Expert Opinion

Published: Dec 29, 2021
Updated: Dec 29, 2021

Boosting gig sector is need of the hour

Questions around the role of the government and who bears the onus of protecting workers deserve a careful consideration in the backdrop of the rising incidence of informal employment in the formal sector and the growth of the gig economy. It is apparent that in our relentless pursuit of economic growth, we have ignored the voices of India’s informal sector for too long. The coronavirus outbreak and the ensuing lockdown triggered a unique and damaging job crisis in India during 2020. In April and May, when the country was under strict government-mandated lockdown, around 10 million daily wagers fled cities – walking miles on foot – afraid of hunger and unemployment.

OUT OF SIGHT

An informal economy, or informal sector, or grey economy is the part of any economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countries, it is sometimes stigmatized as troublesome and unmanageable, though the informal sector provides critical economic opportunities for the poor.

Further, the pandemic has changed the way businesses are conducted, not only in India but all across the world. Due to the forced remote work culture, many companies are realizing its advantage on stressed cash flows, remodelling their operations as per business continuity plans, and opting to hire freelance talent under the given market scenario. While this model has been slowly accepted by employers, employees and government, the gig sector observes a lot of skill gaps. Rapid digitization has led to the disruption in the labour market. Technology played a very important role in galvanizing the scope of independent work regardless of geographical boundaries. Independence of the project and flexibility of work hours has become the new work mantra, which has redefined the meaning of labour.

In the present scenario, India stands to lose around 135 million jobs due to the pandemic. Many of them could be guided towards building skill sets to suit freelance work opportunities and be a part of the growing flex or gig economy. India’s gig sector is expected to grow to $ 455 billion by 2024 at a compounded annual growth rate of 17 per cent, with the potential to grow at least double the pre-estimates for the post Covid19 pandemic period.

GIGS HERE TO STAY

The notable trend is that going forward it is likely that informal employment will also increase as workers who lost formal jobs during the Covid-19 crisis are trying to create work for themselves by resorting to self-employment in the informal economy. In addition, formal enterprises are likely to continue hiring informal workers as they seek more flexibility and attempt to cut labour costs to cope with the pandemicinduced economic uncertainty. Developing countries such as India are economically vulnerable to Covid-19 kind of disruptions because of the presence of a huge informal workforce. India’s vast informal workforce, which has no labour, social or health protection, is woefully ill-equipped to cope with the medical, social and economic shocks of the virus. The necessity to eke out a subsistence living in the absence of alternative employment opportunities is an important policy consideration, which the government needs to immediately work upon and start schemes to reduce work deficit and protect informal workers by providing them with a social protection floor. The government must also consider bailing out medium, small and micro enterprises from their financial problems.

All said and done, labour-intensive growth stems from creating more jobs that are formal so that informal workers can move to these jobs. Further, there is a need for increasing productivity of informal enterprises and incomes of the informal workforce by providing them with technical and business skills, infrastructure services, financial services, enterprise support and training to better compete in the market. A multi-pronged and comprehensive approach is needed to facilitate the transition to arrive at a solution to smoothen the crooked road from informal to formal to subsistence living.

(Dr VVLN Sastry is a post-doctorate in Economics, a PhD in Law and Public Policy, a passionate economist and a financial and law expert.)