GIG ECONOMY

WHY IN THE NEWS?

According to Economic Survey for 2020-2021, the COVID-19 pandemic and induced lockdown caused the economy to improve the scale of the Gig economy.

GIG ECONOMY

• Gig economy undermines the traditional economy of full-time workerswho rarely change positions and instead focus on a lifetime career.
• A gig economy is a free market systemin which temporary, flexible jobs are commonplace, and companies tend toward hiring independent contractors and freelancers instead of full-time employees.
• For example, in traditional employment, the employee has to reach a particular destination called a production house or factory, or office and provide his or her human capital to produce a particular product or service.

              In a gig economy, there is no traditional employee-employer relationship and no need of assembling at a particular place to deliver his services.

DIFFERENCE BETWEEN THE GIG ECONOMY AND TRADITIONAL EMPLOYMENT

NATURE OF GIG ECONOMY

1. Digital platform – Creation of a digital platform to connect service providers with service recipients. It is a form of an app-based platform where it provides works according to the needs of the customers such as making food deliveries, Logistic services, etc.
2. Temporary service – Workers perform “gigs,” in which they are employed for a specific task or time. Once the task is complete, the worker is free to move on.
3. Reduced control- The employer does not have full control over the employee unlike in the case of the traditional employer-employee relationship.
4. Flexibility – It is up to the employee’s interest whether to provide his services which means no fixed period of a time period to perform the job.
5. Aggregators – Different service providers are aggregated together through a digital platform to provide the required services.

For example- Take the case of Zomato, different persons have registered under that particular platform andare ready to procure the food from the restaurants. It is up to their will to do the work.

6. No huge capital outlays – No huge investment in the form of office infrastructure or asset procurement for undertaking production. The only requirement is to have a digital platform to connect service providers and recipients.
7. Tools and equipment – The service provider have to own all the tools and equipment to provide services. The employer is not in a position to provide the same.
8. Feedback mechanism – Service recipients are free to give their feedback on the services availed so that the quality of services can be improved.
9. Types of services – Food delivery such as Zomato, and Swiggy; Transportation facilities such as Ola; temporary hotel facilities such as Oyo are the main services under Gig economy
10. Commoditizing the skill – The skills which were not commoditized hitherto got commoditized under the Gig platform using the digital medium.

For instance: a person possessing certain skills such as decorating the house for an event can commoditize their skill by registering with a digital platform and can provide the services.

11. Trust – The entire platform is functioning under one aspect called trust. The service provider trusts the recipient in getting payment while the service recipient trusts the provider in getting the services within the determined time period.
12. Holistic coverage of services – The gig economy cannot be confined to only food and transportation facilities. It can be expanded for highly skilled white jobs such as freelance content writers along with blue-collar works.

ADVANTAGES

1. Flexibility

• Flexibility in working hours gives autonomy in functioning to the service providers
• Gig economy benefits workers, businesses, and consumers by making work more adaptable to their needs and demands.
• Absence of monotonous feeling for the workers by following a regular pattern.

2. Commoditize the services

• Gig economy helps to commoditize the services which were hitherto gone unrecognized in the economy.

3. Multi-talented works

• Gig economy provides the platform for those who are well versed in multi-talented skill. It helps a person to do multiple works during the same period.
• For example: a plumber having car can provide plumbing services and transportation facilities if he or she is interested in performing multiple works.

4. No one Boss philosophy

• Unlike traditional employment, gig economy enables to have multiple masters. A service provider can register themselves with multiple employers and can perform his duties according to his will.

5. Benefits employers

• Short term contracts help the employers to avoid obligations in the long run.
• In a gig economy, job providers save resources in terms of benefits like provident fund, paid leave and office space and other infrastructure facilities.
• For instance –the food-tech company Zomato executed its Initial Public Offering plan with a stellar debut in the market.
• Low concentration on Social responsibility since it is working through a digital platform.
• The employer can procure very efficient people for performing irregular or temporary nature of works.
• For example- An office requires sweeper every day, but it doesn’t require a computer repairer every day. It is because repairing is a specialized job and the computers need to repair whenever it is out of order which is not a frequent phenomenon, unlike sweeping activity.

