The Boom of Gig Economy in India

After the advent of COVID-19, the Indian job sector changed dramatically. A lot of industries closed down after failing to withstand the pressure of lockdown. It hurt both the employed and job seekers. Also, the economy suffered from the loss of employment and returned a negative growth rate.

According to the Indian Economic Survey 2020-21, this uncertainty of economic conditions and the broad usage of e-commerce and online retail resulted in the growth of the gig economy exponentially. It has enabled India to emerge as one of the biggest markets for contractual hiring.

Despite all this, the gig economy is still in its initial stage in India, with employers and employees coming to terms with the new working conditions post-COVID 19.

What is Gig Economy?

The term Gig is another word for work that is temporary. It will only last for a specified period before the committee will end from either side. The gig economy is a labour market marked by an abundance of short term contracts or freelance works rather than permanent jobs.

It is beneficial for both the company and the employees. While the company may save itself from office costs, employees get flexible working hours and a hassle-free working environment.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said that India’s gig economy could grow at a compounded annual rate of 17% to reach $455 billion by 2023.

Boston Consulting Group (BCG) and Michael & Susan Dell Foundation released a new report indicating that the Indian Gig economy will grow three times in the next four years. Hence, there will be around 24 million jobs due to this.

Not only this, it will keep growing exponentially to 90 million jobs in 8-10 years, and the total value of the transaction will be more than $250 billion. Hence this revenue growth will enable India’s GDP to increase by 1.25% in the next decade.

We estimate that the gig economy has the potential to service up to 90 million jobs in India’s non-farm economy alone, transact more than $250 billion in the volume of work, and contribute an incremental 1.25% approximately to India’s GDP over the long term”. Said the report

Reasons for the Jump in Gig Employment in India

Rajah Augustineraj, the report’s author, said that “the gig economy presents an opportunity for India to drive job creation and economic growth. Technology platforms operating at scale within an ecosystem of information and services can help unlock efficiency, bring in demand-supply transparency, and drive greater formalization and financial inclusion”.

In a total of 90 million jobs that are going to be created over the next ten years, 35 million jobs would be for semi-skilled and skilled professionals. Retail, Manufacturing, Construction, Transportation, and Logistics will be the most significant industrial sectors with a chance to create approximately 70 million jobs for gig workers in the next eight to ten years.

 Expert skilled gig workers would be in high demand for sectors like small and medium business, healthcare and the field of oil and gas.

With the massive potential for the gig employment, India’s new labour codes have also set sight on the gig economy and promised to provide social security benefits to contract workers.

How has COVID 19 affected Gig employment?

However, this needs to be clear that gig employment isn’t a direct outcome of the COVID-19 pandemic. In fact, it was there even before the pandemic happened but at a low intensity. The new world order post COVID just proved to be a catalyst in expanding its base and increasing its speed.

Another report says that it is the developing countries where the gig economy is more prevalent than the developed countries. The participation ratio in the gig economy for developing countries is around 5%-12%, while the same percentage for developed countries is just between 1% and 4%.

Tulsi Jayakumar, Professor of Economics at SPJIMR, says that – “Several industry reports in the last few months attest to the reimagining of the future of work in India, with 50%-76% of the workforce in service sectors comprising of white-collar gig workers”.

The current Indian workforce is projected to have almost 500 million workers. Amongst this, 250 million workers are involved in agriculture and allied sectors. The other 250 million workers are busy in India’s four most extensive industrial areas, including Construction, Manufacturing, Retail, Transportation, and Logistics.

These sectors account for more than 70 million of the jobs that can be considered gig jobs.