Gig Economy

• 17 May 2025

For Prelims:  Gig Workers, NITI Aayog, E-commerce, Artificial Intelligence (AI), Minimum Wage, Code on Social Security, 2020. 

For Mains: Role of gig economy in India’s economic growth, Key issues associated with the gig economy in India and way forward. 

Source: TH 

Why in News? 

The gig workers' meeting on "Current Developments, Challenges, and the Way Forward," organized by the Gig Workers Association, highlighted critical issues within India’s gig economy and recommended the establishment of minimum wages, social security, and legal protections for gig and platform workers. 

• It also called for the establishment of tripartite welfare boards at both state and national levels, including representatives of workers, employers, and the government. 

What is the Gig Economy? 

• About: The new Labour Codes of 2019 defines a gig worker as “A person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship”.  
  • It is a labor market of short-term, flexible jobs often enabled by digital platforms.  
  • Workers, as freelancers or independent contractors, are paid per task rather than through full-time contracts. Common activities include freelance services, food delivery, and digital work. 
• Status of India’s Gig Economy: A NITI Aayog report estimates 7.7 million gig workers in India in 2020–21, projected to reach 23.5 million by 2029–30, mostly in medium-skilled jobs. 
• Key Factors of Growth: 
  • Growing Digital Access: India has over 936 million internet users, with rapid growth in rural areas. Around 650 million smartphone users, supported by falling prices, are expanding access, strengthening the gig economy. 
  • E-Commerce Boom: The growth of startups and e-commerce is driving demand for flexible gig workers in content creation, marketing, logistics, and delivery. 
  • Rising Demand for Convenience: Urban consumers’ demand for quick services like food delivery and e-commerce boosts gig opportunities in delivery and customer support. 
  • Low-Cost Labor: A surplus of semi-skilled labor, high unemployment, and weak social security drive many into low-paid gig work as a survival strategy. 
  • Shift in Work Preferences: Younger generations favor flexibility and work-life balance, finding gig work attractive for its project-based, remote, and flexible options. 
• Segment: 

What is the Significance of the Gig Economy? 

• Opportunities for Gig Workers: The gig economy provides flexible work that helps balance personal and professional life, especially benefiting women, while enhancing skills and earning potential. 
• Business Friendly: Businesses gain cost-effective, scalable labor and can hire skilled workers for short-term projects, boosting productivity without long-term commitments. 
• Economic Growth and Job Creation: By 2030, India’s gig economy could support 90 million jobs, handle USD 250 billion in work volume, contribute 1.25% to GDP, and make up 4.1% of the workforce. 
• Inclusive Growth: Initially dominated by high-income professionals, the gig economy now offers alternative income and flexible jobs to entry-level workers and freshers, especially in growing Tier-II and Tier-III cities. 
• Future Potential with Technology Integration: The gig economy is set to drive economic growth and job creation, boosted by Artificial Intelligence (AI), predictive analytics, and digital innovation enhancing gig work’s efficiency and reach. 
• Supporting the Informal Economy: Many gig workers in India, including drivers and delivery staff from informal sectors like agriculture, find additional work opportunities through platforms like Zomato and Swiggy.    

What are the Major Issues Affecting the Gig Economy in India? 

• Lack of Legal Protections: Gig workers, classified as independent contractors, lack essential rights like minimum wage, paid leave, and health benefits, making them vulnerable to exploitation. 
  • Laws like the Contract Labour Act, 1970, and Employment Compensation Act, 1923, are inadequate for gig workers due to the flexible and decentralized nature of platform work. 
• Employment Instability: Gig workers face job insecurity as opaque algorithms and customer ratings control their work, pay, and employment, leading to unpredictable income. 
  • A 2024 NITI Aayog report found 90% of gig workers lack savings and face high vulnerability, while a 2023 Fair Work India study reported average monthly earnings of Rs 15,000–Rs 20,000 only. 
• Inadequate Government Response: The Code on Social Security, 2020, mandates a National Social Security Board for gig workers’ welfare, but slow implementation and weak enforcement leave most workers without benefits or protection. 
  • The "Prisoners on Wheels" report found that 83% cab drivers work over 10 hours a day. 
• Gender Disparities: Women gig workers face more harassment, lack grievance support, and often experience underpayment, limited opportunities, and unsafe conditions, worsening gender inequality. 
• Timely Payments: Over 25% of gig workers face job dissatisfaction due to delayed payments, stressing the need for timely, transparent, and shorter payment cycles to avoid financial strain. 
• Algorithmic Control: The lack of transparency and accountability in algorithmic management creates a severe power imbalance, with workers facing arbitrary decisions like unexplained account deactivations and no clear recourse, exposing platform exploitation. 

India’s Initiatives Related to Gig Workers 

• Code on Social Security, 2020 
• e-Shram Portal 
• Pradhan Mantri Shram Yogi Maandhan Yojana 
• Rajasthan's Platform-Based Gig Workers (Registration and Welfare) Act, 2023 

What Steps Can India Take to Strengthen and Enhance the Gig Economy? 

• Legal Reforms: Urgent implementation of Labour Codes for the gig economy is needed through clear, enforceable rules, establishing tripartite welfare boards, ensuring social security, and avoiding overlaps with existing frameworks. 
  • India could follow countries like the Netherlands, UK, and California by reclassifying gig workers as employees to guarantee social security benefits. 
• Portable Benefits System: A portable benefits system offering health insurance, retirement, and unemployment benefits across platforms would enhance gig workers’ stability and financial security. 
• Improved Working Conditions: India should require gig platforms to provide transparent grievance mechanisms, enabling workers to report unfair practices and ensuring timely resolution under labor authority oversight. 
  • Companies like Amazon, Flipkart, Zomato, and Swiggy are improving worker conditions with safety gear, resting areas, and water access. Continued focus on welfare will ensure a sustainable gig economy.   
• Skill Development and Upskilling: Promote skill-building initiatives and collaborations with vocational institutes to equip gig workers with the necessary skills to transition into higher-paying roles and entrepreneurial ventures. 
  • Launch digital literacy programs in rural areas and collaborate with platforms on tailored training to empower workers and reduce exploitation. 
• Formalization of Gig Economy: India can better integrate gig workers by expanding and improving the e-Shram portal to provide digital IDs linking them to welfare schemes, benefits, and job opportunities. 

Conclusion 

India’s gig economy is a powerful driver of job creation, economic growth, and inclusive opportunities, particularly for women and youth. However, to ensure its sustainability, there is an urgent need for comprehensive legal protections, transparent algorithmic governance, and enhanced social security measures, supported by focused skill development and policy reforms. 

Drishti Mains Question: 

Discuss the significance of the gig economy in India and the major challenges faced by gig workers.

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Prelims 

Q. With reference to casual workers employed in India, consider the following statements:

1. All casual workers are entitled for Employees Provident Fund coverage. 
2. All casual workers are entitled for regular working hours and overtime payment. 
3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account. 

Which of the above statements are correct? 

(a) 1 and 2 only  

(b) 2 and 3 only 

(c) 1 and 3 only  

(d) 1, 2 and 3 

Ans: (d) 

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Mains 

Q. Examine the role of ‘Gig Economy’ in the process of empowerment of women in India. (2021)