From UPSC perspective, the following things are important :
Prelims level : Gig Economy
Mains level : Read the attached story
The Union Labour Ministry is organizing a program aimed at sharing information and good experiences on policies and global practices relating to gig and platform workers and their social security.
What is the Gig Economy?
- In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees.
- A gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career. e.g Employee models of Uber, Ola, Swiggy etc
- In this economy, tech-enabled platforms connect the consumer to the gig worker to hire services on a short-term basis.
- Gig workers include self-employed, freelancers, independent contributors and part-time workers.
Where does gig culture exist in Indian Economy?
- Sectors such as media, real estate, legal, hospitality, technology-help, management, medicine, allied and education are already operating in gig culture.
- The gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and demand for flexible lifestyles.
Key Drivers for Gig Economy
- Unconventional work approach by millennials: Hectic lifestyles of employees in private sectors have created a negative perception of full-time employment among millennials.
- Emergence of a start-up culture: The start-up ecosystem in India has been developing rapidly. For start-ups, hiring full-time employees leads to high fixed costs and therefore, contractual freelancers are hired for non-core activities.
- MNCs are hiring contractual employees: MNCs are adopting flexi-hiring options, especially for niche projects, to reduce operational expenses after the pandemic.
- Rise in freelancing platforms: Rise in freelancing platforms has also aided in the development of the gig economy.
- Business Models: Gig employees work on various compensation models such as fixed-fee (decided during contract initiation), time & effort, actual unit of work delivered and quality of outcome.
- Impact of Covid-19: Many laid-off employees are focusing on developing skills to avail freelance job opportunities and become a part of this burgeoning economy.
Why is Gig Economy preferred by workers?
- Profit through multiple work: One can work on freelancing as well as work full-time somewhere else.
- Women empowerment: It is very beneficial for womenwho work on this concept when they cannot continue their work or take a break from career due to marriage or child birth.
- Leisure and dependency: Retired peoplecan stay active after retirement as this will keep them engaged away from loneliness and depression and can earn as well on their own.
- Flexibility and diversity to the workers: It offers flexibility when workers can work according to their convenience and schedule rather than routine like in full-time jobs.
- Work from home: The travel costs and energy to travel to the workplace is reduced.
Why is Gig Economy preferred by Employers?
- Efficiency, efficacy and productivity of workers in the gig economy are much more than that of a stable full-time job.
- More rconomical for employers-when employment givers can’t afford to hire full-time workers, they hire people for specific projects and pay them.
- Start-up companies and entrepreneurs – who do not have big financial space – can grow only if they can leverage the services of contract employees or freelancers.
- In a gig economy, businesses save resources in terms of benefits, office space and training.
- Competition and efficiency among workers is improved.
Challenges faced in Gig economy
- No perks and benefits: There are no labour welfare emoluments like pension, gratuity, etc. for the workers.
- Job insecurity: Gig workers may face unfair termination. They may also attain minimum wages and less paid leave.
- No legal protection: Workers do not have the bargaining power to negotiate a fair deal with their employers.
- Unionization of workers will be difficult.
- Confidentiality of documents etc. of the workplace is not guaranteed
- Urban nature: The gig economy is not accessible for people in many rural areas where internet connectivity and electricity is unavailable.
- 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.