INTRODUCTION
The gig economy is an economy of workforce except it does not include the traditional workforce. It consists of independent contractors and freelancers in place of long-term employees. It aims to provide flexibility and other benefits to workers and employers. With the advent of COVID-19, the rise in technology pursuits enabled the gig economy to grow more. As people searched for more flexibility and remote work, the gig economy became popular even though it existed before. The gig economy’s ability to democratise employment options is among its most noteworthy features. It enables people to make the most of their time and skills in ways that suit their unique schedules and lifestyles. Even though it has its advantages, there are complex challenges to it as well. Worker rights are often ignored in the gig economy. There is no security, insurance etc provided by the employers and as such workers are rather left in a frenzy. Therefore, as the gig economy grows, it is crucial to find a balance between the opportunities it presents and the support and safeguards that workers require.
CLASSIFICATION OF GIG WORKERS
No law has been passed that distinguishes the types of gig workers. To be considered an employee, the employer must have control and supervision over the gig worker[1]. However, in this regard grey area exists in the gig economy. While gig workers may be under some control and supervision of their employers, at the same time, they also enjoy a considerable amount of autonomy. That is the reason why ambiguity still exists about gig worker’s classification as employees or independent contractors. Employees can enjoy employment, insurance, and social benefits while independent contractors are devoid of the same as they are paid only for the services provided by them[2].
REGULATORY CHALLENGES
Many challenges surround the gig economy when it comes to its regulations. The gig economy, being different from the traditional economy has opened up a plethora of new factors that are being proven to be difficult to regulate. Gig workers are known to provide their services through not just a single platform but through various types of platforms like technology companies or even intermediary service providers. Given that the operational platform is not fixed, this leads to the challenge of regulation. If the source of an operation is unknown, prescribing a set of rules becomes difficult. Furthermore, the uncertainty in classifying gig workers also adds to the regulatory challenges as there are different provisions for wages, security and insurance for independent contractors and employees. The gig economy does not only provide services but also provides goods as well. While payment for services is regarded as income and therefore taxed, payment for some goods is not regarded as income and therefore not taxed[3]. For example, there is a difference between the services of ride-sharing and ride-hailing in the sense that ride-hailing is taxable, but, ride-sharing is regarded as non-taxable because the fuel costs that the car owner incurs are compensated by sharing the non-utilised empty seat[4]. However, it is imperative to take into cognisance that these regulatory challenges are capable of being settled.
IMPACT ON TRADITIONAL INDUSTRIES
The traditional employment sector has also been affected by the gig economy. India’s population is the largest in the world and, with its developments, the majority of the population is well versed with smartphones which provides a suitable ground for the gig economy. The number of traditional full-time jobs is constantly dropping due to the preference of companies to use gig workers more frequently for project-based or seasonal employment as employing gig workers offers companies flexibility and cost-effectiveness[5]. In the gig economy, workers can set their hours and decide where, when, and how much to work[6]. Better work-life balance, which is frequently lacking in traditional roles, can result from this flexibility which is why people have started preferring gig jobs over full-time employment. Gig workers are free to choose how they want to go about their careers. They have a degree of autonomy that is not usually found in traditional employment i.e. they can select the projects and clientele they want to engage with. The lack of such control and independence has resulted in people taking up gig jobs.
FUTURE OF GIG ECONOMY
Artificial intelligence is going to be one of the factors that will lead to the growth of the gig economy in the future. It is a tool to improve productivity, create new opportunities for gig-based employment, and simplify the relationship between gigs and workers. Artificial intelligence has the potential to automate repetitive work in jobs fulfilling the increasing need for human creativity, analytical skills and intelligence[7]. Furthermore, once the regulations are adopted to regulate the gig economy, it will surely develop the gig economy. Gig workers will become popular in traditional areas like healthcare, banking, and education since they enable people with particular skill sets to work as employees whenever needed. This diversification will produce a more integrated global talent market and open up new options for corporations and workers alike. With technological advances in the coming future, companies would prefer temporary contracts with gig workers who possess unique abilities as a more realistic long-term approach to adapt to shifting market demands than to continuously retrain their permanent employees. According to a report by NITI Aayog, compared to the 8% reported in 2022, gig or contractual hiring is predicted to rise to 9% on average of all workforces hiring in 2023 and car, engineering & manufacturing, GIC, and IT will be the main industries hiring gig workers[8].
ANALYSIS
The gig economy offers workers freedom and autonomy but also poses various obstacles. It is a substantial change from traditional employment and with the COVID-19 pandemic, its growth expedited as developments in technology rendered remote work more viable. However, the lack of workers’ protection remains a critical issue. The same benefits that regular employees have, such as social protection, health insurance, and job security, are unavailable to gig workers. This discrepancy calls into question the viability and justice of the gig economy, highlighting the need for legislative frameworks to safeguard these workers. This problem is made more difficult by how gig workers are classified. The lack of clarity surrounding the classification of gig workers as independent contractors or employees results in the absence of the application of labour regulations. Under the current labour rules, this ambiguity can result in exploitation and unfair treatment, underscoring the necessity of precise legislative framework and protections. The creation and implementation of regulations are made more difficult by the absence of a fixed operating platform.
Furthermore, because different regulations apply to services and goods offered by gig workers, taxation and regulation become more complex. The rise of gig workers is significantly impacting traditional industries as companies increasingly favour them for their cost-effectiveness and flexibility. This shift is leading to a decrease in full-time employment and is affecting the job security and benefits typically associated with permanent work. As a result, the labour market dynamics should be reevaluated. It is expected that the gig economy will expand into more established industries, creating a more unified global talent pool. With an anticipated increase in gig hiring, it is evident that the nature of the workforce is evolving, necessitating both firms and employees to embrace flexible strategies.
Author(s) Name: Rusham Jain (OP Jindal Global University, Sonipat)
References-
[1] Sharma R, ‘Gig Economy and Employment Classification’ (TaxGuru, 26 April 2023) <https://taxguru.in/corporate-law/gig-economy-employment-classification.html# > accessed 13 July 2024.
[2] Gig Economy Worker Classification: Amtrust Financial’ (AmtrustFinancial) <https://amtrustfinancial.com/blog/small-business/employment-classification-impact-on-gig-economy> accessed 13 July 2024.
[3] Koutsimpogiorgos N and others, ‘Conceptualizing the Gig Economy and Its Regulatory Problems’ (WILEY Online Library, 2 May 2020) <https://onlinelibrary.wiley.com/doi/full/10.1002/poi3.237> accessed 14 July 2024.
[4] Ibid.
[5] ‘The Gig Economy: Transforming Traditional Employment Landscape’ (Scissors App) <https://www.scissorsapp.com/ultimate-staffing-agency/gig-economy/how-the-gig-economy-affects-traditional-employment/ > accessed 14 July 2024.
[6] Ibid.
[7] G S, ‘The Gig Economy and the Future of Work: Challenges and Opportunities’ (LinkedIn, 24 February 2024) <https://www.linkedin.com/pulse/gig-economy-future-work-challenges-opportunities-santosh-g-vxwyc> accessed 15 July 2024.
[8] ‘Future of Gig Workforce in India’ (CII Blog, 13 June 2023) <https://ciiblog.in/future-of-gig-workforce-in-india/> accessed 15 July 2024.
