Gig Economy in a post-COVID era: The Future of Work has arrived
As I scroll through the countless memes in this lockdown, I can claim that I have at least witnessed one ‘Black Swan’ event in my lifetime. As the COVID-19 pandemic slowly spread its wings putting us through excruciating angst, we still found our Genies through the Gig Workers who doubled down not only as our food delivery friends but also as the essential economy’s frontrunners!
Whether it was for panic-buying wheat flour for the whole year from the nearest supermarket or just a simple ‘non-essential’ indulgence in Tiramisu during a pandemic, the gig workers were on point with their contactless delivery, amidst safety rules mandated by the over-empowered resident welfare associations. Riding through empty roads and deserted streets, they made the deliveries before time even as the Virus was going viral across the world.
Gig work driven by digital platforms includes a variety of ‘jobs’ or micro-entrepreneurial opportunities — from ride-hailing to delivery & professional services, providing homestays as a service — each a small business in their own right. Gigs include essential public services and add great value to local economies, putting money directly in the hands of people on a daily basis. But, this dual crisis of health and economy is taking a huge toll on gig workers too.
Being some of the worst-hit victims of the national lockdowns, the gig economy’s army of workers are pushed into either making a choice of taking risky rides that expose them to the Virus or go without money to pay the bills! Recognizing how large and varied the Gig Economy is will help us understand why some Gig workers are affected more than others.
Numbers Don’t Lie
As the crisis evolves further, gig workers won’t be the only ones suffering even more than usual. The International Labour Organization published a ‘high’ global unemployment estimate of 24.7 million because of COVID-19 in mid-March; a week later, it announced that the outcome could be ‘far higher’. In comparison, global unemployment increased by 22 million compared to the 2008–2009 economic crisis. It is also expected that, worldwide, there could be as many as 35 million more in ‘working poverty’ than before the pre-COVID-19 period for 2020.
In India alone, more than 120 million people have lost their jobs in the month of April while the country’s unemployment rate has risen to 27.11%, according to the Centre for Monitoring the Indian Economy (CMIE).
These statistics send an important message: “Protecting workers against the adverse impacts of the crisis is not only about increasing protection for typical jobs,” states UN Research Institute for Social Development. It is also about including and protecting better those working at the margins: Non-standard workers in tourism, travel, retail and other sectors most immediately affected, dependent self-employed persons with unstable incomes, zero-hours workers and low-paid workers in precarious working conditions who stand to gain little from the various countries’ latest packages of emergency measures, as evidence shows.
Race to the Bottom
For companies relying on gig work, the problem is a threefold one. They must not only focus on protecting the enterprise but also protect the supply — the workers who deliver their services — and the demand — their customers. There are also some companies from the digital economy which have had ‘zero participation’ on their platforms which is helping their founders gauge the sustainability of such business models.
While food delivery, grocery or medicines delivery, cab/ambulance/truck drivers are seeing a spike in demand for their services, they are also at high risk of being medically and financially impacted by COVID-19. On the other end of the gig spectrum, many freelancers such as graphic designers, wedding photographers, travel guides, writers, nannies, cooks, dog walkers are witnessing their work opportunities dwindling while they do not qualify for government assistance or healthcare benefits or other incentives.
A survey states that almost 70% of the workers from the gig economy have said they were not satisfied with the support they had received from their companies during the pandemic. Over half expected some help either from the government or the companies they work for.
Another trend that picked up during the pandemic in the gig work is the race to the bottom. With many rendered jobless as a direct impact of lockdowns, the newly unemployed applied to gig jobs, impacting the lives of those who were part of an already volatile new economy. For instance: Upwork has seen a 50% increase in freelancer sign-ups since the pandemic began. Talkdesk, which launched a gig economy platform, witnessed 10,000 new applications within 10 days.
On platforms like Upwork and Fiverr, many freelancers are already feeling the pinch. Given the effect of the pandemic on jobs globally, many giggers are now vying for freelance work and pitching their services for lower rates to make money, leaving them wondering whether they can really make enough money off of these platforms. Despite more people having food delivered now, receiving packages from Amazon and searching online for their graphic design and customer service needs, the surge of new workers has turned the law of supply and demand in the gig economy upside down.
A Silver Lining for Some
The pandemic-induced recession also shone a silver lining through the crisis where giggers have become the face of the COVID-19 economy, especially the delivery folks!
As tech-driven platforms such as ride-sharing, home/hotel rentals and other Uberisation-based digital businesses related to the hospitality and service sector witnessed their earnings plummet, delivery platforms saw an immediate spike in orders, pushing them to pivot and refocus their business strategies on supplying only essential items.
For instance: Grofers, Big Basket and such food/grocery delivery businesses witnessed a spike in orders by three to five times per day soon after the announcement of lockdown in India. Similarly, Instacart had to refocus its business on only delivering essentials due to an overwhelming amount of orders while it added 3 lakh full-time shoppers during the pandemic. Meanwhile, Swiggy and Zomato switched to essentials and groceries deliveries as restaurants remained shut.
As a result, job postings for mobile delivery platforms have opened up significantly during the COVID era and jumped 78% in March. Around the same time, Amazon announced that its intention to hire around 100,000 workers globally to meet the demand of soaring online orders. In India, Swiggy has responded to the expanded demand for grocery delivery and began servicing non-partner stores under their delivery offering.
