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Gig Economy: How this could be India’s solution to the unemployment crisis

India's unemployment rate keeps rising, however, a Gig economy aims to create leverage amongst the unemployed with gigs that

A major challenge worldwide is creating jobs for young people, further exacerbated by the global financial crisis that has hit this group hard. Due to poverty and low human capital levels, young Indians face major barriers. Although educational attainment has increased rapidly in recent years, for many young Indians, gaining a foothold in the labor market remains elusive. Young males are typically employed in casual employment in rural and urban areas. At the same time, their female counterparts tend to be self-employed.

Youth unemployment and underemployment are prevalent worldwide because there is a lack of skills, job experience, job search skills, and financial resources to find young people’s employment. In developing countries, poverty and competitive pressures resulting from a rapidly growing labor force exacerbate this situation. Moreover, the inadequacy of social protection benefits and active gig market policies means that young people have little support outside of their families and friends in such economies. Therefore, the youth are more likely to be unemployed globally or be employed on more precarious contracts or in the informal sector (1).

These difficulties are evident in India, which has the world’s biggest younger population, with about 66 percent of the total population under 35. Governments are deeply worried about rising rates of youth unemployment and underemployment in this regard, not just because of the direct economic costs, but also because of the social impact of unemployment, as evidenced by increased crime, mental health problems, violence, drug use, and social exclusion. The young, many of whom were unemployed or in jobs that did not make full use of their abilities and skills. Unemployment spells, especially long spells, can result in scarring effects and a greater likelihood of being unemployed (2).

Various labor market metrics provide interesting interpretations into the present situation facing young people in a country like India that persists in being dominated by the unorganized sector, given the large economic growth rate. Total unemployment rates in developing countries are generally lower than observed in developed economies compared to advanced economies because most people cannot support themselves and their families through social protection schemes. (3) At the same time, however, unemployment tends to be higher. As observed in many developing countries, the unemployment rate rises with the level of education.

Thus, many times, the government has to develop an economy that helps overcome this huge problem. Such a problem exists in the face of a growing young population coping out of a pandemic. Now, irrespective of the pandemic happening or not, this thing existed way before also. Thus, such an economy was forming into action. An economy that could shape the unemployment crisis in the country for the better. They call it the gig economy (4).

What is the Gig economy?

Everyone is trying to speak of the gig economy, and there is an increasing number of people working in it. The term might seem like a new thing, but it’s not. The gig economy has sometimes been called the freelance economy, agile workforce, or even temporary work before apps decided to bring the idea of on-demand services and gig work to everyone’s phone. It also might seem like everybody these days has a side business. Or that individuals for gig economy jobs paying just as well with less stress have quit their high-powered day jobs. And although some individuals have made the transition from 9-to-5 to gigger effectively, the truth is, the gig economy is not just on-demand work.

The gig economy is known as a work involvement where there is a service seeker, on the one hand, i.e., a customer with a demand for a specific task, and a service provider, that’s is a gig worker; on the other hand, who can perform that particular task. Tech-enabled platforms in this economy link the customer to the gig worker to hire services on a short-term basis. Self-employed, freelancers, independent contributors, and part-time workers include gig workers. This project-based gig economy allows the service adopter to cut overhead costs and the gig worker to get paid instead of receiving a fixed salary for a specific task performed (5).

In 2018, the digital gig economy produced a gross volume of about 204 billion dollars from customers worldwide. Over 50 percent of the total of this value was made a significant contribution to transport infrastructure services. It is expected that the magnitude of the gig economy will grow by 17 percent CAGR and create a gross volume of 455 billion dollars by 2023. After the US, China, Brazil, and Japan, India emerged as the 5th largest Flexi-staffing country. Haryana, Madhya Pradesh, Andhra Pradesh, Gujarat, and Telangana have had the most possibilities for Flexi-workers in economic growth. In the absence of intermediaries, digital platforms are available as facilitators for creating jobs with both the power to discover job seekers and job providers easily (6).

A research paper describes that by 2025, digital labor systems could boost US GDP by 2.3 percent and its full-time equivalent employment by 2.7 percent. The transaction cost of outsourcing (7) non-core operations is trying to reduce and aiding an increase in the number of tasks that each worker can perform because of the rapid developments in technology. Therefore, companies are shrinking in size. We are witnessing a rise in start-ups that contractually outsource many activities to expert service providers. Factors such as freedom, technology upgrading, skill focus, additional income, and human capital drive flexible work inclination.

