Explained: What Is Gig Economy And How Much Does It Contribute To India¡¯s GDP

The Central government has decided to train state and centre officials on technological change, emerging forms of employment, rights, labour protection etc. of the gig workers. The session will provide information and good experiences on policies and global practices relating to gig and platform workers and social security.

The gig workers are not guaranteed social security rights and often cause distress among this emerging form of employees.

What is the gig economy?

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A gig economy is a free market system in which organisations hire or contract workers for a short span of time. Simply put, the positions are temporary to meet the company¡¯s requirements by having short-term engagements.

Startups like Ola, Uber, Zomato, and Swiggy have established themselves as the main source of the gig economy in India.

Who is a gig worker?

According to the Code on Social Security, 2020 (India), ¡°A gig worker is a person who performs work or participates in work arrangements and earns from such activities, outside of the traditional employer-employee relationship.¡±

They are independent contractors, online platform workers, contract firm workers, on-call workers and temporary workers.

India and the gig economy

According to the India Staffing Federation report (2019), India is the 5th-largest in Flexi-staffing in the world, after the US, China, Brazil and Japan.

According to the Boston Consulting Group¡¯s report, in India, over 15 million workers are employed as gig workers across the industries. The number is projected to rise by over 24 million in the near-medium term and to 90 million in the long term.

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An ASSOCHAM report reveals, that the gig sector has the potential to grow to the US $455 billion at a Compound Annual Growth Rate (CAGR) of 17% by 2024. The Indian gig economy has the potential to add 1.25% to the Indian Gross Domestic Product (GDP) and provide over 90 million jobs in the non-farm sectors of India.

According to the Economic Survey 2020-21, ¡°the changing nature work with the change in technology, the evolution of new economic activities, innovation in organisation structures and evolving business models have grown the potential of the gig economy.¡±

The survey also stated that digital platforms played a significant role in discovering job seekers and job providers in the absence of middlemen.

What are the benefits of the gig economy?

The gig economy has various driving factors including work flexibility and the choice to work remotely from anywhere in the world. Further, the gig workers work on the fixed-fee (while doing a contract) model, time & effort model etc. and start-up culture has also promoted the idea of freelancing and contractual work.

The labour contract is usually shorter and more specific to the task or job assigned, and the nature of payment against the work is more of a piece rate, negotiable and flexible time with a choice on when and where to work.

What are the cons of the gig economy?

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The problem with this kind of employment is the lack of social security, working conditions and working rights etc. It is largely unregulated which results in less job security and nominal benefits. In another word, it is an extension of India¡¯s informal or unorganised labour, which is yet to be reformed by the government.

A gig-economy employee will have to upgrade his skills on his own at his own cost While companies routinely invest in training employees.

What are the laws for the gig workers in India?

According to the Code on Wages, 2019, a universal minimum wage and floor wage should be provided to all organised and unorganised sectors, including gig workers.

Whereas under the Code on Social Security, 2020, the gig workers are provided with recognition as a new occupational category. But, a few problems are associated with the code as even though the gig workers are now eligible for benefits like maternity benefits, life and disability cover, old age protection, provident fund, employment injury benefits, etc. However, eligibility does not ensure the guarantee of mentioned benefits to workers.

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