The lockdown because of COVID-19 has meant that more than 120 million people have lost their jobs in the month of April, and India's unemployment rate has risen to 27.11% according to a report by the Centre for Monitoring the Indian Economy (CMIE).
Speaking to BOOM's Govindraj Ethiraj, Ateesh Tankha, who runs a fintech company, Sabina Dewan, president of thinktank JustJobs Network; and Haresh Chawla, partner of private equity firm True North, shared their views about the post COVID-19 economy.
Sabina Dewan, president of thinktank JustJobs Network predicts that the e-commerce and gig economy will actually capture the limited demand post COVID-19. Gig workers are employees with contracts that exist outside traditional employment, and a gig economy is based on temporary and contract-based flexible jobs, which involves connecting clients and employees via online platforms. But she sounds a warning that the overpopulation might depress the wages. "When bricks and mortar business are going out of business, you are going to see more delivery boys, more people in the gig economy, that are lower skilled, taking their cars and saying I am going to be an Uber driver, kind of entering the gig economy. So what is going to happen is you are going to see an oversupply of labour in those sectors, which is further going to depress the wages and the working conditions in those sectors and that is something we need to watch out for, " said Dewan.
The share of the gig economy in the service industry in the urban labour force is 25% according to a report by Invest India and the total workers in the services sector in urban areas are estimated to be around 35 million.
Haresh Chawla, partner of private equity firm True North says that, "MSME jobs will go down because of the spiralling of the demand-supply pattern. The consumption pattern of the top 15-20% Indians who are basically driving the nation's consumption and the trickle-down of income might change. If it shifts it will go towards the gig economy, it will go towards a higher amount of services. You will stop going out, you start getting services in. It is just a hope—one fall in demand from one side of the economy can be made up partially by the fact that these other services become available. Of course, discounts and funding for these startups will be under pressure. But the fact is, now people's willingness to pay also will also go up."
Ateesh Tankha, who runs a fintech company, says, "As you think about the gig economy and all the startups out there, the original model may have been A, now they are suddenly playing into B or C. I think it is really about survival. Having said that some of them are going to find a sweet spot whereby because of a certain service they are providing to a non-typical client of the past, where they were B2C, Zomato is now doing big time B2B, it is tied up with Hyatt, it has tied up with a lot of FMCG majors, etc. "
Prior to the COVID-19 pandemic, a report by industry body ASSOCHAM had estimated the gig economy in India to grow to reach around $455 billion by 2023.
Gig workers associated with online platforms might have a slew of benefits awaiting them according to new rules proposed by the labour ministry last year under the Social Security Code Bill. These rules will make gig works eligible for insurance benefits provided by the state-run Employees' State Insurance Corporation (ESIC).
Catch the full discussion below.