IAS Gyan

Daily News Analysis

Gig Economy  

30th December, 2021 Economy


Figure 4: No Copyright Infringement Intended


  • The surge in demand for gig workers, particularly in the shared services and logistics segments, in the aftermath of the Covid-19 pandemic led to mushrooming of job discovery platforms.


About Gig Economy:

  • A gig economy is a work environment (borderless and technology enabled) where organizations /businesses hire temporary workers or freelancers instead of full-time long-term employees.
  • Fragmented Work where someone is given a work for certain amount of time 
  • People provide a service nearly always through a digital platform
  • Companies provide temporary positions to workers and the latter reaches independent, short-term contracts with them. 
  • So, instead of a regular wage, workers get paid for “gigs”.


Drivers of the Gig Economy:

Emergence of the digital age. 

  • Here, workforce is highly mobile and work can be done from anywhere, anytime. This means that you need not reach at the location of the organization to do the job. 


  • In the era of disruption will be safe as it avoids long term obligations like pension and other emoluments, when they provide short term contract.
  • The worker can be relieved at any time without any friction. 


  • The short-term engagements better fit for the workers to search for the best. 
  • Software and technological changes taking away human efforts also contributed to the gig economy.
  • Temporary nature of projects and greater specializations, added to this trend.
  • Uncertain business climate and declining profits in the context of disruptive innovations also tempted companies to go for short-term labors.
  • In the US, colleges and universities recruit teachers and professors on contract basis.


Size of Gig Economy:

  • An estimated 56% of new employment in India is being generated by the gig economy companies across both the blue-collar and white-collar workforce. 
  • Global Gig Economy Index report has ranked India among the top 10 countries. India constitutes about 40% of freelance jobs offered globally.


Advantage of Gig Economy:

  • Cater to immediate demand: Gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and demand for flexible lifestyles.
  • Cheaper and more efficient: Most times, employers cannot afford to hire full-time employees. In a gig economy, large numbers of people work part-time or in temporary positions.
  • The result is cheaper, more efficient services, such as Uber or Airbnb, for those willing to use them.
  • Wider choice to employers: Technology and connectivity through the internet don’t require the freelancer to come into the office for work. Hence, employers have a wider range of applicants to choose from as they don't have to hire someone based on their proximity.
  • Offers specific expertise: Professional services firms are hiring gig workers to add deep domain expertise to client-impact teams. Majority of professional services contact workers have years of domain-specific knowledge, like consultants.
  • The wider choice to employees: People often find they need to move around or take multiple positions to afford the lifestyle they wan These days, people also tend to change careers many times throughout their lives; the gig economy is a reflection of this rising trend.
  • Youth economic productivity: India has a high share of young population which is only expected to grow. According to economists at IMF, youth inactivity in India is at 30%, the highest amongst developing countries.
  • The gig economy offers the perfect platform for engagement of youth in productive employment activities.
  • It is also estimated that the gig economy offers a relatively high gender-parity in the workforce, as compared to traditional employment.


Associated Challenges:

  • There is no certainty, stability or job securityin gig economy.
  • Workers can be terminated anytimehere in a gig economy.
  • Workers do not have a bargaining powerin a gig economy.
  • Workers do not get pensions, gratuity, perks etcthat is available for full-time workers.
  • There is no basis on which banks and other financial service providers can extend lines of credit when steady income is not assured.
  • The social welfare objectives can be neglectedif business and profitable avenues of freelancing are prioritized.
  • It is not accessible for people in many rural areaswhere internet connectivity and electricity still is a distant dream. Hence they are deprived of this opportunity and this stems up inequality debate again.
  • Confidentiality of documents etc of the workplace is not guaranteed here. When there is a situation where gig worker is potentially working for others as well, including competitors, the employer is wary of what he shares with the gig worker and perennially suspicious.
  • In few work projects where teamwork is essential, gig economy becomes dysfunctionalin such a scenario.
  • It is still in a nascent stage in a country like India.

Way Forward:

  • Giving due effect to the Code on Social Security: For the 1st time, the Code on Social Security bill, 2020 acknowledges platform workers and gig workers as new occupational categories. With that, the platform workers are eligible for benefits like life and disability cover, old age protection, maternity benefits, provident fund, employment injury benefits, etc.
  • The government has to give due effect to the Code immediately and provide them with basic human dignity to the gig workers.
  • Take examples from global best practices: Amendments to labour laws in Ontario and California have shown a move towards granting employee status to platform workers, thus guaranteeing minimum wage and welfare benefits. This is the view propagated by international agencies in the EU, including the European Trade Union.
  • So, the government of India should also consider granting the gig workers the status of employees of the aggregators. That would automatically provide them all the labor benefits like PF and ESI.
  • Provide chances to gig workers to become independent entrepreneurs: The government should consider providing a loan scheme to the platform workers, to end their dependency on the platform aggregator companies.