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What is Gig Economy?

Context:

The Union Labour Ministry is organizing a program aimed at sharing information and good experiences on policies and global practices relating to gig and platform workers and their social security.

Relevance:

GS III- Indian Economy

Dimensions of the Article:

  1. What is Gig Economy?
  2. Advantages of Gig economy.
  3. Challenges related to Gig economy
  4. Measures to address the issues related to Gig economy
  5. Way Forward

What is Gig Economy?

  • Gig economy involves a temporary contractual job or short-term contract or freelance work that a person may take, on a project-to-project basis, for which the payment is made once the task is completed.
  • The gig economy gets its name from each piece of work being akin to an individual ‘gig’. A gig economy encompasses all platforms that hire independent contractors, consultants and workers in different sectors, such as
    • information technology,
    • content creation,
    • social media marketing and communications,
    • food and beverages,
    • creative fields such as art and design.
  • A gig economy, hence, means an existence of temporary or part-time workforce instead of a conventional workforce.

Advantages of gig economy:

  • Cater to immediate demand: Gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and demand for flexible lifestyles.
  • Cheaper and more efficient: Most times, employers cannot afford to hire full-time employees. In a gig economy, large numbers of people work part-time or in temporary positions. The result is cheaper, more efficient services, such as Uber or Airbnb, for those willing to use them.
  • Wider choice to employers: Technology and connectivity through the internet don’t require the freelancer to come into the office for work. Hence, employers have a wider range of applicants to choose from as they don’t have to hire someone based on their proximity.
  • Offers specific expertise: Professional services firms are hiring gig workers to add deep domain expertise to client-impact teams. Majority of professional services contact workers have years of domain-specific knowledge, like consultants.
  • The wider choice to employees: People often find they need to move around or take multiple positions to afford the lifestyle they want. These days, people also tend to change careers many times throughout their lives; the gig economy is a reflection of this rising trend.
  • Youth economic productivity: India has a high share of young population which is only expected to grow. According to economists at IMF, youth inactivity in India is at 30%, the highest amongst developing countries.
    • Gig economy offers the perfect platform for engagement of youth in productive employment activities.
    • It is also estimated that the gig economy offers a relatively high gender-parity in the workforce, as compared to traditional employment.

Challenges related to Gig Economy:

  • Erosion of traditional economic relationships: Gig economy can have downsides due to the erosion of traditional economic relationships between workers, businesses, and clients. This can eliminate the benefits that flow from building long-term trust, customary practice, and familiarity with clients and employers.
    • It could also discourage investment in relationship-specific assets that would otherwise be profitable to pursue since no party has an incentive to invest significantly in a relationship that only lasts until the next gig comes along.
  • Crowding out traditional workers: Workers who prefer a traditional career path, stability and security that come with it are being crowded out in some industries.
    • The gig economy makes it harder for full-time employees to develop fully in their careers since temporary employees are often cheaper to hire and offer more flexibility in their availability.
  • Disrupted work-life balance for gig workers: Flexibility in a gig economy often means that workers have to make themselves available at any time the gig comes up, regardless of their other needs, and they must always be on the hunt for the next gig.
    • Hence, for some workers, the flexibility of working gigs can disrupt the work-life balance, sleep patterns, and activities of daily life.
  • No employment-related rights: Unlike traditional employment, workers in the gig economy are usually ineligible for any social benefits such as insurance, medical benefits, employees’ provident fund, bonus or gratuity.

Measures to address the issues related to gig workers:

  • Evaluating scale of Gig economy: As of now there exists no authoritative estimate on the total number of gig workers in India, though the centralised nature of the platforms, and the larger platform labour market should make the collating of this data relatively straightforward for the Labour Ministry.
  • Making regulations related to Gig economy: A more viable strategy then would involve conditional government partnerships with platforms under some of its flagship schemes. Here, the successful pilot of Swiggy’s Street Food Vendors programme under the PM SVANidhi, or PM Street Vendor’s Atma Nirbhar Nidhi scheme, may prove to be an illustrative example.

-Source: The Hindu


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October 2022
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