The Future of Work is Now
The pandemic has shown us that as business recovers, digital economy companies will benefit from their ability to be more flexible than other industries in certain aspects. On the business side of things, minimizing exposure to the virus may lead to a further reduction in cash transactions. The crisis will likely intensify investors’ growing scrutiny of the path to profitability for gig economy companies, making them increasingly wary of start-ups’ strategies that favour achieving scale before profitability.
In fact, governments of many countries are now leveraging gig work to fast-track recovery. Digital platforms have contributed to crisis management and recovery using their nimble operations, flexible thinking, and technological prowess to get things done quickly.
For instance: Chinese companies such as JD.com and Meituan25 innovated earlier this year when mobility restrictions were placed on them, by testing and piloting their autonomous delivery services, so as to minimise human contact. Keenon Robotics went ahead and delivered meals in hospitals and quarantine rooms using robots in 40 cities. Similarly, batched orders for apartments is also a feature in NinjaCart, an agritech startup in India, similar to the aggregated orders placed by the Chinese for their gated communities in Beijing.
In India, Kerala State Civil Supplies Corporation in Kochi partnered with Zomato to enlist grains and other essentials on the app. By restricting payment to online mode only and by roping in Zomato’s expertise in packaging to train their staff, the state government utilised the private sector effectively to deliver essentials under the government’s public distribution system (PDS). In Bengaluru, the ride-hailing platform Ola tied up with the Municipal Corporation to provide transportation for health workers to visit people quarantined at home, facilitating trips to 20,000 households in the city.
These examples pave the way for opportunities to re-skill or upskill workers that are hinged on technology and platforms. Additionally, the experience of a pandemic response, which is way different from crisis management, has also taught the digital economy companies to identify where their natural pivot points are and how they can utilise other services through theirs if their primary business model is jeopardised in some way.
Band-aid solutions won’t work anymore
In this crisis, there is a lesson for the future: The experience of gig workers reflects that going digital means more than just shifting channels. It is about re-orienting labour markets, ensuring safety net or social protection and welfare systems that protect every person’s human right to social security in a post-COVID digital era. The rise of platforms such as “Gig Workers Rising” is a testimony to that.
As a result, new economy companies have begun responding to the COVID crisis by providing health benefits and protection programs along with other incentives to retain gig workers. For instance: Uber in India created an ‘Uber Care Driver Fund’ with a corpus of Rs. 25 crores for essential family needs of its driver-partners. The ride-sharing company also launched UberMedic and UberEssential globally for transporting frontline healthcare workers and providing rides to the elderly as well as moving essential supplies across.
Meanwhile, food and grocery delivery platforms have developed no-contact protocols and temperature checks for their personnel. Ride-hail platforms have provided drivers with masks and sanitizers, created a physical separation between driver and passenger cabins, and mandated regular cleaning of taxis. Another intervention involves mapping rideshare drivers to location-specified mass deliveries or to transport patients to meet the additional demand as well as to expand coverage of services in times of minimal public movement.
On securing incomes and livelihoods, gig economy companies have leveraged fintech and other measures like waiving off the lease and insurance payments for their workers. In the United Kingdom, for example, the fintech community has built ‘COVID Credit’ to let sole traders self-certify lost income. They are also mulling a move to expand government relief to the self-employed, gig workers, and small businesses through this “Open Banking” technology. Similarly, many countries around the world have announced low-interest, collateral-free loans aimed towards SMBs to secure their cash flows.
To stimulate the economy and labour demand in these challenging times, governments have announced short-term measures, supplementing existing social safety nets and insurance mechanisms. These measures limit the human and economic impact of the COVID-19 pandemic and particularly, protect the self-employed, gig workers, and small businesses. They, however, do not suffice.
The change needs to be a long-term solution that happens at the policy-level along with a complete overhaul of labour laws, highlighting a dire need for creating a robust digital infrastructure, boosting connectivity. Regulations on data privacy have to be formed and enforced. There is also a need to formulate regulations to protect consumers from unscrupulous operators where regulators and consumer courts will play a significant role.
Gig Economy is the New Economy
Like I had mentioned in my earlier article on Gig Economy, Gigs generally see an uptick in demand during a recession. The Gig Economy in the COVID-era is currently at a breakout point which is accelerating the pace of its growth. With remote work no longer being an option, COVID-19 has magnified the opportunities that come with it.
The gig economy will continue to grow as companies seek a low-risk staffing option and workers seek economic opportunities in the courier lifestyle with minimal effort to participate. Therefore, the trajectory towards the emerging gig-economy where more and more people are working as gig-workers is likely to be catalysed as an aftermath of the pandemic.
According to Deloitte’s ‘Future of Work Accelerated’ report, three in five organisations (60%) are gauging increasing share of gig workers to reduce the dependence on the full-time workforce. And, India’s gig economy is projected at a market size of $455 billion over the next three years — which might increase even further with the new-found interest.
Additionally, restaurants will look to deliver orders directly to consumers as anybody can start doing it with a bit of investment in technology, which will save costs in the long run and reduce dependency on aggregators. Given that safety and hygiene will also be crucial, transparency in the supply chain will alter the new economy altogether.
As people across the world get unemployed and look for new opportunities as a result of the economic recession, gig work could emerge as the new normal where the workplace will not be an “actual workplace” but a remote one.
Reposted from aditya-gupta.co