India’s First Official Study on Gig Economy

India’s First Official Study on Gig Economy

NITI Aayog’s first-of-its-kind report is a good starting point for the government to address longstanding issues in unorganized sectors

On 25 June this year, NITI Aayog– the apex public policy think-tank of the Government of India that had replaced the Planning Commission in 2015 – published a first-of-its-kind report on India’s gig and platform economy. Prepared by the Skill Development & Employment (SDE) Vertical Team of NITI Aayog in collaboration with external expert research teams, the study is a high-level overview of the sector that attempts to estimate its size and potential, and also offers several recommendations for formalised growth of the sector.

The report highlights the need for a framework that could balance the flexibility offered by platforms while also ensuring the social security of workers in the unorganised sectors. Currently, such workers operate in a regulatory grey area. However, the observations and recommendations made in the report are not binding on platform companies. Rather, it is the first step towards a long-term approach.

Titled “India’s Booming Gig and Platform Economy: Perspectives and Recommendations on the Future of Work”, the report was released by NITI Aayog’s Vice-Chairperson Suman Bery, CEO Amitabh Kant and Special Secretary Dr K. Rajeswara Rao. At its launch, the Vice-Chairperson hoped that “this report will become a valuable knowledge resource in understanding the potential of the sector and drive further research and analysis on gig and platform work.”

Ushering in a new economic revolution

The intro to the report clearly states the aspirations of this study and also outlines the challenges anticipated. it admits that while the rapidly burgeoning gig workforce is ushering in a new economic revolution globally and India – with half-a-billion labour force and the world’s youngest population – is at the frontier of this revolution, there are severe data gaps when it comes to estimating the actual size of the gig economy in India.

The purpose of this study is to view gig work, with a focus on its subset, platform work, through economic as well as worker perspectives. In economic terms, the job-creating potential of the gig economy, estimating its size and identifying its demand across various industries are some of the aspects that have been studied.

The introduction also defines – for the first time – who, according to the government, belong to the categories of gig and platform workers. To quote directly from the report: “Gig workers – those engaged in livelihoods outside the traditional employer-employee arrangement – can be broadly classified into the platform and non-platform-based workers. Platform workers are those whose work is based on online software apps or digital platforms. Non-platform gig workers are generally casual wage workers and own-account workers in the conventional sectors, working part-time or full time.”

For a more accurate differentiation between gig and conventional workers, the study uses several parameters, including location, age, education, income, ownership of mobile phones and access to a bank account.

Estimates and Projections

In view of the fact that the entire gig workforce is not visible due to the complete absence of official data, this report takes the first step to address that issue. The study recommends that the government undertakes an exhaustive enumeration exercise separately to take full cognizance of gig workers.

For the purpose of the current study, the authors have taken into account whatever limited data is available by building on assumptions derived from past nationwide micro and macro studies on the topic. However, the report makes it clear that the estimation is only indicative and cannot be expected to be factually accurate or claim to represent the true size of the gig workforce.

The study works upon the following estimates and projections for the gig and platform sectors in the country:

  1. In 2020-21, 77 lakh (7.7 million) workers were engaged in the gig economy.
  2. By 2029-30, the gig workforce is expected to expand to 2.35 crore (23.5 million) workers.
  3. Of the total gig workers, currently, about 47% are engaged in medium-skilled, about 22% in high-skilled, and about 31% in low-skilled jobs.
  4. While the medium-skilled gig workforce is gradually declining, the low- and high-skilled forces are on the rise. The domination of medium skills could continue till 2030, but other skills are expected to emerge.

Recommendations for Stakeholders

The report presents several recommendations for concerned stakeholders in the gig and platform economy. Here, we touch upon the salient points:

  1. Catalysing platformization – A Platform India initiative, built on the pillars of accelerating platformization by simplification and handholding, funding support and incentives, skill development, and social financial inclusion, may be introduced.
  2. Accelerating access to finance for platform workers – Access to institutional credit may be enhanced through financial products specifically designed for platform workers – with special emphasis on women and Persons with Disabilities (PwD) as well as small cities, towns, and villages. FinTech and platform businesses may be leveraged to provide cash flow-based loans. Unsecured loans to first-time borrowers may be classified as Priority Sector Lending.
  3. Skill development for platform jobs –Platform-led models of skilling and job creation need to be promoted for the gig sector. The Ministry of Skill Development and Entrepreneurship, and the National Skill Development Corporation (NSDC) could nurture skilled workers and micro-entrepreneurship. Transformational upskilling for workers presently engaged in the informal sector can create avenues for horizontal and vertical mobility.
  4. Enhancing social inclusion in the new-age digital economy – This covers the following aspects:
    1. Gender sensitisation and accessibility awareness programmes for workers and their families
    1. Inclusive communication systems, work design, and processes
    1. Incentivising inclusive businesses
  5. Extending social security for gig and platform workers in India –The study mentions various social protection approaches taken around the world for gig and platform workers and how they could be implemented in India. The recommended measures are:
    1. Paid sick leave, health access and insurance
    1. Occupational disease and work-accident insurance
    1. Retirement/pension plans and other contingency benefits
    1. Support to workers in a situation of irregularity of work
    1. Supporting small businesses and entrepreneurs associated with platforms
    1. Contingency cover out of a corpus fund
  6. Recommendations for future estimations of platform workers – The Study suggest undertaking a separate enumeration exercise to estimate the size of the gig economy, identify the characteristic features of gig workers, capture the different occupations, and collect information to identify gig workers.
  7. The future of platform economy – This sub-section lays down a brief research agenda for future studies on the platform economy in India. The report mentions the following key aspects on which future research should focus:
    1. Survey of small platforms
    1. Women-run platforms
    1. Are platforms leading to the formalization of employment?
    1. Contribution of the platform economy to India’s GDP

A starting point at least

While some experts have expressed doubt that instead of a study report, the real action is the need of the hour – it must be acknowledged that this study is at least a good starting point for the government to address longstanding issues in the unorganised sectors.

The report’s recommendation of extending social security measures to gig workers and their families is in line with the Code on Social Security (CoSS), 2020. The CoSS was the first attempt in which gig and platform workers were recognised by this government. It sought to give workers social security benefits. Moreover, in the absence of any defining regulation, gig workers had long been at the receiving end of labour law violations. To address this, the Ministry of Labour and Employment has bought them under the ambit of the new labour code that takes effect from July this year. The current NITI Aayog report should be considered as a logical next step.

Formed under the Ministry of Planning by the NDA government in 2015, NITI (National Institution for Transforming India) Aayog is the nodal agency tasked with catalysing the country’s economic development. While the erstwhile Planning commission followed a top-down model, NITI Aayog takes a bottom-up approach to foster cooperative federalism through the involvement of the state governments in the economic policy-making process. Hence, we can expect results to follow this study.

Anyone can access the full NITI Aayog report at:25th_June_Final_Report_27062022.pdf (niti.gov.in)

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