Time to ‘gig’ it a go: Can fintech emerge as a gamechanger for the gig economy?

| Updated on: Dec 03, 2021
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As the world evolves into a gigantic place of work for all, how can India bring in ‘acche din’ for its fast-emerging gig economy?

The raging Covid-19 pandemic not only tested organisational resilience but also dispelled several reservations about the long-term viability of giggers. Even though the gig economy is not a new concept, businesses began appreciating its advantages with reduced overhead costs and improved liquidity. On the other hand, employees also saw greater freedom of choice and flexibility in this approach.

Amidst this fading skepticism and rise of blue-collar jobs in India, the government found an opportunity to create 90-million jobs and combat the surge in unemployment, which recently rose to 7.91 per cent. Further, with India preparing to frame the National Employment Policy, this could be a turning point for the new breed of hard-working and talented people, as the policymakers may finally consider bringing gig workers into the mainstream.

But with macro and micro shifts in global economies, these genies of Covid-19 still face profound income fluctuations and remain poorly served by the current financial system. Here, a bigger question is – can fintech be that magic wand for the soon-to-be-mammoth gig workforce in India? 

Bring in social security benefits

While the recent social security code by the Central Government might cover gig workers to a certain extent, it is critical to note that despite their growing number, the gig workforce in India suffers from inadequate employment rights like EPF, ESI, medical insurance, paid sick leave, maternity/paternity leave, among others. The workforce also follows various compensation models like fixed-fee (contractual), commensurate to time and effort, actual units of work delivered, and the quality of the outcome. These models need to be reviewed as there are several gig workers who suffer from unreliable or untimely payments. 

If they are brought under the ambit of the National Employment Policy, employers will move over their tax commitments and start fulfilling their social obligations, thus creating a secure work culture for this segment. 

Bridging the gap through smart financial solutions

Fintechs can play a prominent role in the formalisation of the gig workforce by bringing financial services to them at convenient terms. Being digital-only platforms, fintechs can customise solutions and create experiences for all kinds of business models and offer solutions like bank accounts with benefits similar to salary accounts and access to credit against the expected income to bridge the significant gap between traditional financial services and the conventional ways of working in the gig economy.

Additionally, solutions that offer seasonality-induced lean periods and emergency expenses, customised group insurance plans including medical insurance at affordable rates, and investment options to match their specific financial goals, can help the gig economy flourish in India. 

Help in building skill sets 

For any gig worker, multi-tasking and multi-skilling are the key attributes that enable them to work on multiple projects simultaneously. Hence, developing vocational training courses to build skill sets is key for the sustainable growth of the gig economy.

Fintechs can be instrumental in providing financial literacy to these gig workers by launching learning and development programmes in collaboration with gig employer platforms that can help address their financial literacy challenges. Helping them understand topics like cash flow, insurance, small-asset financing, hassle-free loan procedures, customised investment options will assist them in choosing the right opportunities to effectively grow their income, and meet their personal financial goals.  

Fintech and gig economy: A win-win combo

Despite their growing numbers, the gig workforce continues to remain financially underserved – inconsistent income patterns, lack of benefits, and the formalisation of services being some of the key deterrents. This presents a clear opportunity for fintech. Most gig workers use various platforms to acquire and complete projects, thereby generating huge data that includes their work history, digital transactions, social interactions, spending patterns, etc. Fintechs can use these resources of alternative data in order to create customised products suitable for the gig workforce. 

As gig workers deal with several projects at a time, they are more likely to choose a digital platform for their financial and administrative needs. Be it platforms that offer flexibility in bill payments or quick and low-interest lending solutions, or an invoice assistant that helps chase clients for payments, to cashflow insights that help them predict and regularise their income cycles – innovative fintech solutions can be a game-changer for the gig economy.

According to research published by the Trade Union Congress in the UK, the rise of gig workers has far reached consequences, ranging from gender balance in the workforce to overall labour reforms in pay and working conditions. India has a huge untapped potential for the gig economy. However, it is when policymakers, compliance legislators, and employers work in tandem that we will create a balanced and successful working model for them. Here, early fintech disruptors who understand the potential of this massive workforce will fine-tune policies and codes of conduct to create diversity and make it a conducive place for all to coexist. 

The author is CEO, Tide (India)

Published on December 03, 2021

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