factory-appropriate labour laws. They are inappropriate, inadequate, and ineffective in resolving disputes arising from these platforms.
  • Supply and demand mismatch:
    There are already far more potential online independent workers than jobs, and the mismatch between demand and supply will only get worse over time and wages will fall. 
  • The gig economy brings loneliness
    Being an independent worker can be very lonely depending on the type of work you do. This is especially true for designers, developers, or copywriters who work from home on their laptops. You can work from home for a full week without any real-life interaction. 
  • Challenges from conventional players
    Companies operating according to the principles of the gig economy pose a major challenge for already established companies. For example, Airbnb has caught the attention of the hotel industry, and the same is happening with Uber and the taxi industry.
    Traditional gamblers are lobbying government agencies to introduce same-gaming laws to protect the interests of existing gamblers.
    Given the voter weight these traditional players hold, government regulation may impose additional conditions on such gig-principle firms. It may weaken our competitive advantage.

The Recommendations by NITI Aayog for Gig Economy

  • Catalyze Platforming: Like the highly successful Startup India initiative, the Platform India initiative is launched, built on the pillars of simplification and handholding, financial support and incentives, skills development, and accelerated platformization through social and financial inclusion.
  • Fast access to funding for platform workers: Access to institutional credit can be enhanced through financial products designed specifically for platform workers and those interested in setting up the platform.
    Venture capital funding, grants, and loans from banks and other funding agencies should be made available to prestige and early-stage revenue platform companies of all sizes. 
  • Skill development for platform jobs: The gig and platform sector should promote platform-driven qualification and job creation, models. The platform can work with the Ministry of Skills Development and Entrepreneurship and the National Skills Development Corporation (NSDC) to promote skilled workers and micro-entrepreneurship. 
  • Improving social inclusion in the new era of the digital economy: Platform companies partner with civil society organizations (CSOs) to enable diverse worker groups, such as workers and people with disabilities, to pursue job opportunities in the platform sector through skills development and access to funding and assets. can. 
    Women-led platforms or platforms that facilitate the recruitment of women employees and persons with disabilities should be incentivized.
  • RAISE Framework for Operating the Code of Social Security (CoSS), 2020:
    Applying a five-pronged RAISE approach in formulating rules and regulations under CoSS 2020 by central and state governments to achieve full access to social security for all gig and platform workers; 
    Recognize the diverse nature of platform work to design equitable systems.
    Enables increased social security through innovative financing mechanisms.
    Consider the specific benefits of the platform when designing your program.
    Consider the impact on job creation, platform companies, and workers.
    Help workers enrol in government programs and benefits
    Programmed through an extensive awareness campaign.
    Give employees easy access to benefits
  • Expanding Social Security for Gig and Platform Workers in India: In line with the measures taken to mitigate the challenges posed by the Covid-19 pandemic, paid sick leave policies and health insurance by platform companies can be rolled out to all workers employed by the platform throughout the year.
  • Recommendations for future quotes from platform workers: Conduct another census to estimate the size of the gig economy and identify gig workers during a census (Census, PLFS, NSS, or other); Different jobs a person could have, including being a gig worker or not. Gather information during the count to identify the gig her workers. This may include questions regarding the nature of the employee-employer contract, the use of technology in the workplace, etc.

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Last Updated : 31 Oct, 2022
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