Why gig work matters – Its rise can help improve labour force participation

Source: The post is based on the article “Why gig work matters – Its rise can help improve labour force participation” published in Business Standard on 7^th August 2023.

Syllabus: GS 3 – Indian Economy – Employment

Relevance: benefits of gig work

News: Gig works are often seen as insecure kind of job in India. However, given the number of jobs generated by it in the urban area, it has the potential of reshaping the urban labour market.

According to the NITI Aayog, about 7.7 million workers are engaged as gig workers.

What are the benefits of gig work?

Lack of Salaried Job: Gig work may appear less attractive compared to a regular salaried position. However, the majority of jobs in urban areas tend to be informal and temporary in nature.

Furthermore, out of the total urban workforce of 131 million, merely 52 million hold salaried jobs, making such opportunities challenging to obtain. Hence, gig work aligns well with the dynamics of the Indian urban labor market.

Flexibility: Gig works offer flexibility allowing women and disadvantaged groups like the elderly or persons with disabilities to work as per their convenience.

Given the rigidity in salaried jobs, gig jobs fit well for the needs of these people. Hence, given the low Labor Force Participation (LFP) rate in India, gig works have the potential to improve LFP rate.

Minimum Wage: Gig economy has proved to be like the National Rural Employment Guarantee Scheme (NREGS) in urban areas. Through gig works individual always has an option of doing some labor supply and earning the minimum wage.

Further, it would have been difficult for the government to launch a job guarantee program in urban India due to state capacity constraints. Thus, the gig economy represents a significant improvement for the urban work market.

However, despite its multiple advantages, gig works are not able to reduce the level of urban unemployment.

Why are gig works not able to reduce the level of urban unemployment?

There are many reasons behind this such as – 1) Traditional social norms hold women at home, 2) Women hardly get access to mobile phones or scooters, 3) Rural-to-urban migration is constrained by social factors and various monetary and non-monetary costs.

These factors act as obstacles for the gig works to have an overall impact on the employment levels.

What can be the way ahead?

In a changing economy, companies succeed and fail, and jobs are both created and lost. Hence, criticizing gig work using the benchmark of salaried jobs is misguided as most work in India does not have these perks and security.

However, India faces challenges between treating gig work on a par with the Indian informal labour market, or of bringing the burdens of the formal labour market upon it.