6. Seasonal Nature of job

• Seasonal spikes in customer service helped in the rise of the gig economy.

7. Employment opportunities

• Higher demand for flexi-hiring options, especially for niche projects by MNCS to reduce operational expenses after the pandemic increased short-term job opportunities.
• Currently, it is estimated to have a coverage of around 15 million job in the economy, but it can go up to 24 million and ultimately 90 million employment opportunities in the long term.

8. No geographical limitation

• By using the digital platform, the worker need notbe available at a fixed location as the job can be done from anywhere. This helps employers to select the best talent available for a project without being bound by geography.

DISADVANTAGES

For Employers

1. Quality of the work

• It becomes difficult to ascertain the quality of employees and their skills in the gig economy.
• It is a major concern, especially for highly skilled jobs faced by employers.

For Employees

1. Unstable Income – Employees are paid on the basis of completion of tasks, thus they are in a position of uncertainty regarding wage payment.
2. No permanent relationship –The absence of personal bonding with employers since there is no permanent relationship between employer and employee.
3. No social security benefits –There are limited benefits for gig workers such as accident insurance and life insurance coverage available now.
4. High initial cost – Employees have to purchase needed tools and equipment for performing the job. Here, the employer will not provide machinery for employment.
5. Absence of labour rights – The employees cannot claim labour rights unlike in the unorganized sector.

For instance: Recently, Zomato announced a pilot project to deliver food in just 10 minutes where people alleged that it will put the lives of their delivery partners in danger, as they will rush to meet the target.

For government

1. Dynamic nature

• Difficult to regulate the gig economy due to its flexible and dynamic nature
• Therefore, the constituted labour laws become largely ineffective.

2. Low social responsibility

• Employers under the Gig platform have low responsibility to society.

Other concerns

1. Disrupts traditional employment- The wide acceptance of the gig economy destructs the old nature of jobs in the economy.

1. Regional disparity –The gig economy may not be accessible for people in many rural areas where internet connectivity and electricity are comparatively less unavailable with respect to urban areas.

3. Requirement of minimum skill – A minimum level of skill is required for performing the job under the gig platform.

For example, a person needs to know “driving” for performing under the “Ola” taxi services.

HOW THE GIG ECONOMY AFFECTS WOMEN?

MEASURES TAKEN BY THE GOVERNMENT

1. Code on Wages, 2019

• The code has provisions to ensure labour benefits for gig-economy workers. It provides for universal minimum wage and floor wage across organized and unorganized sectors, including gig workers.

2. Code on Social Security, 2020 –

• The code recognizes gig workers as a new occupational category. It defines a gig worker as a person who performs work or participates in work arrangements and earns from such activities, outside of the traditional employer-employee relationship.
• It provides that central or state government may notify specific schemes for gig workers to provide various benefits, such as life and disability cover. Such schemes may be financed through a combination of contributions from the employer, employee, and the appropriate government.

WAYFORWARD

1. Improve work environment – The better peer-to-peer relationship between workers and employers will improve the working environment.
2. Fix legislative loopholes – India could frame comprehensive legislation covering basic social security benefits including Maternity benefits, sick leave, etc.
3. Empower the gig workers – Better awareness to be provided to the gig workers about their rights, allowances, and benefits to save them from any exploitation.
4. Grievance redressal mechanism – Timely and effective grievance redressal mechanism is highly needed for the platform economy.

CONCLUSION

Therefore, the gig economy is an emerging platform that has the capability to create a revolution in the economy. It has the potential to absorb more workforce and it acts as a driving force for achieving a 5 trillion-dollar economy in the future.

PRACTICE QUESTION

Gig economy is revolutionising the whole economy in terms of scale, employment, explain. Critically examine the challenges that the sector is facing. (250 Words, 15 Marks)