Future of Gig Economy: Transforming Unorganized Sector in India

Gig economy is a flexible, brief, or freelance working engagement where a service seeker, i.e., a client connects with a service provider, i.e., a gig worker for undertaking a specific task. The gig workers earn their incomes in whole or in part from short-term contracts under which they are paid for individual tasks or jobs. The exchange of service usually involves connecting with consumers via a digital platform. The rapidly developing gig economy can benefit workers, businesses, and consumers altogether by making work more flexible, customized and adept to the situation. It has demonstrated its resilience and potential even in the wake of the Covid-19 pandemic, by continuing to unencumber millions of jobs and keeping communities linked. 

In 2020-21, 7.7 million workers in India were estimated to constitute gig workforce is expected to expand to 23.5 million workers by 2029-30, forming 6.7 per cent of the non-agricultural workforce or 4.1 per cent of the total livelihood in India. The employment elasticity to GDP growth for gig workers was continually above one throughout 2011-12 to 2019-20, indicating greater demand for gig workers. The said elasticity was also always above the general employment elasticity, further indicating stagnant demand growth rate for non-gig workers, and also the conversion of non-gig work to that of gig work.

In terms of industrial classification, about 2.7 million gig workers were involved in retail trade and sales, 1.3 million in the transportation sector, 0.6 million in manufacturing and another 0.6 million in the finance and insurance activities. During 2011-12 to 2019-20, the retail, transport and manufacturing sector saw an increase of 1.5 million, 0.8 million and 0.4 million workers respectively. Gig workforce in the education sector propelled from 66,000 to over 1 lakh by 2019-20. Currently, about 47 per cent of the gig work is in medium skilled, 22 per cent in high skilled, and 31 per cent  in low skilled jobs. However, gig work may accentuate skill polarisation as the trend shows the concentration of workers in medium skills is gradually declining and that of the low skilled and high skilled is increasing. 

The government of India has taken multiple measures to boost gig-economy in India. In January 2022, Ministry of Labour and Employment organized a webinar in collaboration with the V. V. Giri National Labour Institute, International Labour Organization (ILO), BRICS Network of Labour Research Institutes and the International Training Centre (ITC) of the ILO. The webinar was envisaged to understand cross-country perspective on two important issues – (a) Opportunities and Challenges of the Gig and Platform Working, and (b) Policy Environment to promote new forms of employment. Besides opportunities, emerging issues in regard to the service conditions, totalisation of social security benefits, appropriate forum for disputes resolution, etc. were also discussed.

In 2021, the Ministry of Labour and Employment launched the e-Shram portal to create the first-ever national database of unorganised workers, which is seeded with an individual's Aadhaar. The data includes details of name, occupation, address, educational qualification, skill types and family details etc. As of May 2022, over 94 per cent of 27.69 crore informal sector workers registered on the e-Shram portal have a monthly income of INR 10,000 or below and over 74 per cent of the enrolled workforce belongs to scheduled castes (SC), scheduled tribes (SC) and other backward classes (OBC). The main objective is to create a centralised database of every construction worker, migrant worker, gig and platform worker, street vendor, domestic worker, agriculture worker etc, for understanding their employability, extending benefits through the implementation of the social security schemes to them, and share their information with various stakeholders for delivering the welfare schemes. 

In March 2022, The Code on Social Security, 2020 was enacted by the Parliament as one of the four Labour Codes, which for the first time introduced provisions relating to gig and platform workers. The Code envisions social security benefits through formulation of schemes for gig and platform workers that can be implemented through Employees’ Provident Fund Organisation (EPFO) and Employees’ State Insurance Corporation (ESIC). A Social Security Fund has also been set up under the Code to enhance benefits provided under the scheme.

In June 2022, NITI Aayog also published a report titled ‘India's Booming Gig and Platform Economy’. It presents comprehensive perspectives and recommendations on the gig–platform economy in India and highlights the opportunities and challenges of this emerging sector. It also presents best practices from around the world on initiatives for social security and outlines strategies for category-wise skill development and job creation of workers in the sector.

To harness the potential of the sector, the report recommends accelerating access to finance by specifically designing products for platform workers, linking self-employed individuals engaged in selling regional and rural cuisine, street food, etc., with relevant food-tech platforms to enable them access to wider markets in towns and cities. The report highlights suggestions regarding platform-led transformational and outcome-based skilling. It also focuses on enhancing social inclusion through gender sensitization and accessibility awareness programmes for workers and their families. Other key recommendations entail 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.

Leveraging all these reforms in place and many more to come, India is expected to transform its gig and labour workforce with centralised opportunities, increased employment, stringent labour code and better wages for the currently unorganised sector. With its demographic dividend of half-a-billion labour force, world’s youngest population, rapid urbanisation, and widespread adoption of smartphones and associated technology – India is set to become the new frontier of gig workspace revolution.

This has been co-authored by Cherishi Maheshwari and Ishita Sirsikar.