Why is India facing a shortage of gig workers?

India’s labour market is witnessing a perplexing phenomenon. Data from the Centre for Monitoring Indian Economy (CMIE) showed that, from 428.4 million in March, the labour force increased by 8.8 million to reach 437.2 million in April this year. This was one of the largest monthly increases.

The private think-tank said that such an increase is only possible if some working-age people who were out of the labour force joined back in April.

However, employment opportunities were inadequate to absorb the additional supply resulting in the unemployment rate inching up slightly.

An 8.8 million increase in the labour force and a 7 million expansion in employment in April resulted in a 1.8 million increase in the count of the unemployed. This pushed the total number of unemployed to 34.2 million.

But, what was perplexing was that even as the number of jobless people soared, India’s on-demand delivery platforms witnessed a shortage of workers -- the riders who can pick and drop food, groceries and other items.

Swiggy has temporarily shut down its pick-up and drop-off service Genie in Mumbai, Hyderabad and Bengaluru - three of the 68 cities where the service is available due to a shortage of delivery personnel.

The company said the cricketing and festive season resulted in a surge in demand for servicing the requirements for both the food marketplace and grocery service Instamart, requiring them to prioritise deliveries accordingly.

Swiggy said it hoped to resume Genie in the impacted cities soon. While demand has gone up, delivery times have increased too in the past few weeks in top cities. Food delivery times are averaging above 40 minutes and even go up to 60 minutes or more.

It is also leading to order cancellations. This is also compelling online platforms to club multiple orders in one go.

The proliferation of quick commerce apps has triggered a hiring frenzy of sorts for delivery workers. B2B gig marketplace Taskmo’s Prashant Janadri says that companies must broadly increase their pay for gig workers in order to retain them longer as workers are now switching platforms in as little as 1 or 2 months.

It is clear that delivery workers feel their wages are not lucrative enough anymore for the kind of effort they put in, especially in the summers.

Janadri says one of the biggest contributing factors to the crisis is the wages not going up commensurately as fuel got costlier in the last two months. But companies could be worried that increasing delivery charges could lead to suppression of demand.

Meanwhile, Rohit Rathi, co-founder of Karmalife, a financial platform for gig workers, says the current situation is because of cyclical factors and the demand-supply mismatch will stabilise in a few months.

The demand for gig workers by quick commerce and logistics players, plus rising inflation due to fuel costs and the inability of players to increase incentives to riders along with a high churn rate is therefore impacting hiring and retention.