Stock Analysis

90 million jobs to be generated under Gig Economy

A gig economy can be defined as a market system characterized by non-traditional workplace arrangements where workers work independently on a short-term or temporary basis for one or multiple organizations. It consists of all types of contingent work contracts which includes freelancers, consultants, temporary contract workers and independent contractors. This is not a new trend or phenomenon though. People have been working under such arrangements for quite some time now. It is gaining more and more prominence as many workers aim to transition to flexible hours working on short-term contracts or those in a traditional 9 – 5 job aim to work extra hours for generating additional income. 

In India, the gig economy is still at a nascent stage compared to other nations. The rapid urbanization and digitalization in the country have led to an increase in several online platforms that provide a wide range of jobs that fall under the definition of a gig economy. Earlier, most of the workers were concentrated in blue-collar jobs in the delivery and taxi aggregator sectors. The lockdown enforced as a result of the pandemic has led to an increase in several greys and white-collar workers in this economy. Many companies have restructured their entire working models because of the challenges that have emerged due to the pandemic. Therefore, to reduce costs, they have started working with gig workers by entering into temporary task-specific contracts. 

A report by the Boston Consulting Group developed in partnership with Michael & Susan Dell Foundation says that India’s gig economy has the potential to generate 90 million jobs in a non-farming economy which amounts to $250 billion in terms of work volume which can contribute to the GDP in the long run by 1.2%. The report further stated that almost 70 million of these jobs would be possibly concentrated in the construction, retail, manufacturing, transportation & logistics sectors. Shortly, 24 million jobs in skilled and semi-skilled sectors can also be generated. Currently, 15 million people are engaged in gig work in sectors like IT, HR and designing. Many companies are also hiring freelancing talent from India for projects related to finance, business consulting and data analytics indicating an increase in several white-collar professionals in the gig economy. 

The benefits of a developed gig economy are many. However, in India, to take advantage of these benefits to a maximum level, the skillset of the country’s workforce needs to be updated. The gap between theoretical knowledge and practical experience is still existing on a large scale. Narrowing that gap will lead to more job opportunities for workers in the gig economy. For companies, a gig economy gives them access to a wider pool of talented people from all over the world for work from home jobs at least. In this process, companies also end up saving quite a lot on upskilling and training costs. For white-collar professionals, a gig economy provides them with the flexibility and freedom in working as per their wish. The era of digitalization has made internet access possible on a wide scale for the rural population of the country. This can tremendously help them in getting better job opportunities in urban settings and aim for a better lifestyle. 

gig economy: How gig economy is becoming a key part of India Inc's strategy  - The Economic Times

Source: The Economic Times

Though the potential of the gig economy is enormous, various challenges need to be addressed. In a traditional workplace, various benefits are provided to employees. It isn’t the case in this sector. Here, the payments are assured on completion of projects and sometimes that might be delayed even if it is completed; there are no benefits involved too.  ‘Gig worker’ has been defined under the Social Security Code, 2020 as “a person who performs work or participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship.” The code also states that though these workers are not employees may be provided with social security benefits as stated by the Central government. Recently, the labour ministry had set a target to bring 40 to 50 lakh platform and gig workers under the Employees’ State Insurance Scheme (ESIC), once the Social Security Code is implemented. Such reforms are needed to be brought in by the government for all types of professionals and workers who are a part of this sector. The scope of the gig economy is vast and the right measures taken by the government will help to unlock the benefits and contribute to the economy in the coming years.

Written by : Silmi Maknojia