MODI GOVT HAS TO TAKE MEASURES TO ENSURE EXPANSION
Kaushik Banik is a happy person these days. He is a software developer. After toiling hard for months to get a job, he finally found an alternative, thanks to the Upwork, an online digital job platform. His hourly wage rate is $35 dollars. There are millions of others like Kaushik who are now getting benefitted from the advent of digital platforms. At a time, when fewer jobs are getting created in the organized sector (daily, less than 2 per cent Indians who apply for jobs get them), and the economy is slowing down, the silver lining lies in the spread of platform enabled gig economy. In India, it is estimated there are around 3 million gig workers. The number is certainly small if one were to compare it with India’s 500 million workers. However, the good part is an estimated 56 per cent of the new employment is generated by the gig world.
Delivery-boys, cleaners, consultants, bloggers, etc. are all part of the gig economy. Uber, Ola, Zomato, etc., are all part of the labour platform. As the work is job-specific, workers have the flexibility to work for more than one contractor and choose the hours of work. This has encouraged women in labour force participation. Women comprise more than a third of 15,000 users of the digital platform Souktel in the West Bank and Gaza region, compared to only 19 per cent of the entire labor force in the same area. The capital platform, such as Airbnb (providing lodging), Quick Ride (providing car-sharing service),etc., has provided better utilization of fixed assets such as cars and houses. A global survey of platform companies found there are around 180 platform companies valued at $4.5 trillion. Some of these services are bundled together. Uber not only provide taxi rental services but also has Uber Eats.
There are other related benefits. The lower price of service associated with the gig economy has generated consumer surplus which can be spent on other sectors, with a multiplier effect on income and employment generation. Taxi services by Uber and Ola, has reduced taxi fares in major cities in India. There has been a reduction in alcohol-related motor vehicle accidents and traffic congestion. Carpool and car-sharing have environmental benefit as it contributes to a low carbon-footprint.
Growth of platform enabled services has led to the formalization of the economy and provided means to finance India’s huge unbanked population. People are using apps such as Google pay, Amazon pay for buying goods and services. Even in advance economies like Singapore, studies point out, the advent of the gig economy has led to an increase in credit card sales.
As there are no entry barriers, anyone, and everyone can participate from anywhere. This has led to a demand for bloggers, researchers, consultants, from developing countries such as India, the Philippines, Bangladesh, etc. Their returns have gone up, as they are getting paid in US dollars. There are no barriers based on caste, religion, gender, and location. In the USA, a study points out before the advent of Airbnb, Afro-American rental hosts were getting 12 per cent less rent than the White American counterparts for the same type of house in the same location. UNICORN such as Google, Facebook, Microsoft are now investing in digital startups and even training workers as to how to make the best use of the online market.
There are several ways the government can intervene to complement this self-evolving gig economy. It is important to ensure the supply of skilled labours. The United Kingdom government is promoting robotics, 5G wireless internet, and smart technologies while asking private sectors to sponsor 300 master students and 200 doctoral students in artificial intelligence every year.
As much of the growth is supported through the ICT, the government should undertake investment in telecommunications, cyber-security, internet, and ensure widespread access. Investing in complementary infrastructure such as electricity connection, lowering logistics costs for setting up a business, and enforcing contracts will help.
There should be a way to usher in the ease of doing business, for instance, streamlining regulatory issues. In case of Uber, Ola, etc., the government should minimize regulatory constraints so that is easy to obtain a driving license, ensure access to finance (giving soft loan to buy a car), and also see there is a way to harmonize the tax. Road tax paid in any state should be waived-off if the driver may choose to operate Ola/Uber in a different state in India. Likewise, for the provider of rental apartment services, the tax should be minimized if the provider is providing employment and lodging opportunities, particularly, in the rural areas. The small-time businessowners should not be charged any tax if they are accommodating transactions through paytm and e-wallets.
From the consumption-side, regulations related to data privacy have to be formed and importantly it has to be enforced. In a digital world, an enormous amount of data about individual and their activities are captured by the platform owners. These data are then bundled and sold to various companies without taking consent from the consumers. A market can be created by taking consent from the consumers, for instance where the consumers get some discount on the online platform if they agree to sell their data.
At the same time, to safeguard the interest of the consumers using on-demand services, there is a need to formulate rules to protect consumers from unscrupulous operators. Here the efficiency with which other Institutions such as the Competition Commission of India and consumer courts operate will be important. News reports abound with a bad experience with hotel and cab aggregators are not difficult to find.
For the workers, who are the main party in this gig-world, there is a need for ensuring social security. Cab drivers, delivery boys, technicians, etc., have reasons to be looked after in the event they fall sick, or meet with an accident. An overarching insurance scheme, the premium for which may be borne by the government will be a welcome move.
The author is with Bennett University, Greater Noida