What is Gig Economy?

We’ve all probably heard the term “gig market” or “gig economy”, but maybe you aren't aware of what it exactly is. Let’s define it to make the rest of the article simple. In essence, a gig economy or a gig market is a free-market system that exists with temporary positions. Many organizations hire independent ‘gig workers’ for these short-term positions. Traditionally, the term “gig” was used by musicians to define a short performance of theirs, after which they would move on to other performances or gigs.

In this era, gig workers are a dime a dozen, with jobs including independent contractors, freelancers, project-based workers, and temporary or part-time hires. These gigs are enabled by digital technology such as apps, which serve as a bridge between them and the customers. A report by Boston Consulting Group states that India’s gig workforce comprises around 15 million workers employed across multiple industries.

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Segmentation of Gig Workers?

Under the gig economy, there are four main segments of workers. The image above perfectly encapsulates the segments. However, let’s just elaborate on the core aspects of them:

• Free Agents – These are those independent workers whose primary source of income is from gigs, and they actively choose this type of work style rather than looking for more traditional jobs. Eg: A freelancing UI/UX Designer
• Reluctants – These are those gig workers who take up independent work and derive their primary income from it, but they would rather have a more settled traditional job. Eg: A grocery delivery person, who would rather prefer to have a more permanent job in the white-collar world.
• Casual Earners – These are the gig workers who gain supplement income by taking on additional independent work during their free time and they do so of their own free will. A few of them have traditional jobs, while the rest are students, retirees, or caregivers. Eg: A professor who also does paid webinars in his free time
• Financially Strapped – They are the gig workers who supplement their income by taking on additional gigs. They do so as they have no choice but to take up side jobs to make ends meet. Eg:? A carpenter who takes up carpentry work in the mornings, and cab driving in the evenings

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Promotion of Gig Employment in India

In recent years, gig employment has rapidly increased and has revolutionized the Indian economy. It has created a large number of jobs for the populace, thus adding to the country’s GDP in the long run. In fact, it is getting so popular that few people are actively taking up gig jobs over traditional work, thanks to the convenience and flexibility they offer.

It is beneficial for the companies that are posting requirements of gig workers too. They save money on commercial office space and other equipment expenses, while their workers enjoy flexible work timings, and opportunities to do something that they like in their free time or even earn more by taking up multiple gigs.

The companies providing gig jobs are now expanding and creating new opportunities for a large number of people who are looking for work. The pioneers of job creation in the gig market are Amazon, Flipkart, Zomato, Swiggy, Bigbasket, Blinkit, Dunzo, Ola, Uber, Porter, and Urban Company.

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Problems Faced by Gig Workers

While we are fortunate enough to order groceries, food, electronics, and other items from the comfort of our homes through a few clicks in an app, the same cannot be said of those who deliver these items to us around the clock. 2020 and 2021 were quite the challenging years for gig workers, due to the first few waves of the covid-19 pandemic and other economic issues that directly or indirectly arose due to the pandemic. As a result, most gig workers faced acute financial issues due to a reduction in their earning capacities.

Before the pandemic, most gig workers earned a remuneration of at least Rs. 25000 a month, whereas after the pandemic hit, nine out of ten workers ended up earning less than Rs. 15000 a month. The sensitivity of the work contracts in the gig economy was made starkly apparent during the pandemic. This caused severe economic turmoil in the community since almost all businesses were shut down during the lockdown.

Most gig jobs payout on a project or task basis. So, the problem arises that a gig worker might not have entire control over how many tasks they can complete in a stipulated time. If the gig worker does not log in for service, maybe due to family, health, or transport issues, they will not be paid a single rupee for that day.

This is due to the problem that gig workers aren’t considered employees in legal terms. Each state has its definition of gig workers, and this also mainly depends upon the degree of control over the worker that the company has. Even the costs of any legal proceedings are very high, which makes gig workers more vulnerable to settlement, even if they have a good legal claim.

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NITI Aayog Report: Helping the Gig Workers

The rapidly burgeoning gig workforce is ushering in a new economic revolution globally. With its demographic dividend of 500 million labor force, the world’s youngest population, widespread adoption of technology, and rapid urbanization, India is now the new frontier of the gig economy revolution. NITI Aayog, the Indian government’s think tank, has made recommendations on various aspects such as work benefits, platform regulation, and taxation of the booming gig economy of India. This first-of-its-kind report presents their comprehensive perspectives.

