Relevance: GS-3: Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.

Key Phrases: Gig Economy, Gig and Platform Economy, World Economic Forum, Social security, Grievance Redressal Mechanism, Demand-Supply Mismatch, NitiAayog’s recommendations, RAISE Framework for Operationalising the Code on Social Security.

Why in News?

• NITI Aayog launched a report titled ‘India's Booming Gig and Platform Economy’ and has inter-alia recommended extending social security measures to gig workers and their families, including paid sick leaves, insurance and pension plans.

What is Gig Economy?

• As per the World Economic Forum, gig economy is defined by its focus on workforce participation and income generation via “gigs”, single projects or tasks for which a worker is hired.
• Gig economy” refers to a general workforce environment in which short-term engagements, temporary contracts, and independent contracting is commonplace. It’s also referred to as the “freelancer economy,” “agile workforce,” “sharing economy,” or “independent workforce.”
• Gig workers, those engaged in livelihoods outside the traditional employer-employee arrangement, can be broadly classified into platform and non-platform-based workers.
  • Platform workers are those whose work is based on online software apps or digital platforms such as food aggregator platforms Zomato, Swiggy, Ola, and others.
  • Non-platform gig workers are generally casual wage and own-account workers in conventional sectors, engaged part-time or full-time.

Difference Between Part-time Workers and Gig Workers

• Gig workers can be branded as an upgrade to a pre-existing part-time economy. The key difference between part-time workers and platform workers would be that part-time workers are formally tied to organisations and form an integral part of payroll, unlike platform workers.
• Self-employed professionals have a primary income that comes from independent, client based work.
• Members of the gig economy work side gigs such as rideshare driving or freelance writing in addition to maintaining a traditional full-time job.

Gig Economy in India:

• It is estimated that in 2020-21, 77 lakh (7.7 million) workers were engaged in the gig economy, accounting for 1.5% of the total workforce in India.
• The gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029-30, making up for 4.1% of the total livelihood in India.
• At present about 47% of the gig work is in medium skilled jobs, about 22% in high skilled, and about 31% in low skilled jobs.
• Trend shows the concentration of workers in medium skills is gradually declining and that of the low skilled and high skilled is increasing. It may be expected that while the domination of medium skills would continue till 2030, gig work with other skills will emerge.

Advantages of the Gig economy:

For worker:

• More flexible nature of work:
  • Workers have more alternatives to optimise time and income.
  • They can also complete tasks on the go and can better balance work with family i.e. better work-life balance
• Freedom to choose work:
  • Workers can choose the type of project they will take on.
  • Also, project options are more varied because they come from companies around the world.
• More opportunities to earn a higher income:
  • Workers can take on several jobs at once.
  • They may focus on one big project and take on several small jobs to add their income.

For Business:

• Cost-Effectiveness:
  • Minimising costs and expenses are widely considered one of the major benefits of operating in the gig economy. This is because businesses are able to hire off-site workers which significantly reduces the need to maintain expensive workspaces and large offices.
• More choices:
  • They can select some of the best individuals in their field, according to the company budget. Options are more varied because the supply comes from local workers and from all over the world.

Challenges Faced in the Gig Economy:

• Lack of benefits:
  • Gig workers are typically hired by companies on a contractual basis and are not considered employees.
  • They do not receive some of the benefits that an on-roll staff does.
• No social security: There are no labour welfare emoluments like pension, gratuity, etc. for the workers.
• Rigidity: More rigidity of working hours and pay, whereas the gig economy has more options of work assignments and payment offerings to choose from, more flexibility of working hours and greater freedom of switching from task to task.
• No employment stability and heavy workload
• There is no proper Grievance Redressal Mechanism available to gig workers to solve their genuine problems.
• Demand-Supply Mismatch: There are already many more potential online independent workers than jobs, and this demand-supply mismatch will only get worse over time, depressing wages.

What are Niti Aayog’s recommendations for the Gig Economy?

• Fiscal incentives such as tax-breaks or startup grants may be provided for businesses that provide livelihood opportunities where women constitute a substantial portion (say, 30 per cent) of their workers.
• Businesses should focus on recruiting women workers because a higher share of women managers and supervisors in the organisation ensure that communication to workers does not perpetuate gender stereotypes.
• Firms adopt policies that offer old age or retirement plans and benefits, and other insurance covers for contingencies such as injury arising from work that may lead to loss of employment and income.
• Such plans and policies may be uniquely designed by a firm, in partnership with insurance companies, or could be designed and offered in collaboration with the government, as envisaged under the Code on Social Security, 2020.
• To harness the potential of the gig-platform sector, accelerating access to finance through products specifically designed for platform workers, linking self-employed individuals engaged in the business of selling regional and rural cuisine, street food, among others, with platforms to enable them to sell their produce to wider markets in towns and cities.
• It also recommended undertaking a separate enumeration exercise to estimate the size of the gig and platform workforce and collecting information during official enumerations ( Periodic Labour Force Survey) to identify gig workers.
• The report has also suggested creation of a corpus fund to support workers whenever required.

Way forward:

• The gig economy has been on the rise and is expected to beat the pre-pandemic estimates due the expected influx of gig workers transitioning from full-time employment.
• While the government has taken the initial steps to ensure social security of gig workers, the ‘Code on Social Security’ needs to be fine-tuned. For example, the option to deduct 5% from the amount payable to gig workers should be voluntary (based upon income brackets). As most gig workers, especially delivery executives and drivers, are already facing declining income levels due to COVID-19, such deductions would not be amenable.
• Further, all platform workers should be offered mandatory coverage under the Bharat Pradhan Mantri Jan Arogya Yojana, Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana. This can be facilitated through the employer companies and will ensure employee protection; thus, guaranteeing a sustainable gig economy..

Source: Live-Mint

Mains Question:

Q. Discuss the challenges of the Gig Economy in India and the recent recommendations of Niti Aayog to deal with them.