We have been co-existing with COVID-19 for about 18 months now, where we were forced to adapt to an entirely new way of living with minimal contact with others. With global economies taking a hit across the globe and businesses shutting down, tons of workers were left to the mercy of gig contracts. A gig economy is a free and global market, typically one with temporary, flexible jobs with companies hiring independent contractors and freelancers rather than full-time employees. The ASSOCHAM stats convey an optimistic projection for the gig economy, increasing to $455 billion by 2024 at a 17% CAGR. However, this new system of business brings with itself a model which needs accommodation from the policymakers.

 

The gig economy workforce enjoys the liberty of working for flexible hours consistent with their convenience. A trend of the shift to the gig economy during the pandemic was evident among the younger workforce. The bounty of time during the lockdown allowed workers to hone their skills and gain many new ones. The innate need to self-actualise and grow has led to several young workers not being eager to be pinned to one company and one role. The desire to explore one's horizon has culminated in taking various part-time jobs at different organisations.

 

Economic recessions put far more pressure on independent workers due to the unavailability of jobs and volatility of prices they can charge. However, during significant downturns, many traditional workers are put out of work, thus losing their income. As many studies have shown, job loss often results in long-term negative consequences owing to substantial periods of unemployment and/or lower wages upon finding another job. Independent workers are less subject to those extreme losses. It hence becomes a stimulating observation of how independent workers could be better resistant to elongated periods of economic dips.

 

The increasing number of workers preferring flexible hours over traditional jobs and corporations finding ways to chop costs to survive the economic slump has led to a lop-sided demand and supply relation. There's a certain kind of monopsonist market within the making which leaves the gig workers with little to no bargaining power to negotiate their working conditions.

 

Traditional employment remains a lucrative option for several who desire the perks that accompany it:  health insurance being one among them. The absence of any kind of medical cover in the case of gig works (on account of them not being on the formal payroll of any organisation) leaves them exposed to purchase insurance through the open market, which may be expensive and time-consuming. The disadvantage faced by independent workers within the health care market is analogous thereto faced by any self-employed or unemployed person. Therefore, benefits become an important area where policymakers need to work for the parity between the independent and traditional works for the gig economy to benefit both buyers and sellers of labour.

 

The right policy for other benefits, like social insurance and retirement benefits, is complicated because workers within the gig economy vary in income and age. Therefore the amount of their time spent working. It seems most effective for policymakers to permit workers to line up their own benefits programs with their earnings to satisfy their own needs rather than ensure portability. A good example is the United States' SEP-IRA (a sort of retirement savings account) that already provides independent workers tax-preferred retirement benefits, almost like those enjoyed by traditional workers, and these plans can easily be tailored according to the income and savings needs of any given individual.

 

In conclusion, permitting the employers and the employees to contract in the most efficient manner should be the objective that guides policymaking. As the gig economy flourishes, these structural policy changes would be essential to provide independent workers portability of benefits and safeguard them from exploitation.