The gig economy can be viewed as an engagement between three prominent parties; the independent workers who take on the ‘gigs’, consumers who are looking for the fulfilment of these ‘gigs’ and the companies who act as a third party or intermediaries between the consumers and the service providers. Several firms such as Uber, Airbnb, Swiggy, Ola can be seen as participants of the gig economy. To a layman, working in the gig economy means undertaking temporary employment and being paid for that specific job. It came into existence during the global economic crisis, when people took up odd jobs in order to make ends meet.
The gig economy is on a rise and it’s here to stay, the US workforce’s share of gig economy has risen from 10.1% to 15.8% from 2005 to 2015. Furthermore, it is expected that 43% of the workforce will be freelance by 2020. A total of 3-14% of the global workforce will shift to the gig economy, depending upon the development and the growth in demand for the work. It is anticipated that the gig economy would add $957 billion to the Indian economy by creating better outcomes for both the individual as well as the society, by sharing and capitalizing risks and resources in the local markets.
The rise in the gig economy can be attributed to the advent of technology, which results in the absence of the need for all workers to be physically present in a particular location. With the surge in video conferencing and telecommunication technology, workers now work from the comfort of their homes. Secondly, with the widening educational gaps, companies struggle to find the ‘best-fit workers’ and may thus rely on gig workers than full time hires. Workers with a lack of a degree may find it easier to look for jobs with the help of the gig economy. Furthermore, freelance work allows individuals to prioritize work according to their needs and the appeal of work from home acts as a huge pull factor amongst today’s generation. Absence from workplace removes workers from situations of workplace politics. Thirdly, 66% of the large companies use freelance work to reduce labour cost because most of them are paid below the minimum wage levels and don’t receive perks in terms of leave, pension, working conditions etc. The gig economy is seen as a platform to help fund eventual retirement, also an excellent medium as a way back into the formal labour market and helps balance familial and career needs.
However, critics question the sustainability and fairness of the working conditions of the workers who receive remuneration on ‘piece rate’ basis. Additionally, the capitalist economy is seen as the bane for all evils associated with the gig economy.
The challenges faced by a country, seeing an upsurge in the gig economy is an altering mindset of the key economic players involved, alteration in government policy who will need to adapt, recognize and record the necessary developments.
By Roshni Divecha
(TYBA Economics, Mithibai College)
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