The future of work is here. Is it fair?
Gig workers are those who engage in freelancing, flexible, or temporary labor, frequently facilitated by digital platforms. These individuals work as independent contractors, taking on jobs or projects outside of traditional employment arrangements. Delivery workers for service providers like Swiggy or Zomato or drivers for companies like Uber and Ola are prime examples of gig workers.
The gig economy has become a powerful force in the global labor market, transforming how employment is viewed and compensated. Traditional compensation models that are based on organizational structure, hierarchies, and legacy-dependent norms are found wanting to address the complex reality of gig working. The same can be said about statutory norms governing traditional labor interests.
According to a December 2024 ET Retail study, the gig economy in India is projected to generate $455 billion by 2024. India currently has an estimated 7.7 million gig workers, and this number is expected to increase to 23.5 million by 2030.
The COVID-19 pandemic accelerated the shift toward independent contractual work as companies adapted to remote operations and pursued cost efficiencies. Yet this transition has exposed a stark disparity: while companies benefit from increased flexibility and reduced overhead, gig workers shoulder the burden of economic uncertainty. The statistics are sobering, with 43% of India’s gig workers earning less than ₹500 per day, lacking the basic protections that traditional employment provides.
A Call for Fair Compensation
Gig workers currently receive only monetary compensation that fails to take into consideration their specific needs. They typically lack traditional employment benefits like health insurance, paid time off, and retirement plans. The absence of minimum wage protections only compounds such problems, as many gig workers often earn beneath subsistence levels.
According to Business Wire, more than half of gig workers rely on this type of work as their primary source of income, which frequently places them in a financially vulnerable position, where they are either underinsured or completely uninsured. Since they lack extensive support structures, they are exposed to risks that traditional employees might mitigate through employer-provided benefits and other safeguards. As the gig economy grows, it is important to ensure that gig workers attain long-term financial stability and security.
The Role of Technology in Compensation. As technology advances, it will have the ability to change the gig economy into a more equitable environment where employees are treated with respect and receive fair compensation. Technology and automation will significantly impact how gig workers are compensated in the future. Platforms can use data analytics to develop more fair compensation plans that take into account variables like performance, experience, and fluctuations in demand. Businesses can improve employee satisfaction by implementing algorithms that prioritize fair compensation practices. Technology can also enhance communication between platforms and employees, resulting in enhanced transparency and improved dispute-resolution procedures.
Smart contracts are self-executing digital agreements with the terms directly written into code. These automated protocols run on blockchain networks and automatically enforce predefined rules when specific conditions are met, without requiring intermediaries. For example, in the gig economy, a smart contract could automatically release payment to a driver once a passenger confirms their ride is complete. The code itself handles verification, execution, and enforcement, eliminating the need for middlemen like payment processors or legal entities to facilitate transactions. Incorporating blockchain technology offers an innovative approach to ensure a safe and transparent compensation mechanism. Blockchain technology can provide gig workers greater control over their financial data by facilitating real-time transaction tracking and offering an unchangeable record of earnings. By enabling employees to compare their pay to the services they provide, this transparency not only builds trust but also lowers the likelihood of wage disparities. Additionally, smart contracts can automate payment procedures according to predetermined standards, guaranteeing that gig workers receive fast and equitable payment for their labor.
Fair Pay, Strong Economy
According to a study by Papegowda (2024), employees are more productive when they feel safe about their financial circumstances. Businesses can improve overall performance and reduce turnover rates by creating an atmosphere where gig workers are fairly compensated and provided adequate support.
Over a period, better gig worker compensation models can result in a more sustainable workforce. Establishing robust compensation plans can help retain talent in the gig economy and attract new entrants. Increased pay and benefits not only improve employee satisfaction but also foster loyalty and skill growth among gig workers. Business success can ultimately be fueled by this investment in human capital, which can result in better services and happier customers.
Another dimension is linked to the reputation of the hiring company. As quick commerce, can services, food delivery, and other platforms scale, there will be increased deployment of gig workers by such platforms. With the increase in gig workers, their issues, which are currently under the carpet, will gain higher attention. There is a strong possibility that the corporate reputation of the company will be linked with the way it treats its gig workers. Platforms such as Glassdoor, LinkedIn, etc., would soon highlight issues of unfair pay, unsafe practices, and long working hours. Similar to the traditional compensation approach, competing firms can attract gig workers by offering better compensation packages. Investing in better compensation models for gig workers is not only a moral imperative but also an economic necessity.
When gig workers have access to social safety nets and fair wages, they are more likely to support local economies by spending money in their communities. Furthermore, providing adequate support will assist businesses in attracting and retaining talented gig workers, which would enhance customer happiness and service quality. Although businesses are making this investment in human capital, there may be a broader advantage in that it could reduce the need for government assistance programs. Ultimately, emphasizing equitable pay can be a strategic business decision that strengthens a company’s reputation and creates a more stable staff.
A Call for Action
Every stakeholder involved—governments, businesses, and society at large—must acknowledge the importance of gig workers to our economy and review how they are compensated. The time has come for the adoption of compassionate policies and innovative compensation plans that prioritize stability and dignity over transactional partnerships. By implementing comprehensive policies like minimum wage standards, health benefits, retirement savings plans, and social security protections, we can establish a more equitable framework for gig work that recognizes its complexity and empowers those who choose this path.
Authored by: Mary Aakansha Boggu, Postgraduate Student, FLAME University & Prof. Aditya Agrawal, Faculty of Human Resources, FLAME University.