Indian Gig Workers : A Fairer Deal : Daily Current Affairs

Relevance: GS-2: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Key Phrases: Gig Economy, Gig worker, start-ups, freelancer economy, unicorns.


  • In the long history of labour relations in profoundly hierarchical India and the short history of the gig economy, Uber’s announcement of new terms for drivers may prove revolutionary.
  • To work around the recurrent problem of drivers cancelling rides because they did not want to go to the destination or wanted a cash payment upfront rather than waiting for the company to reimburse them weekly, the cab-hailing service is making that information available to drivers so that they can pick which rides to accept.
  • Changing a payment system so that drivers are paid the next day for most rides and allowing drivers to see destinations is commonsensical and humane.

What Is a Gig Economy?

  • In a gig economy, temporary, flexible jobs are commonplace and companies tend to hire independent contractors and freelancers instead of full-time employees. A gig economy undermines the traditional economy of full-time workers who often focus on their career development.

Indian Scenario:

  • The Indian gig economy has the potential to serve up to 90 million jobs in the non-farm sectors of India and can add 1.25 per cent to the country’s GDP.
  • Start-ups like Ola, Uber, Zomato, and Swiggy have established themselves as the main source of the gig economy in India.
  • The gig sector has the potential to grow to the US $455 billion at a CAGR of 17 per cent by 2024, an ASSOCHAM report says.

Turbulence in Gig Economy:

  • The gig economy and more broadly the start-up universe have been buffeted by storms, lately.
  • First, poor working conditions and high fuel prices are making the retention of drivers and two-wheeler delivery personnel an uphill battle. Attrition at food delivery companies is estimated at around 40% every month.
  • Second, the US Federal Reserve’s accelerated rate hikes this year mean the end of the funding that earlier seemed easier
  • India’s low labour costs had made windfalls for startup founders even more dramatic.
  • Unicorns were minted at rich-world valuations while the pay offered to ‘delivery partners’ stayed decidedly developing world. Last year, 40 new unicorns—companies with valuations of $1 billion or more—were created in India.
  • India’s speedy climb in digital transactions and burgeoning unicorns as signs of an India transforming as “epic” as that of the US in the late 19th century.

Challenges Faced in the Gig Economy:

  • No social security: There are no labour welfare emoluments like pension, gratuity, etc. for the workers.
  • Rigidity: More rigidity of working hours and pay, whereas the gig economy has more options of work assignments and payment offerings to choose from, more flexibility of working hours and greater freedom of switching from task to task.
  • Dip in the market: Remuneration being squeezed amidst harsh inflationary conditions.
  • Demand supply mismatch: In the interplay of demand and supply mechanisms, the gig workers always lose out.
  • No employment stability and heavy workload
  • No proper Grievance Redressal Mechanism
  • Slowdown in Start-Up Funding:
    • Funding slowdown has hit start-ups across stages, whether it is growth-stage companies unable to raise new funding or early-stage start-ups that have to settle for lower-than-expected valuations and fund sizes.
    • There has also been a spate of layoffs as growth-stage start-ups try to rationalise costs and survive the funding winter.
    • Over 3,000 employees were laid off across multiple start-ups, including unicorns such as Cars24, Unacademy, Meesho, and Vedantu.
    • Start-ups, like any business, will respond to both business cycles, funds availability and talent cycles. With the recent meltdown, there is a clear cutback on frills and even headcount.
  • Slow Estimates of Recovery:
    • In India, many less well-off were getting employed again in our cities and we seemed set to reshape our inequitable K-shaped recovery when Omicron hit and prices spiralled up early this year.

Way Forward:

  • The overall economic activity is recovering at a modest pace, but many sectors and segments still seem to be constrained by demand weakness and will require continued policy support.
  • With an influx of gig workers and freelancers expected to enter the gig economy, the only way forward is to fine-tune labour laws and social security rules for gig workers, constant upskilling opportunities and technological empowerment of the gig workers.
  • The Government should encourage the MNCs and other companies to generate a social security fund to provide the gig workers with protection against death and disability along with old age benefits.
  • The machinery should introduce some more measures to attract the FDI to reserve a good amount of foreign exchange and thereby create a scope of job opportunities.

Source: Live-Mint

Mains Question:

Q. Gig Economy can generate a potential positive thrust for India’s demographic dividend. Explain.