April 1, 2020
Decent Jobs in a Gig Economy: Promise, Peril, and the Path Forward

Close to a quarter of the world’s gig economy workers are in India, according to a 2017 EY study. Over 1.5 million of these individuals work with ride hailing companies, a key player in the rapidly growing sector. ‘Gig economy’ has become a common part of our increasingly digital world. But what does this paradigm shift in the style of working mean for smaller organisations, or those participating in these roles? The model holds promise to help increase employment, but it comes with its share of perils; are these mutually exclusive? What are the gendered experiences of gig work. Addressing these aspects will be key in ensuring both job quality and security for the individual workers and productivity and cost-savings for employers. With many small and growing businesses (SGBs) choosing to hire through the model, it is pertinent to embrace the gig economy and plan for the future.

The gig economy is defined in a myriad of different ways; a simple and commonly used definition is “a labour market that allows for short-term or freelance contracts for workers.” Although the origins of ‘gigs’ can be traced back to jobs being picked up by jazz musicians in the early 1910s, the term was coined during the height of the financial crisis in 2009, when the un- or underemployed made ends meet by doing several part-time jobs. While most would agree that Uber drivers or Swiggy and Dunzo delivery staff count as gig workers, other workers such as carpenters, domestic workers, or even plumbers could arguably fit the bill — not to mention freelancers, volunteers, and consultants who often work remotely. It is also important to keep in mind that most definitions and classifications come from an urban labour perspective, yet a significant portion of the Indian population resides in rural regions and relies on temporary contractual labour for agricultural or other work; this also fits into this definition of gig work.

While it’s inherently difficult to measure the prevalence of this relatively new form of work in India, a survey of Indian corporates revealed that over 70% of responding organisations had used freelance or gig workers at least once for major organizational operations such as advisory services or policy and program design in 2018. The same study noted that 73% of respondent organizations would rather hire a freelancer than a conventional full time worker, to optimize operational costs and supplement skills of existing workforce. There are a few ways to view this — in the words of one venture capital executive, “power is slowly and steadily shifting back to the individual, and startups are facilitating this shift.” However, another shared that, “heavy inflows into these business models have drawn more scrutiny”, and now investors are revisiting investing in these startups with a different lens.

There are clear indicators that the conventional ‘job’ as we have come to know it, is being redefined around the world. With an increasingly mobile workforce in a V-U-C-A (Volatile, Uncertain, Complex and Ambiguous) world, both SGBs and larger organisations must prepare for a paradigm shift in the way we work.

The Promise

Advocates of the gig economy workers are more in control or are able to take work into their own hands — deciding pace, place and time of work, and therefore their earning potentials. Unlike conventional jobs, gig workers focus more on results than processes. They are paid based on number of deliveries or cab pick-ups and drop offs, which allows them to exercise their own judgement to meet the target set by the companies they work for.

SGBs can also leverage the gig economy. By hiring freelancers on demand, they can keep costs at a minimum, and leverage external skill sets to tackle the issues of limited resources and help in achieving rapid growth. The utilisation of the gig-model of operations will also save costs on benefits and professional development, if a large part of the team is temporary or short-term. Such a model may free up funds that can be allocated to other priority areas that are crucial for the growth of the company, especially during its early stages of growth.

In India, where female labour force participation is declining, gig roles that provide autonomy over time, flexibility, and options for remote work can address some common concerns such as childcare and household responsibilities that prevent women from taking up full-time jobs.

The Peril

However, many argue that the gig economy is not always beneficial to its workers. Studies show that there is no safety net for giggers, and app-based companies like food delivery and ride hailing services are known to have some of the worst working conditions. There is no minimum wage or overtime guarantee, and salaries are merely ‘values of the gigs completed’ and do not carry additional benefits or job security.

Workers worry that they cannot afford to fall sick, as companies do not provide medical insurance support to their contractual employees. For example, Uber drivers are guaranteed incentives of meagre amounts of INR 2,000 per week, which they are entitled to only if they complete a minimum number of trips in 2–3 days. These quotas push them to drive for prolonged hours, which can aggravate existing health conditions, and incentives earned are not sufficient to manage medical expenses, loans, home rents, and other basic costs of living.

Female gig workers are especially hard hit. Besides obvious safety risks and lack of benefits like paid maternity leave and childcare support, studies show that despite arguments that flexibility could help increase gender equality, the gig economy actually exacerbates gender discrimination. Women are paid less than men for doing the same kinds of jobs or having trouble getting hired in the first place due to unconscious biases or stereotypes.

The current coronavirus pandemic is only exacerbating these dangers for all gig workers. Many gig workers are already facing unemployment, as organisations shut down or must reprioritize resources, and lack social security nets to cushion them through these difficult times. However, given all the challenges they face, the response from gig workers to help facilitate response to the crisis has been remarkable. Previously considered menial jobs by many, the resilience and support shown by these individuals is making many reconsider the value of their contribution to our daily lives.

The Path Forward

Given that experts in the future of work argue that the gig economy is likely here to stay, there are ways businesses, especially SGBs, can consider the benefits and risks of plugging into the gig economy as they continue to grow. ANDE’s recent issue brief on decent work and economic growth highlights talent development, tracking and supporting quality of jobs, engaging the gig economy, and developing research and measurement on dynamics of job creation as key strategies to help the SGB sector “gig-proof” their work. With the changing requirements of the workforce, making sure to take advantage of the flexibility associated with the gig economy, such as remote work, can be beneficial for companies — and some entrepreneurs are even focusing on these issues in their principal business model.

With fewer Indians choosing the 9-to-5 route and instead opting for gig work, numerous platforms now allow them to find jobs, including UpworkTapchief and Frapp. Other platforms like Gigi Benefits and Lakshya are helping workers access previously missing benefits (like Provident Fund contributions, pensions and insurance covers). Organisations like Better Place are providing platforms for blue-collar workers to gain access to a structured process of employment, financial management and health services. These organisations have cropped up because there are evident inequalities and issues with being associated with the gig economy, and support is needed, both at the individual as well as the employer level. It is encouraging that there is increasing acknowledgement by these and other SGBs that aspects like professional development are worthy expenses and to dedicate more resources to.

All this begs the question, why focus on quality of work and decent jobs when the economy is struggling to stay afloat with high rates of unemployment? Many traditional economists argue that the number of jobs being created through the gig economy will contribute to economic growth. But this forcible formalization, where millions previously participating in the informal sector are brough under formal folds may actually end up backfiring. Although this imposition of formality is favourable to the state for administration, it drives up operational costs for SGBs with additional paperwork and regulations.

The challenge facing India, and similar developing countries, is twofold — SGBs must continue to consider the tradeoffs between flexible staffing and lower core costs to compete in competitive markets and decent quality of life and work. Achieving an equitable balance then, would seem to be the imperative.