The gig economy consists of small tasks that the worker completes, no matter what industry a gig worker is in. Such tasks can be anything from groceries to code writing. A gig worker can choose to work for a certain number of hours or work through the project. The worker moves on to the next gig once the task or shift is finished. That might be another assignment with the same organization or something completely different with another organization. It’s hard to pin down the proportion of individuals in the gig economy that collaborate. Because the term gig worker covers several freelancers, temporary workers, and contract worker statuses, it can all be part of the gig economy that it is difficult to define who is and isn’t (8).

How Gig Economy is defined in the modern age

One of the primary factors for developing the gig economy can be considered the digital age’s evolution. For each gig or job they do, workers or independent contractors get paid. This very principle is the basis of all internet applications that involve this temporary workforce. Multiple businesses pay their partners, whether drivers or delivery managers or other such personnel, according to the number of deliveries and customers they serve in a day or month or according to the schemes put in place by these businesses. These partners may carry out different tasks of a similar or different nature with different companies, as any establishment does not permanently employ them.

The main drawbacks in a gig economy, even so, may include:

Employment instability.

Tentative wage schedules.

  • Unstable workload.
  • A lack of social benefits.
  • Any statutory safety similar to a regular employee.

The industry will not always be favorable to a specific industry, so it is expected that freelancers will be prepared for even more than one particular skill. There is no surety relating to the pay scale and its consistency due to the lack of full-time employment. Therefore, to remain in business, people who choose such open work environments need to update their knowledge base constantly.

The more major drawback of a gig economy is that workers in a gig economy do not appear to be qualified for any social benefits such as health coverage, medical benefits, pension benefits of employees, bonus or gratuity, unlike full – time employment. There are also no employee rights for these gig workers, except in some instances involving any infringement under one’s respective contracts. Not becoming a full-time worker of an organization means that an organization is not required by law to provide an individual worker with any welfare benefits or statutory advantages. (9).

The Gig Economy in India

With 15 million qualified professionals fueling the ever-increasing demand for contract-based jobs or the freelance industry, India accounts for about 40 percent of the freelance jobs offered globally. Freelancers are allured to the gig economy since they can follow their specialty. At the same time, utilize the freedom and flexibility that arrives with it. An employee or contract worker can choose his or her working time and, on occasions, even the method by which they desire to finish the job. Such employees or independent contractors may work from home, particularly in arts and design, information technology, or creative writing projects.

Several internet sites have taken measures to provide employers with a platform for finding the right human resources for their work, such as Guru (10), Freelancer (11), and Elance (12). Freelancers provide potential hirers with a plethora of abilities to choose from and thus are given a chance to source specific projects globally. The Online Labor Index, published as part of Oxford University’s labor project, addressed an online gig economy comparable to traditional labor standards by analyzing online labor availability in different fields across various countries. According to the results, the information technology and software industry have been the most targeted in terms of a gig.

The US’s gig economy is being shaped by a shift in the working attitude towards greater independence from work. Whereas in India, the gig economy is empowered by the large number of employees seeking opportunities to hire their talent/skills, India ranks 7th (13) in science and engineering graduates’ talent pool. Also, India is witnessing an increase in additional income due to high urban youth unemployment, rising living costs, increasing student aspirations, and changing women’s mindsets engaged in homemaking. The existence and growth of gig platforms such as Frapp, Internshala, and Awign exhibit this.

Although the gig economy provides flexibility and control over the work schedules, customers, and projects of one’s work, it has certain risks and uncertainties. There is uncertainty about the safety of jobs. In the short term, since the focus is on on-demand projects, the revenue earned by the gig staff is unpredictable. Employers contribute to employee benefits such as EPF, health insurance, medical insurance, pension, and paid leave in the long term in traditional jobs, which safeguard employees against contingent situations such as retirement, disability, illness, old age, etc. There are no such safeguards for jobs in the gig business. There is a risk of the retention of gig workers.

In India, labor laws have been enacted to ensure that employees and certain eligible employees, including contract workers, are entitled to all the benefits they need to support themselves. Over and over again, India’s cases have dealt with situations in which an employer-employee relationship could or could not be established. While India’s central and state governments may be currently focused on addressing the bigger challenges posed by the organized sector, governments may begin to focus on the gig economy and aspire to extend the applicability of certain statutes to them, taking into account the increasing strength of gig employees (14).

The gig economy has a disruptive model for almost all kinds of skills and services to connect vendors and purchasers. While the gig economy’s size may seem marginal compared to the traditional economy, with employees’ desire, especially millennials, to have a flexible work schedule and the increase in on-demand consumer services, it is recognized for its enormous potential. Almost 70 percent of India’s businesses have already used gig workers for at least one assignment in 2018. However, people need to constantly update their knowledge and skills to remain relevant in their enterprises because of the inherent lack of stability in this open work environment.

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