To Gig or Not to Gig

 SIX DECADES AGO, the leftwing Cambridge economist Joan Robinson had famously said, “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.” There is no worse state of being than unemployment, especially in an emerging economy like India where social safety nets are a bare minimum. Those agitating about the level of wages in India’s gig economy should take note. It is a sector which is providing lakhs of livelihood opportunities to Indians with low skills.

Are gig workers paid enough? If compared with very low productivity, ultra-low wage labour in agriculture, the gig economy provides a much better income potential. Remember that India’s per capita income is just $3,000 or `2.7 lakh per year or `22,500 per month. The average gig economy worker can earn that much, maybe more. On the other hand, is it a well-paid, highly desirable way of work? The answer is no. But if there were better jobs available in numbers, people would opt for those. The fact is that there aren’t.

The reality is that over 40 per cent of the workforce is engaged in agriculture, barely eking out a living. Over two-thirds of workers are in the informal, unorganised sector. The fact is that India has not created a sizeable largescale manufacturing sector which could absorb this labour by paying decent wages along with social security benefits. And that is because we have failed to recognise the leading source of our competitive advantage: cheap labour.

As in many other domains, India has put the cart before the horse. The political economy has insisted on over-regulating labour markets, restricting “hire and fire”, setting “minimum wages”. All that this approach has done over seven decades is create a small labour aristocracy, an absence of labour-intensive manufacturing, a preference for capital-intensive industry and mass under-employment (unemployment isn’t an option for most). We have successfully protected labour from jobs!

Now, the challenge is more complex. The nature of work (and jobs) is changing. Take the gig economy. It is an entirely different paradigm from the conventional world of work. By definition, this sector is about temporary or freelance work, not permanent jobs. The gig economy wasn’t created in India. It came up in advanced economies. And in many of these economies—which are labour scarce and high-wage—contracting workers on a part-time, freelance basis makes business sense. It works for the workers as well. Many Uber drivers in the US or the UK do other jobs or other gigs and drive their private cars as taxis to earn supplementary income. The bottomline is that it isn’t a “job”.

In India, because of a scarcity of jobs, and the success of the gig economy, we have reached a point where these gigs are being equated with jobs. That isn’t the nature of work in this sector.

Soon, there will be even bigger changes to jobs as we know them. Artificial Intelligence (AI) is already replacing humans in several tasks which it can do more efficiently and at a lower cost. Again, many of the jobs disappearing in the advanced economies are lower level or entry-level jobs, particularly in services. When this disruption reaches India, as it inevitably will, there will be discontent.

India needs to urgently reset the way it thinks about jobs. There is still a window for old-fashioned labour-intensive manufacturing to employ those with low skills. The gig economy should supplement jobs rather than be an alternative. Simultaneously, an upskilling of the workforce is also required along with a greater focus on entrepreneurship. For now, creativity and empathy are humanity’s comparative advantage over AI.

If the goal is to create more jobs and better jobs, over-regulation and industrial action are wholly inappropriate. They will only lead India to a miserable past, not a prosperous future.