• Uniformly Implement No Commercial License rule: While commercial license requirements have been removed by the central government, the state governments haven’t implemented the rule uniformly, as stated by the report. It further elaborates that the removal of these requirements makes the initiation of women and disabled persons into the gig market easier and cuts down the long one-year waiting time to secure a license. Thus, it recommends state governments uniformly enforce the rule.
• Allow Ferrying of Passengers in Various Classes of Vehicles: The report also recommends the permittance of the ferrying of passengers in two-wheeler, three-wheeler, four-wheeler, and 10–12-seater vehicles to ensure seamless access for any gig worker who is using any of the above vehicles for gig jobs.
• Regulate Shared Mobility at State & Central Government Levels: The report recommends that state governments must create rules and regulations to allow the legality and operations of shared mobility, while the central government must set guidelines to promote this. Shared mobility services include bike-sharing, carpooling, etc.
• Fair Taxation of Gig Work: The report advocates for fairer taxation for gig workers. It highlights how the current IT return filing process for gig workers is not streamlined, and thus the requirement of recognizing them as a separate category of workers is required in existing IT return forms.
• Credit Lines for Gig Workers:? The report recommends the extension of better credit facilities to gig workers, by assessing their creditworthiness and thereby extending credit. Using the example of Ola and Avail Finance’s tie-up, the report shows how lower-cost options for healthcare, institutional credit, retirement savings, and insurance are offered to gig workers, who would otherwise not have access to such facilities.
• Incentivize Platformization: Lastly, the report also recommends that apart from only easing regulations and offering incentives, both central and state governments must make efforts to give impetus for platformization through a program called ‘Platform India’, similar to the government’s earlier ‘Start-Up India’ Initiative which promoted the setting up of Startups in India.

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Growth of Gig Economy During Pandemic

The gig economy has rapidly grown over the last few years and has exponentially expanded since the beginning of the Covid pandemic, thanks to the increased reliance on gig workers to deliver essentials and necessities directly to the homes of consumers. This pandemic has also disrupted the traditional working world, where many blue-collared and even white-collared employees pursued gig work for additional income or even primary income during these problematic times.

Being a predominantly informal economy, India witnessed growth in unemployment rates, with poverty and inequality increasing every single day. However, both the central and state governments were quick to expand their welfare and ration distribution programs. As we now enter the third year of the pandemic, both entrepreneurism and gig work is on the rise.

Thanks to affordable internet and decent connectivity, majority of the affected people were able to find gig work to at least get back on track, cushioning the terrifying economical blow that the pandemic left on them and their families. People’s orientation changed regarding work-from-home jobs and gig works, as the pandemic brought upon us a reminder of how fragile life is.

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Future of Gig Economy In India

As reported by NITI Aayog, the Indian gig workforce is expected to grow to a whopping 23.5 million workers by the year 2030, which is almost a 200% jump from the current figures of 7.7 million. It is also estimated that the gig workforce will comprise 4.1% of the total Indian workforce by 2030 from the existing 1.5% now. Jobs in the gig economy are also expanding now, with about 47% of jobs being medium-skilled, about 22% high-skilled, and about 31% low-skilled.

The future of work is changing, as the growing gig economy is bringing around a paradigm shift in the existing workplace, workforce, and work models. It has also changed due to the onset of the pandemic, causing several businesses to digitalize and shift to a remote working model. As the talent pool of the nation has been altered and hiring demands shifting constantly, the HR world has also turned to the gig model. Thanks to the flexible workforces and mass adoption of remote working models across India, the most coveted candidates are now being found in the untapped talent pool of the gig economy.

India is predicted to be a ‘gig’-antic hub with the rise of the gig business transformation around the world. With the changing demographics, fluid workforces, democratization of technology, and employee expectations, gig work will become more ubiquitous in businesses. We are already on track with many organizations adapting to these changes and implementing the gig platform for their jobs, and soon this will become the new normal for the future of the Indian workforce.

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Article written by:?Sean Pinto?@ Incubate Hub

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IncubateHub?is Asia's largest open innovation & corporate venturing platform to drive Digital Transformation & Sustainable solutions working with Startups, Students & Professionals. We also help Startups engage with our 52+ clients including Mondelez, Faurecia, P&G, Accenture, Tata, DCB Bank, Fidelity, ITC Infotech, IBM, NASSCOM, Analog Device, Nasscom Foundation & Quest Global.