On-demand employment or the gig economy includes all the platforms that provide independent workers contractual or freelance work. Presently, there are 15 million gig workers across India as reported by ASSOCHAM. A joint report by the Boston Consulting Group and Michael & Susan Dell Foundation found that the Indian gig economy has the potential to create 90 million jobs in the non-farm sectors alone and can add 1.25% to the country’s GDP. Then, how is the gig economy moulding the future of work ? As this new form of employment emerges with full force in the twenty-first century, will it evolve as a threat to job security and stability or a means to new possibilities?
Digitisation of the workspace
The pandemic has fastened the process of digitisation. It has made organisations realise that people can deliver from anywhere. Platforms that leverage this digitisation scale up faster and significantly cut down cost as compared to traditional brick and mortar companies.
The BCG-Dell Foundation reports that nearly 24 million jobs could migrate to technology-based gig platforms by 2023-24. It can grow to twice the pre-pandemic levels. These digital platforms have managed to blur physical boundaries and have made the terms “employer” and “employee” more expansive. With Amazon, Flipkart, Uber, Ola, Urban Company etc. thriving, India has become one of the largest hubs for flexi-staffing.
Gig work and the changing aspirations of workers
Not only is the gig economy fitting in light of this virus called corona but also, it is able to cater to the changing aspirations of the country’s youth. Young people don’t want to be stuck in 9-5 jobs with minimal pay and are attracted to the gig sector for the flexibility, independence and plethora of opportunities that it has to offer. Moreover, freelance work enables them to supplement their primary source of income. They can work on their terms, fit in additional projects keeping in mind their schedule.
The driver of economic growth
The gig economy is often backed by terms like growth, innovation and efficiency. Upskilling is critical to create a career ladder for gig workers who come with low baseline skills. It helps them upgrade to supervisory roles, office & clerical jobs and other outside opportunities. Therefore, the booming gig economy is in line with the New Education Policy (NEP) and the increasing emphasis on vocational training and skilling. This will formalise the large informal sector, increase process driven, high quality and skilled work. There is thus also the dire need to finance such skilling programmes. However, training programmes are not yet a part of gig engagements and need to be incorporated in the model to help workers have a better career trajectory.
Moreover, having worked in a number of different environments, gig workers tend to be more innovative and receptive to new technology.
Benefits of the gig economy for businesses
Businesses can hire workers for a shorter period of time, well suited for specific projects. This format of employing workers on a contingent and contractual basis allows businesses that are experiencing short run fluctuations in the demand for their goods and services to adjust the hiring of workers accordingly. This allows growing businesses to scale faster.
Most of these workers operate remotely and don’t need office space or other amenities which significantly lowers the costs. Remote working also allows people from diverse geographic locations to be a part of the business or the project. Thus, freelance work enables businesses to hire a diverse talent pool. In the long run, this will also lead to greater penetration of opportunities to tier 3/4 towns thus giving them a better platform and quality of life.
Everything said and done, the Indian gig economy is no utopia. It continues to grow, evolve and there are a set of challenges and concerns that need to be addressed. The gendered nature of blue collar gig work has become a pertinent cause of concern. The urban female labour force participation rate plummeted over the pandemic. Due to the lack of access to digital technology, women continue to be underrepresented in the gig economy. With stronger digital infrastructure, the situation can be turned around and the gig economy can be an attractive work format for India’s women population. As it is largely women who bear the burden of household work, flexible work hours and independence are important factors that can incentivise and improve women’s participation in the economy. Moreover, there is the need for gig work to go beyond male dominated fields and permeate sectors that are aligned to the flexibility and safety needs of women.
Another challenge that is faced by a large chunk of blue collar gig workers is financial insecurity. These on-demand jobs confer very few employer provided benefits or social security which makes it harder for gig workers to be resilient to income shocks. A report published by Flourish finds that as many as 20% of the gig workers would not be able to cover their household expenses for even a week if they were to lose their main source of income. Blue collar gig workers are even more vulnerable as gig work is often their primary source of income. They often run out of liquidity before their payout and need short term credit to manage their daily expenses. Blue collar gig workers usually don’t have a lot of savings and need immediate financial help in case of emergencies for which they turn to their employers or local lenders for loans. These loans are informal, tend to be given at extremely high interest rates and can be exploitative in nature. Due to the contractual nature of their jobs, they are not covered by insurance which makes them even more vulnerable. Moreover, since they start from a low skill baseline they need money to also finance skill development. They need skills to boost their incomes, and credit to acquire these skills. Therefore, easy access to credit is their way out of this vicious cycle.
Thus, the need of the hour is for financial institutions and fintechs to serve the gig workers. By bringing the informal sector on e-platforms, the gig economy gives this huge workforce a digital footprint. If leveraged, this can provide the workers liquidity and microcredit at affordable rates, health insurance, life insurance and other social security benefits as well as overall recognition which goes a long way in enhancing quality of life today. Providing easily accessible digital finance could be the key to tackling financial insecurity. It will formalise informal borrowing, improve worker retention and efficiency. Digitisation can also be leveraged to provide long term access to credit and security to the workers. Moreover, since these digital platforms are devoid of biases, digital finance will also financially empower women and consequently their participation in the gig economy.
KarmaLife aims to build a model that can provide liquidity on tap based on the employees “digital karma”. It combines tech and trust to specifically cater to the needs of the blue collar gig workers. It provides sustainable liquidity based on their income patterns, performance and has a self adjusting mechanism. It empowers workers by helping them to ramp up their credit scores and not depend on payouts for their day to day expenses. It aims to provide integrated finance, including credit, insurance, savings and pensions, to help them meet their short and long term life goals.
However, the mere existence of financial solution providers isn’t enough. The onus also lies on businesses to provide their workforce access to new tailored financial solutions. Since many are new to the labour force as well as credit, it is important for organisations to look after their financial needs. Apart from addressing their personal financial insecurities this will also lead to more financially responsible and aware citizenry.
Thus, the impact of the booming gig sector on the economy would depend heavily on whether we are able to collaborate and forge a path that can facilitate protection of workers while simultaneously giving room to growth and innovation.