On 8th May 2019, thousands of protesters outpoured their ire over what they perceived as injustice perpetuated by the companies that have adopted something called the Gig Economy model, casting doubts on the very principles that form the basis of this system. Uber and Lyft drivers staged mass protests regarding unfair terms of payments and lack of protection against these ride-hailing behemoths. Conversely, for us, as consumers, it is no longer possible to imagine a world without Ola and Uber. The convenience and affordability that these platforms provide cannot be ignored. Thus, the day marked the start of a long and heated debate on the potential and sustainability of the Gig Economy. From being called the driver of growth to the perpetrator of inequity and worker resentments, the arguments, though seemingly valid, are poles apart.

Challenging the conventional ideas of work, the Gig Economy model targets the new generation of individuals who aspire for greater freedom, control and flexibility in their professional lives. This model provides them with a different way of life than those described by their elders: a lifetime of doing the same thing at the same place for the same pay and in the same capacity.

The Gig Economy is used to describe a system wherein the people (freelancers) offer their labour services on a short-term basis to one or more different employers at a particular point of time, instead of taking up full employment in a specific firm for an indefinite period. The Gig Economy model has become, in recent times, the topic of most debates. It has its own set of advantages that glorify it as a means to solve most of our economic problems and disadvantages that raise questions on its sustainability and suitability.

The strongest point in favour of this model is the incentive structure that it provides to workers to enhance their productivity. All income and job-related negotiations boil down to one argument: “If you want the job or if you want a higher salary, you raise your competence.” Lack of job security and intense competition serve as major incentives to workers to upgrade their skills, a theory akin to Marshall’s Efficiency Wage Hypothesis for Labour Economics.

However, on the flip side, what can be viewed as an incentive to improve the quality of work can also be considered to be a constant cause of anxiety and mental turmoil. Devoid of employment perks like guaranteed flows of monthly income, sick leaves, provident fund and insurance, paid holidays, fixed schedules, etc., freelancing may disrupt a person’s work-life balance. Moreover, a freelancer, to stand out in the competitive environment, is burdened with the tasks of constantly looking out for new job postings, marketing herself/himself to prospective employers and negotiating the terms of the contract. These tasks, though not bad per se, might serve as distractions and limit the time and efforts available for individuals to focus on their primary work.

On the other hand, people may associate this style of living with entrepreneurship, self-employment, initiative, creativity and independence. The freedom and flexibility that comes with freelancing cannot be undermined. The model provides for an all-inclusive growth, providing opportunities to even the physically disabled. It limits the scope of workplace bias and discrimination. If utilised well, it can also serve as a facilitator of economic mobility. It can also help individuals come out of abject poverty (getting some work somehow is better than no work).

However, the unrestrained freedom might come at the cost of worker exploitation. A product of capitalism at its extreme, the Gig Economy threatens to create similar problems that extreme capitalism has been feared the most for – worker exploitation due to lack of regulation by the government.

The model seems to hand too much power to the corporations who may exert their dominance over freelancers in the absence of any minimum wage law or other forms of government intervention. Unreasonable work hours, unjust payments and tremendous workload are some of the struggles the freelancers have to face. Furthermore, it is always these corporations who are at a better bargaining position in these negotiations since the number of freelancers easily outnumber the jobs available.

On viewing this model from the perspective of startups, big business houses and corporations, the corporate world has much to gain. Outsourcing of work reduces costs and improves efficiency of operations. A vast pool of talent is available from across the globe, as and when necessary. The business model becomes flexible and can be easily adapted to suit the present needs. Investment in workplaces for permanent employees or for conducting employee benefit programmes can be reduced. It also makes a company’s business model more adaptable to the changing business environment. However, the present employees on the company’s payroll may suffer if the company decides to outsource its core work. As far as nations are concerned, the developed countries have been faster in their adaptation of the Gig Economy model and have benefitted from it as well. A report by The Boston Globe estimates 40% of Americans to be working in the Gig Economy by 2020. American IT firms are known to outsource their work to freelancers in countries like India and Africa where they can get it done at a price cheaper than what they may have to pay in their own countries.

The scope of the Gig Economy model as a means to solve economic problems in developing nations like India remains limited, as of now. Considering the amount of illiteracy and lack of technical skills, the Indian population, specifically the poor, may find it challenging to enter the field of freelancing. Moreover, the availability of work might be affected by cyclical fluctuations. However, for the educated yet unemployed youth of the country, freelancing may provide job opportunities that might not be available otherwise. It also provides the ambitious youth of today with avenues for a side hustle. This model can be viewed by many as simply a source of second income.

It is not possible to label the Gig Economy model sustainable or not sustainable. Like every other economic concept, it offers trade-offs, and prudence lies in taking a situation-specific approach to its costs and benefits.

By Aastha Gaur