Article (November-2021)


Employer-Employee bond is absent in gig economy

Manoj K Sinha

Designation : -   Founder

Organization : -  Manoj Sinha at HR EDGE


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What reasons do you see behind the phenomenal increase of gig economy in India? Is it a temporary boom or will last long? Is it going to replace traditionally hired workforce?

MK Gig work is not a new concept in India. With its large informal economy and 'casual workers' segment, India has always had the equivalent of gig work across urban and rural areas - from temporary farm workers to daily-wage construction labourers to household help. The difference now lies in the technology enablement, providing a win-win situation to both workers and businesses, by creating massive opportunities. During the lockdown, we saw a steady increase in the number of gig workers in India. People who had lost jobs were finding gig opportunities closer home. The gig economy has the potential to help people in the unorganized sector learn new skills and help them build a better quality of life for themselves and their families - (as per study done by Michael& Susan Dell Foundation in association with BCG).

India's gig economy is still at a nascent stage in its new avatar, but the young and not-so-skilled flexi workforce will gradually shift to better-paid and more productive work, the BCG 'report indicates, "We estimate that the gig economy has the potential to service up to 90 million jobs in India's non-farm economy alone, transact more than $250 billion in volume of work, and contribute an incremental 1.25% approximately to India's GDP over the long term." It is not at all a temporary boom, but going to be a way of employing people for meaningful roles, with an added space and flexibility to employee as well as employer. Both type of employment, Traditional & GIG will co-exist and thrive in their own space/speed.

What motivates the workers in embracing gig economy? Is it just for the attraction of flexibility or as a second choice because of compulsion arising out of worsening unemployment situation?

MK 'Gig economy' is among the most widely used terms in the business world today. While gig work (which broadly comprises, work delivered on-demand with little to no formal contracting) has been around for a long time, it has gained momentum recently with the success of platform-based companies like Uber, Ola (in ridesharing), Swiggy, Zomato (in food delivery), and Urban Company (in personal services, home renovations and repair). Today, thanks to the emergence of technology-enabled gig work platforms, over 200 million people are considered part of the gig workforce globally. Research studies (BCG, Mckinsey) have also indicated that participation in the gig economy is higher in developing countries (between five and 12 percent) versus developed economies (between one and four percent); and most of these jobs are in lower-income job-types such as deliveries, ridesharing, micro tasks, care and wellness. While there are some clear benefits to this type of on-demand work - namely, convenience, flexibility, higher unit pay, and greater efficiencies - it has also raised questions around minimum wage requirements, worker protection, and consumer rights. In response, governments across the world have initiated legislative and regulatory efforts - ranging from classifying gig workers as 'traditional employees' to defining requirements, social protection and safeguards to ensure there is parity with other modes of work. These efforts, while a positive step in the right direction, take a micro view of the challenges and do not go far enough in unlocking the potential of the gig economy in India.

The popular concept of work as a traditional 9-to-5 job with a single employer bears little resemblance to the way a substantial share of the workforce makes a living. Millions of the self-employed, freelancers, and temporary workers-as well as individuals renting out rooms on OYO, driving for OLA/UBER, or selling goods on Flipkart/Amazon-are part of a significant trend that we call "independent work."

Independent work has a potential for significant growth in the years ahead, based on the stated aspirations of individuals and growing demand for services from consumers and organisations alike. This shift could have real economic benefits by raising labour force participation, stimulating consumption, providing opportunities for the unemployed and boosting productivity. Necessities have always been mother of invention and the same is being seen with such a phenomenal growth of Gig Economy. Flexibilities are there with workers, and also business is having advantages as impact of cost in terms hiring a permanent employee and getting the same job done by Gig 'employee is much less with less of legal hassles.

What is the long-term potential of the gig economy could comprise and contribute to turn around of businesses and make India Inc. globally competitive?

MK Personal references and offline networks have operated in India to source and meet the need for on-demand services since ages. What has changed in the past few years is the use of technology to match and deliver on-demand services at scale. Being the fifth largest country for flexi-staffing after the US, China, Brazil and Japan, India has a huge potential for the growth of gig culture. States such as Haryana, Gujarat, Telangana are already leveraging flexi-workers. India's working age population is 66.8% of the total 1.3 billion, which is 890 million! With a labour force participation rate of 51.8%, we have 461 million workers in India. Be it rideshare, food delivery or on-demand services delivered by plumbers, carpenters, beauticians or housekeeping staff, such jobs are on the ascent leading. Recent study and as published in ET, shows an estimated 56% of new employment generated in India, is from the gig labour force, both blue and white collar. The gig economy benefits employers, employees, as well as the economy at large with gains extending beyond the traditional notions of convenience and on-demand availability and flexibility. As such, we are using the definition of gig work as: Unlocking the Potential of the Gig Economy in India - the underlying economic fundamentals that platform-enabled gig work addresses at scale, and the collateral benefits it can expand into a virtuous expansion cycle. These include :

1. Enhancing the efficiency of large-scale discovery and fulfilment for labour and services.

2. Aligning the economic incentives across employers and workers, thereby increasing earnings for workers while reducing 'fixed' costs for employers.

3. Catalysing economic recovery by providing labour on-demand even if employers remain tentative about hiring workers.

4. Full-time Expanding labour participation especially for women and students who may only be available for part-time work to supplement household income.

5. Accruing collateral benefits associated with 'formalizing' labour markets including financial inclusion and social protection.

6. Driving overall improvement in productivity by reducing idle and unproductive time.

When cost, quality, process, flexibility is so intrinsically inbuilt into the Gig E, definitely will have the positive & super conducive impact on the final outcome of product or services, undoubtedly will be positioning India as globally competitive.

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