Maitreesh Ghatak of LSE and Ajay Shah of the NIPFP have consistently been amongst the more rational thinkers regarding economic policy. In this refreshingly practical application of commonsense and economics, Messrs Ghatak & Shah say that there are three reasons why we should welcome the jobs created in India by the gig economy rather than frowning upon them.
Firstly, these jobs are reasonably well paid in the context of a country where the per capita income is Rs 17,000 per month: “A survey conducted by Centre for Internet and Society suggests that in one kind of gig work (deliveries) net of all expenses, the income is Rs.15,200 per month.”
Secondly, given the changes in India’s labour laws and the relentless rise in the power & popularity of smartphones, the gig economy is likely to grow significantly: “According to a recent Niti Aayog policy brief, there are about 7.7 million workers, which is a drop in the bucket given the 440 million strong Indian labour force. However, it is expected to grow as it is largely an urban phenomenon, concentrated in the service sector, both being expanding domains….
Some observers argue that gig work is a less appealing arrangement for a worker when compared with being a salaried employee. This is true for many, but not all, given the attractions of a salaried job. But out of the urban workforce of 131 million, only 52 million are salaried employees and therefore such jobs are not easy to secure. The bulk of urban work consists of informal arrangements which include self-employment, engagement for a short time period, and piece rates. Gig work, enabled by mobile phones, fits nicely into that main fabric of the Indian urban labour market: all that has changed is that the mobile phone enables engagement with the plumber in an easier way….
Criticizing gig work using the benchmark of salaried jobs is misguided as most work in India (whether well-paying or not) does not have these perks and security. No country has been able to offer their whole workforce well paid salaried jobs.”
Thirdly, the gig economy is becoming an urban version of the NREGS, a central Government funded scheme which economists of all political persuasions believe has delivered stellar results over the past two decades: “Economists in India have long been excited about the NREGS. The big insight there was to create a mechanism through which the individual always has an option of doing some labour supply and earning the minimum wage. The gig economy is functionally the same as an urban employment guarantee scheme. For any adult armed with a mobile phone, it is now easy to step forward and do labour supply. The onboarding process takes about one to seven days depending on the platform. We saw this vividly during the Covid lockdowns, where many individuals took to gig work in response to the economic crisis, and we saw many in the middle class doing deliveries.
The rise of gig work thus improves the safety net in urban India. There is an alternative perspective here: if one had aspired for establishing an EGS in urban India through the government, analogous to the NREGS, this would have been quite a challenge given the limitations of state capacity. That objective has now been at least partly filled through the gig economy.”
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