The gig economy is the labour market where the people are hired for short contracts and paid through piece rate system i.e., paid for the amount of work done. The gig workers include the independent contractors, online platform workers, contact firm workers, on-call workers and temporary workers who get into contracts with the companies to provide services for the clients of those companies.
The gig economy has been hailed for the freedom it provides to the workers in taking up the work, unlike the regular employees sticked to particular companies and organisations. The workers here are free from the routine 9 to 5 working pattern and have the discretion to choose their working hours according to their comfort.
In the present scenario, the COVID pandemic has crashed the economy, affecting the investment capacity of the corporates and aspiring entrepreneurs. The gig economy offers a good solution to this problem since it provides a lot of relief in terms of investment.
According to the estimates before the arrival of this pandemic, the gig economy was expected to provide 56% of the new employment.
Further, the vantage with the gig economy goes as follows –
Relatively less investment by the employers or entrepreneurs serves the purpose unlike the regular companies or organizations.
No burden of payrolls on the employers as the workers are hired according to the requirement on the basis of units of work.
Better utilisation of the fixed assets like cars, houses etc.,
Lower price of service generates the consumer surplus that can be spent on other sectors, with multiplier effect on the income and employment.
Growth of platform enabled services that lead to formalisation of the economy by providing the means to bank for the huge unbanked population.
The workers have the flexibility to work for more than one contractor at a time and also choose the no.of working hours.
The workers need not cater to a company culture or work schedule, letting themselves free from undue physical or emotional stress.
The workers can make choices that suit their personality and unique needs.
The gig economy would be a great opportunity for creative people, allowing them to pay their bills and have time to pursue their passions.
The work can be done from anywhere and there are no entry barriers for the talent.
As nothing comes without it’s own setbacks, the gig economy also has it’s own challenges like –
As the people are hired as per requirement, the investors usually don’t work on mentoring & training of the workers.
The need for a HR Department in the company would not be felt.
It takes a long time for the workers to build a depth of knowledge expected. For example, a job of the head chef in a restaurant is expected to have stability and mentorship qualities which comes only through experience.
The workers don’t have any kind of social benefits from the employers.
The work load and pay schedules are unsteady.
The workers need a lot of self discipline as they would be their own bosses here.
The workers need to continuously up – level their skills and industry knowledge.
The workers need to figure out their own retirement plans and healthcare, which would be both time consuming and expensive for them.
HOW ARE THE SOCIAL SECURITY BENEFITS ASSURED?
US went for the 401(k) plan which provides a retirement plan option for the gig workers, which is sponsored either by the state or the group of gig economy companies.
India went for the Draft Code on Social Security, 2019. According to it, the centre formulates and notifies from time to time, suitable social security schemes for the gig workers and platform workers, including their life and disability cover, health and maternity benefits, oldage protection and other benefits as determined by the central government.
The Oregon state of USA is working on developing a state sponsored retirement plan.
The gig companies like uber, lyft etc., are working after the retirement options for their drivers.
WHAT CAN BE DONE FROM GOVERNMENT SIDE?
The government should ensure the supply of skilled labour through the programmes like Skill India.The British government is promoting robotics, 5g wireless internet, smart technology and asking the private sector to sponsor the master students and doctoral students in AI.
The government should minimise the regulatory constraints by tax harmonisation and ensure access to finance for the gig economy.
Invest in telecommunications, cyber security and internet to ensure widespread access.
Invest in complementary infrastructure like electricity connections, logistics costs etc.,
Make stringent laws to protect the data privacy of the people on the online platforms.
Provide platform for students, IT professionals and start ups to interact with the established corporates, leading tech companies and industry mentors to build collective capacities for the industry.
Apart from these, some unanswered questions about filling of the earlier occupations of the gig workers, stagnant incomes and rewards, and transfer payments should be looked into to make the gig economy flourish.