The Hot New Gig Economy
The quality of jobs, rather than merely the quantity of jobs, should now be the principal concern for the government
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Even as Indian economists fret over job numbers, they are missing the wood for the trees. Employment data from the NSSO or the CMIE does not capture the hottest trend in jobs: the gig economy.
Worldwide more and more millennials are opting for project-based work – gigs that give them freedom, space and challenges. With robots and artificial intelligence shrinking traditional industrial jobs, the trend towards assignment-based work is growing.
In India, jobs data captures less than 50 per cent – by some estimates less than 80 per cent – of all jobs. Most jobs tracked are in the formal economy but it’s in the informal economy where many new-economy jobs are being created. The next time Swiggy delivers your dinner at home or you ride an Uber cab to office, you are supporting the informal economy. Mall workers, healthcare startups, interior designers, web coders and food caterers form a layer of gig jobbers who make India’s informal economy far larger than is generally believed.
The numbers aren’t small. According to a report in Mint: “Delhi has emerged as the top destination for migrant workers joining India’s tech-enabled gig economy, pushing startup capital Bengaluru to a distant second sport. The capital city added 560,600 people to its sharing economy in the six months ended 31 March, an 88 per cent jump from the 298,000 it attracted in the first half of the last fiscal, data from human resource firm TeamLease Services shows.”
Bengaluru isn’t far behind. It added 2,52,300 gig jobs in July-December 2018. Thus just two cities, Delhi and Bengaluru, created over 8,00,000 jobs in the informal economy in six months. Extrapolate that to the 12 months ending March 31, 2019 and we get over 1.6 million new jobs created in one year. Add Mumbai, India’s financial capital and a verital paradise for gig jobs, as well as Hyderabad, Chennai, Pune, Chandigarh and Kolkata which have thriving millennial communities, and the new jobs being generated in the gig slice of India’s informal economy could be close to three million a year.
The downside obviously is low pay and lack of job security. But as India’s new economy and startup ecosystem mature, both wages and job tenure will rise. That has been the trend in the United States and Europe where the gig economy is rapidly gaining traction with rising wages and clear job contracts.
Teamlease estimates that 56 per cent of new jobs in India are being generated by the sharing/gig economy “across the blue-collar and white-collar workforce.” If indeed such a large proportion of new jobs are being generated in the informal economy, NSSO and CMIE employment data would be inadequate to judge India’s jobs growth or decline, as some data analytics claim. An additional factor is the “Mudra economy”. Driven by Mudra loans to self-employed small entrepreneurs ranging from Rs. 50,000 to Rs. 10 lakh, millions of small business have been spawned. These range from food stalls with just two employees to mobile health clinics with several employees. Again, these are jobs in the expanding informal economy that are not captured by NSSO or CMIE data.
Nowhere are more informal jobs being created than in ecommerce. Amazon, Reliance Retail and Flipkart are on a hiring spree. They are also turbocharging “knock-on” industries: logistics, transport, software, payment gateways, warehouses, packaging units and mobile telephony (on which almost all orders are generated). Every time you buy a product on Amazon, work is instantly parcelled out to a chain of suppliers – from the retail store stocking that product to the courier delivering it to your doorstep, often in a matter of hours.
Indeed, ecommerce is revolutionising not only the jobs market but consumer habits. As Joydeep Bhattacharya and Sanjay Wali reported in Mint: “A homemaker in Coimbatore who used to buy groceries from the neighbourhood store now simply orders online what she needs the night before, to be delivered at 7am. It arrives on time, just after her morning puja, every day and she pays her bill at the end of the month using her mobile wallet. The e-store that delivers her groceries customises reminders and options, almost seeming to know what she will need before she realises it. This is the contemporary scenario of grocery retail, and it is an exciting time to be a retailer and a consumer in India. The overall Indian grocery market is set to grow from about $550 billion to nearly $1 trillion in four to five years. The addressable market for FMCG players is about $250 billion today and is estimated to double in the next four to five years, according to Bain & Co.”
All of this presages a great future for job creation but does raise hackles among kirana stores. Will such seamless ecommerce drive kiranas into oblivion? Is that why the BJP-led NDA government has barred FDI in multibrand retail, since traders form its core constituency? The fears are unfounded. As with all innovations, there is a period of disruption before equilibrium is restored. After several years of Flipkart and Amazon operations, kirana store remain resilient. Many have become an integral part of the ecommerce ecosystem. Their volumes have risen. Those that remain outside the ecosystem, selling to local customers, have the advantage of customer loyalty and one-hour deliveries which even Amazon cannot match.
Four conclusions are clear: First, NSSO (and CMIE) data captures jobs in the formal economy where employment is structured and measureable. Second, the informal economy, which is unstructured, comprises over 50 per cent of the overall economy, possibly more. Third, the sharing and gig economy has expanded the size of the informal economy and is adding an estimated three million jobs a year – which traditional jobs data doesn’t capture. Fourth, Mudra loan-financed micro-entrepreneurs are moving away from low-paid blue-collar jobs to self-employment and generating jobs for others in their tiny enterprises.
The quality of jobs, rather than merely the quantity of jobs, should now be the principal concern for the government. It should publish the NSSO data along with a white paper on the exciting dynamic of new-economy jobs in India. That will ensure economists don’t miss the wood for the trees.