Flourish Ventures, a global fintech venture capital fund with investments across South Asia, today published the fourth country report in its five-part series tracking the economic struggles of gig workers during the COVID-19 pandemic.
The survey reveals that nearly 90 per cent of Indian gig workers have lost income during the pandemic. These workers often enjoyed above-average earnings before the pandemic, but more than a third surveyed were making less than Rs 5,000 (approximately USD 68) per month by August. This research also highlighted the potential of Fintech to serve their unmet financial needs and improve their financial security - especially as nearly all intended to remain on digital platforms for gig workers.
This survey of 770 ridesharing drivers, delivery workers, and housecleaners using digital platforms was conducted in August 2020, as COVID-19 cases were surging across in India.
Flourish's series The Digital Hustle: Gig Worker Financial Lives Under Pressure has also surveyed Brazil, Indonesia, South Africa, and is fielding a final installment in the United States.
Key Findings
* Incomes have collapsed since the lockdowns. While most Indian gig workers earned over Rs 25,000 per month (approximately USD 340) before the pandemic, by August nearly nine in 10 were making less than Rs 15,000 per month (USD 200). More than a third of gig workers were making about USD 2.3 per day or less.
* Indian gig workers have been resilient: If they lost their main source of income, Flourish found that 47 per cent of gig workers could not cover their expenses for a month without borrowing money - although the fact that 52 per cent could manage for more than a month indicates greater financial resilience than we found in other markets.
* Many are taking painful action: 44 per cent have already borrowed, 45 per cent have cut consumption, 83 per cent have used their savings, and 57 per cent have acted on the loan moratorium to reduce or halt payments on their debts.
* Government aid has alleviated some hardship: Of those surveyed, 42 per cent received food or financial aid from government COVID-19 relief. Those who have were over four times less likely to say they have lost hope.
* Despite real fears about the health risk, 61 per cent of respondents were more concerned about their ability to work. Concern for their livelihoods outweighed gig workers' worries about even their access to basic needs (17 per cent) or their family's health (12 per cent).
* Most gig workers worry about their future. While immediate cash flow was a moderate concern, at least 61 per cent of respondents' top concern was saving for old age or paying off debt.
"Gig workers have been hurting as the COVID-19 crisis has persisted in India, even when they had a financial cushion in the form of government aid or personal savings," said Tilman Ehrbeck, managing partner at Flourish. "This research reveals most are concerned for their financial future. At Flourish, our hope is that the same digital platforms which enabled the gig economy can connect workers to new sources of income and better financial tools for security in this crisis and beyond." Those Hardest Hit
As Flourish has found in other countries, ridesharing drivers in India were hit hardest by the COVID-19 economy. Fully 90 per cent reported a loss of income, compared to 72 per cent of house cleaners. Because India's digital gig economy is dominated by men, fewer women were surveyed. In Indonesia, female gig workers fared the same as men since the pandemic; in India women were more likely to lose income.
As in most countries, the pandemic has affected urban centers more severely than rural areas - and this may be even more pronounced in India. One house cleaner surveyed said, "I returned to my village. I am concerned about going back to Mumbai because everyone seems to have the disease there, but I don't have an option because there's no work here. We have to find a way to make money." Sources of Resilience
Compared with other countries surveyed in The Digital Hustle series, India provided more generous government aid. In addition to receiving government aid, 57 per cent of workers surveyed temporarily halted payments on existing loans as part of the federal loan moratorium.
Indian gig workers also seemed to have a larger personal savings cushion than those in other countries. At least 83 per cent have used savings to get through the crisis. In India, 52 per cent of respondents said, if they lost their primary income, they could last at least a month without borrowing. In Brazil, Indonesia, and South Africa, less than 27 per cent of respondents could say the same.
Fintech and gig workers' financial futures While 45 per cent of Indian gig workers have cut spending, about the same proportion (44 per cent) have borrowed money in the pandemic. Most are concerned with their ability to pay down debt and plan for the future.
The need to manage strained day-to-day cash flows, and better prepare for the future, could be served by Fintech solutions, as gig workers are already digitally connected.
A mobile app could aggregate all of a gig worker's earnings derived from different sources and nudge workers to regularly put aside small amounts of money into a digital account for future use - such as for debt instalments. Digital platforms could also provide them with small ticket credit to purchase supplies, fill up fuel tanks or learn new skills when needed.
Survey Methodology
Flourish partnered with research firm 60 Decibels and local partners Avail Finance and Unitus Capital to conduct the online survey of 770 gig workers in August 2020. Of these respondents, 322 were ridesharing drivers, 307 were delivery workers, and 141 were house cleaning workers.
