Gig is a slang for a live musical performance, a paid engagement of a musician or orchestra, though its adaptation to economy is a little contrived. Such music performances or gigs are even staged on a street or town hall, at a bar, a music venue or a stadium. They can be formal or informal, ticketed or free.
In a broader sense, it means paid work and employment. A large part of world economy is now gig. Similar to music concerts or musicians who are paid for a performance, gig economy involves payment to individuals on completion of certain work via digital platforms. OECD reports that generating additional income and having work flexibility are the most common motives that work for gig economy platforms.
If you’ve ever called up a freelance taxi driver, or booked a holiday rental, or ordered food or bought a homemade craft through apps, then you’ve been a part of the gig economy. ‘Mastercard Gig Economy Industry-Outlook and Needs Assessment’ reports that Asset sharing services like home sharing, car sharing, boat sharing, parking space sharing, P2P equipment sharing, Transportation based services like ride sharing, carpooling, restaurant delivery, goods delivery, Professional services like business work, micro work, design, tech/coding, writing, translation and administrative or hand made goods, household and miscellaneous services like home services, babysitting, tutoring, handmade crafts and pet services are all important cogs in gig economy.
Ride-hailing apps like Uber or Ola, food delivery apps like Zomato, Swiggy or Domino, or holiday rental apps like 99 Acres, Magicbricks, or Nobroker are all digital platforms. They connect freelancers with customers to provide short-term services or asset-sharing. Gig is a fast-growing segment, that brings in productivity and large-scale employment. It however is a part of the unorganised sector that is as large as 90% in the country. Will this contribute to more shadow economy? The informal sector, mostly labour intensive, have no concept of minimum wage and offer no security whatsoever. Many of them like the construction workers, domestic workers, sex workers, the homeless, street vendors, house hold and miscellaneous service providers are all gig workers.
Is it necessary in future, for people to work nine-to-five for a single employer or being on a payroll of a company? Gig economy offers other possibilities for them to balance various income streams and work independently, job-by-job.
The Boston Consulting Group (BCG) through a research survey based on extensive primary interviews, field research and expert inputs, reports that the gig economy has the potential to serve up to 90 million jobs, roughly 30% of India’s non-farm workforce, add up to 1.25% to India’s GDP in the long-run, and create millions of new jobs across all sectors of India’s economy.
Within the working age population, people join gig economy out of a need for either primary or supplemental income. Among the supplemental income group, there are those who are casual earners and those who are financially weak. In sum, the free agents and casual earners make up 70% of the gig workers.
Why is gig economy in focus? Firstly, Global gig-economy transactions are forecast to grow by 17% a year to around $455 billion by 2023, according to a report from Mastercard. Secondly, it brings about economic benefits in productivity and employment. However, Gig-economy companies present complications for product-market regulation, competition policy, tax and labour-market policies. Still there are questions of protection and labour-market policies of consumers and workers that need answers.
Since most of the Gig economy thrives on technology, if implemented thoughtfully, it can bring about a little respectability to gig jobs. Technology also brings transparency accountability. There is however a paradox here. Whereas digital platforms promote formal economy, the support systems of gig economy do the reverse. That this is avoided, Data analytics and Artificial Intelligence must be used. Resulting trust can drive gig markets into the folds of formal economy.
Can the Government help gig workers? Towards, promoting a social cause, it can. In that sense, a pension for informal sector workers is a great idea for apart from less social protection and no perks in the Gig economy, it can also bring loneliness and associated psychological problems. In order to be successful chasing gig jobs, workers and companies providing such jobs will need a lot of discipline and resilience.
The contributory pension scheme, introduced by the GOI, a key social security measure, caters to unorganized sector workers in the 18-40 age group who earn less than Rs 15,000 per month. There are however questions to answer.
If all the estimated 10 crores workers were to join, an outlay of 12000 Cr will be needed. Further, for a matching grant of the government, a worker too has to contribute 100 rupees a month if he is 29 years and 55 rupees if he is 18. Simple backhand calculations show, with a lock in period of 31 years rising to 42 years, the first set of workers eligible for pension will be year 2050. 200 rupees invested per month for 42 years, yields 15,71,766 rupees at 10% CAGR returning 10,335 rupees a /month at 8% simple interest. Besides this, will they also be eligible for paid holidays and a minimum wage? The larger question however, is who gets the corpus when the pension stops for an individual or his/her nominations? Probably it will be a good idea to declare all gig workers as wage labourers and make minimum wages Act applicable to them.
Unemployment has been on the rise partly due to the pandemic. It rose in October to 7.75% from a three-month low of 6.86% in September, as reported by the research firm Centre for Monitoring Indian Economy. Rural unemployment rose even more to 7.91% from 6.06% the previous month. Can massively rising gig jobs be the answer to our unemployment woes? It can add a few points to the GDP growth as well.
Diane Mulcahy, the author of “The Gig Economy, The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want” writes “For it matters not, how much we own, the cars . . . the house . . . the cash. What matters is how we live and love and how we spend our dash.”. Very profound indeed.