Gig Economy

Rise of Gig Economy


In September 2020, the Indian government introduced a new labor code – ‘The Code on Social Security 2020’, which provided social security to workers in the unorganized sector, including gig workers. The government will bring social security schemes to provide retirement benefits, health insurance and other benefits to workers in the unorganized sector.

What is Gig Economy

  • Gig employees take short-term contracts and will be paid for that. Examples – Food delivery boy, Uber / Ola cab driver, musician, photographer, construction worker, on-demand worker etc. There are many apps and websites (Ex-Fiverr, Upwork) for skilled workforce to take gigs, such as software developers, doctors, etc. Such freelance work market is called gig economy.
  • The gig economy is expanding rapidly, especially in times of pandemics.
  • Many countries are working on bringing policies to prevent exploitation of gig workers and to make their working conditions more humane.

Reasons for the rise of the gig economy:

  • In traditional employment opportunities, employees have to work for fixed hours. But some people prefer a flexible agenda that is contributing to the rise of the gig economy.
  • Rising unemployment rates are also forcing people to work in the gig economy.
  • Many times, a gig economy is a profitable deal for both the company and the employee. Companies do not have to have full-time employees, and thus can save costs, on the other hand, workers will not be hired by any company. They can work with others of their choice.

Relations in industrialization 4.0 and gig economy

  • Economist Ronald Coase said that any company would flourish as long as it would be cheaper to get people to work in a market than sitting in a boundary wall. That is, if any company goes to the market and does every specific work with different experts and this cost is less than the normal cost of the company, then it is natural to hire people for a long time at a fixed salary. Instead she would prefer to go to the market.
  • In Industrial Revolution 3.0, globalization, privatization, and liberalization made it easier to get out of the market, which was why big companies began to shut down faster and were replaced by smaller outsourcing firms.
  • Actually, industrialization 4.0 is mainly based on continuous internet connectivity, robotics, artificial intelligence, nanotechnology and virtual reality. Therefore, companies will now need people who are skilled and from whom to work on the project basis.
  • Significantly, due to Industrialization 4.0, there will be a big change in the way we work. When all the technologies like robotics, artificial intelligence, nanotechnology and virtual reality are interlinked, the methods of production and manufacturing will undergo revolutionary changes.
  • Hence the coming time will be of gig economy, it cannot be denied. Although it is not correct to say that big companies will stop, but there are signs of a radical change in the global economy.

Benefits of gig economy

  • Autonomy for workers
  • Flexible working hours
  • Award for hard work
  • Low cost for companies.

Challenges of gig economy

  • Gig workers do not get benefits like full-time employees like health insurance, retirement etc.
  • Many gig workers are receiving lower wages than the minimum reduction guarantee, which is unethical.
  • In some cases there is no guarantee. Companies can delay or stop payment. This insecurity will always remain and it also causes stress.
  • Some gig workers do more work to earn good money. Many gig workers complain of burnout. Exploitation of gig workers is one of the biggest challenges of the gig economy.
  • Some companies are encouraging people to work in the gig economy in their spare time. This can lead to lack of time for personal life which affects relationships and mental health.
  • The rise of the gig economy is a threat to some full-time employment opportunities. Some companies are replacing gig workers with full-time employees.

In 1991, India opened the doors of its economy to the world, the era of Employment 3.0, which was based on computer and information technology (IT) and electronics and automated machines. But we have not been able to generate enough employment of Employment 3.0 type and this is the reason that today 75 percent of India’s labor force is forced to adopt gig economy.

Gig Employment and Social Security

Ministry of Labor and Employment Social Security Code 2019

India’s labor law legislation may also include employees working in the free market system (gig economy), which will give them some rights related to employees. The Ministry of Labor and Employment has proposed the Social Security Code 2019, which marked ‘gig workers’ and ‘platform workers’, which were never included in the country’s labor law before. Gig workers usually include workers in the sharing economy, such as Uber and Ola drivers, Zomato and Swiggy delivery individuals. With the arrival of tech platforms, such jobs have come, where employees are not connected to an organization and can work for as long as they want. However, the term is also used to refer to highly skilled employees, such as coders or technology professionals, who work as part-time or freelancers.

According to the draft bill, the gigs and platform workers will get life and disability cover, health and maternity benefits, old age security and ‘other benefits’, which the central government will decide for them under the social security scheme. However, gig workers are part of the unorganized sector, so they do not get benefits under the Employees ‘Provident Fund and Employees’ State Insurance schemes.

According to the proposal, such employees also do not get gratuity benefits. The draft law defines gig workers as workers who work or participate in such practices and make money from activities that do not fall under the traditional employer-employee relationship.

The draft states that subject to other provisions of this Code, every woman who also works in the gig economy will be liable to pay maternity benefit at the rate of average daily wage for the duration of her actual absence. Apart from this, many laws will be merged by amending the laws available to the workers.

The Central Government shall, by notification, constitute a National Social Security Board for the unorganized workers. Apart from this, the Central Government will constitute a Central Advisory Committee for the unorganized workers by notification. Also state governments can get information about social security related to this scheme from time to time.

Why a draft is required?

  • Employees working under the gig economy come from the unorganized sector, therefore do not have the same facilities as employees in their organized sector. As a result, they do not get the expenses of any social security schemes, such as health, security, education, salary, pension, life insurance etc.
  • Since there are more workers in the unorganized sector in India, their standard of living cannot be raised without providing social security to them and this situation is a big challenge for both the country and the economy.
  • It is often seen that workers in unorganized sectors are damaged or killed in an accident, they do not get government facilities because their identification becomes difficult. Therefore, a big challenge before the government is how to provide facilities to them.
  • Since the government does not have the actual data of the workers working under the gig economy, the government is unable to formulate an effective plan in their interest.


In 1991, India opened the doors of its economy to the world, the era of Employment 3.0, which was based on computer and information technology (IT) and electronics and automated machines. But we have not been able to generate enough employment of Employment 3.0 type and this is the reason that today 75 percent of India’s labor force is forced to adopt gig economy.

The gig economy will continue to grow rapidly in the coming days for improved results. This can compensate for the high unemployment rate in India. It is good that gig workers are officially recognized and brought under the purview of social security schemes. Working on the challenges of the gig economy to improve working conditions is the need of the hour.

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