Already under massive stress from the virus, more Indian workers turn to ‘gig economy’ livelihoods

India’s work culture is at an inflection point.

The coronavirus pandemic is shaking up the country’s labor force, shifting the focus sharply to gig economy jobs — or on-demand, part-time work given to contract workers.

The global embrace of remote work or working from home has reset expectations, employment choices and work cultures, according to industry experts who spoke to CNBC.

“We believe that there will be structural shifts as part of a hybrid workforce that blends in-person employees with virtual,” said Sandip Patel, managing director of IBM India and South Asia, in an email.  

“It’s a fight for skills and talent that will drive the business and talent models… and gig workers will certainly assume a strong place in the future workforce.”

The workforce changes come as India battles a second wave of the coronavirus pandemic. Covid-19 cases in the South Asian nation have spiked to daily record highs in the past month. India had 362,727 new infections over the last 24 hours with 4,120 deaths reported on Thursday.

India is the world’s second worst-hit country, behind only the U.S. Health ministry data shows there are officially more than 23.7 million cumulative cases since the start of the pandemic. The death toll stands at  258,317 so far — a figure health experts have thrown doubt on as they say the true numbers are not reflected.

The recent surge in cases has pushed the health-care system to the brink as hospitals run out of beds and oxygen, and morgues and crematoriums overflow. 

While Covid cases continue to take a human toll on India, it has also disrupted the country’s workplace.

The South Asian nation has always been known for having a large pool of informal gig workers, such as contract workers on construction sites — but Covid-19 is speeding up this trend even more.

“The pandemic really is accelerating the conversations around it. More companies are now open to people working remotely than before Covid,” Navkendar Singh, research director at information technology consultancy IDC India, said in a phone interview.

“Many organizations will not go back to the same process of hiring people or even working with full-time employees, as having a pool of gig workers is more cost-effective for businesses,” he said, adding that such shifts in India’s workforce culture “will become permanent” with time.

The potential growth of the gig economy in a country like India is enormous. 

The Associated Chambers of Commerce and Industry of India (Assocham) has projected India’s gig economy would grow at a compounded annual rate of 17% to reach $455 billion by 2023, according to the Economic Times.

A recent report jointly published by global management consulting firm Boston Consulting Group (BCG) and non-profit organization Michael & Susan Dell Foundation, further underlined the growing trend.

It predicted India’s gig economy could triple over the next 3-4 years to 24 million jobs in the non-farm sector — from the current 8 million jobs. The number of gig jobs could soar to 90 million in 8-10 years, with total transactions valued at more than $250 billion, the report said.

The gig economy is also expected to contribute 1.25% to India’s gross domestic product (GDP) over the long term, according to the report.

“The gig economy presents an opportunity for India to drive job creation and economic growth. Technology platforms operating at scale within an ecosystem of information and services can help unlock efficiency, bring in demand-supply transparency, and drive greater formalization and financial inclusion,” said Rajah Augustinraj, principal at BCG and one of the lead authors, in the report.

The increasing role of the gig economy was evident through the significant growth of online platform businesses during the pandemic-induced lockdown, said Tulsi Jayakumar, professor of economics at the S.P. Jain Institute of Management and Research, Mumbai.

“The pandemic has on the one hand led to large scale loss of traditional jobs across both service and manufacturing sectors. On the other hand, it has facilitated the development of a gig economy,” she told CNBC in an email. 

She said the national lockdown and the associated needs of Indian customers have “resulted in the flourishing of platform businesses and the associated technology-enabled gig workforce.”

Despite its massive potential, India’s gig economy is still at a very nascent stage and faces many challenges.

The main issue for gig workers is lack of social security benefits — how to pay for medical expenses and maintaining their livelihoods. Critics argue that there is no guaranteed minimum wage and that such workers have little legal rights to bargain collectively.

Nearly 90% of Indian gig workers have lost income during the Covid-19 pandemic and are concerned about their financial future, according to a survey last year by Flourish Ventures, an early stage venture capital firm.

Given the problems gig workers face India needs to rethink its current labor laws to better protect them, Jayakumar from S.P. Jain pointed out.

“The government would need to identify and assess existing laws and regulations that could cover the gig economy to promote its growth environment while ensuring worker protections,” she said.

During this year’s budget announcement, India’s Finance Minister Nirmala Sitharaman announced a key measure to extend social security benefits for the country’s gig economy workers.

“For the first time globally, social security benefits will extend to gig and platform workers. Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation,” Sitharaman said in her budget speech.

While the move is a step in the right direction, the Indian government has to do more and create policies that allow the gig sector to flourish, said IDC’s Singh.

“Let’s start making policies for them (gig workers), which make them feel that they’re part of the overall job ecosystem. That could fuel India’s gig economy very rapidly,” he said.

“I think the government will do something about it.”