Understanding the Gig Economy: Is it a Blessing or Curse for Workers employment opportunities?

The term ‘gig economy’ has become increasingly popular in today’s business landscape. This concept refers to a type of work where individuals are hired for short-term tasks or projects, often through digital platforms without any formal contracts. Although, gig work has existed for many years and it has seen significant growth recently as largely due to the rise of companies that operate through online Android or IOS applications and technology.

The Rise of Platform-Based Companies

Platforms like Uber which revolutionized ridesharing, Swiggy, which transformed food delivery and Urban Company, which provides personal services and home repairs, have played a crucial role in this expansion. These companies have created a new way for people to find work quickly and easily which is leading to a dramatic increase in gig employment. Currently, it is estimated that over 200 million individuals worldwide are engaged in gig work, stressing its global reach and importance.

Global Participation in the Gig Economy

Research shows that participation in the gig economy is notably higher in developing countries where it ranges from 5% to 12% of the workforce. In contrast, developed nations see much lower participation rates between 1% and 4%. This discrepancy suggests that gig work is often more accessible in areas where traditional employment opportunities may be limited. Many of these gig jobs involve lower-income roles such as delivering food, providing rides, completing small tasks and offering care services.

Gig Work in India: A Longstanding Tradition

In India, the concept of gig work is not new. The country has a vast informal economy, which includes a significant segment of casual workers. This means that gig work has been a part of Indian society for a long time, demonstrating in various forms across both urban and rural areas. Examples include temporary farm labourers, daily-wage construction workers, and domestic helpers.

The presence of these workers illustrates how gig work has always been woven into the fabric of Indian labour by adapting to the needs of both employers and workers. As technology continues to evolve, the gig economy is likely to expand further by offering new opportunities and challenges for workers in India and around the world.

The gig economy represents a significant shift in how work is organized and performed. Its growth, driven by technological advancements and changing labour dynamics is reflecting broader economic trends that are reshaping the workforce globally.

Understanding India's Gig Economy

The gig economy in India is a rapidly growing sector that covers various types of workers as each classified under different categories by the country's labour laws. This article piece aims to clarify these classifications and highlight the challenges faced by gig workers, particularly concerning their rights and benefits.

Classification of Workers

Under Indian labour laws, workers can be categorized into three main groups:

Employees: These are individuals who work for an establishment and receive wages for their labour. Employees enjoy several benefits including minimum wage standards, bonuses, provident funds, gratuity, medical benefits, and maternity leave. These protections are outlined in various laws such as the Minimum Wages Act of 1948 and the Employees’ Provident Fund and Miscellaneous Provisions Act of 1952.
Contract Labor and Migrant Workers: Contract labour refers to individuals hired through a contractor to perform specific tasks for an employer. If these workers are employed in a different state then they are classified as migrant workers. Their welfare is governed by the Contract Labour (Regulation and Abolition) Act of 1970. Both contract and migrant workers are entitled to benefits like provident funds as stipulated by the Employees’ Provident Fund Act.
Workers in the Unorganized Economy: This group includes home-based workers, self-employed individuals, and wage workers who do not have formal employment contracts. Their welfare is protected under the Unorganised Workers’ Social Security Act of 2008, which offers various benefits including life and disability coverage and health care through government schemes.

Despite these classifications, gig workers—especially those engaged in platform work—often find themselves in a risky position with limited legal recognition and protection.

The Status of Gig Workers

Gig workers, particularly those operating through technology-based platforms have to face significant challenges. Currently, they do not receive the same protections as employees or even contract labourers. Although some laws, like the Contract Labour (Regulation and Abolition) Act and the Unorganised Workers’ Social Security Act, have to provide some level of oversight for certain worker categories as they do not adequately address the unique needs of gig workers.

The ratio of employees to gig workers in tech platforms can be as high as 1:20, indicating that the majority of the workforce lacks essential benefits. Gig workers often contend with issues such as:

Inconsistent income and salary shortfalls
Lack of insurance coverage
Difficulty accessing credit
Unpredictable work hours and job security

Additionally, platform workers face specific hurdles including unreliable internet access and the nature of their contractual relationships which often do not qualify as traditional employment. Many gig workers have taken to the courts to demand social security benefits by highlighting the urgent need for legal reform.

Corporate and Government Initiatives

In response to the challenges faced by gig workers, some Indian companies including BigBasket, Flipkart, and Urban Company have pledged to ensure that their gig workers earn at least the local minimum wage, factoring in work-related expenses. Furthermore, the Indian government has launched a web-based portal called e-SHRAM, aimed at creating a National Database of Unorganized Workers. This initiative seeks to enhance the employability of various worker categories as including gig workers and extend social security benefits to them.

Proposed Legal Framework for the Gig Economy

Recognizing the need for a more comprehensive approach to labour laws, the Ministry of Labour and Employment has introduced the Code on Social Security, 2020. This new legislation aims to consolidate existing labour laws and explicitly include gig workers and platform workers in its provisions.

Defining Gig Workers

The Code defines a gig worker as someone who engages in work or a work arrangement outside the traditional employer-employee relationship by earning income from such activities. Platform work is similarly defined as a work arrangement facilitated through an online platform where individuals or organizations offer services in exchange for payment.

The Indian judiciary has established criteria to determine whether an employer-employee relationship exists, taking into account factors such as:

The level of control the employer has over the worker.
Supervision of the worker's tasks.
The employer's role in setting employment conditions.
The provision of tools and materials for work.
Insurance contributions and mutual obligations.

These factors help clarify whether a worker is an independent gig worker or an employee under a more traditional arrangement.

Social Security Provisions for Gig Workers

While the Code acknowledges gig workers, it distinguishes them from traditional employees. Employees are entitled to various benefits including gratuity, compensation for workplace injuries, insurance, provident funds, and maternity leave. In contrast, gig workers will have access to social security schemes developed by the Central and State Governments which will cover areas like life and disability insurance, health benefits, and retirement protection.

The Code also mandates the creation of a social security fund specifically for gig workers. Gig employers, such as those in ride-sharing and delivery services will be required to contribute a percentage of their annual turnover to this fund. This contribution is intended to support the social security schemes available to gig workers. Additionally, all gig and platform workers must register to access these benefits.

The Indian gig economy presents numerous opportunities, but it also poses significant challenges for workers who often lack adequate protection. The proposed legal reforms aim to address these issues by recognizing gig workers and providing them with essential social security benefits by paving the way for a more equitable labour market.

The Growing Challenges of Regulating Gig Workers

With the expansion of part-time jobs and freelance work, a new segment of the workforce, known as gig workers, has emerged. These individuals do not fit into the traditional full-time employment model, which makes it difficult for current labour laws to protect and regulate them. As technology advances and work becomes more flexible, particularly among millennials, the conversation around gig workers' rights has gained momentum globally.

Global Debate on Gig Worker Classification

The issue of how to categorize and regulate gig workers is not unique to one country. The NITI Aayog report highlights that this is a widespread debate across many nations. For instance, in the United States, gig workers are often considered employees unless they meet three specific conditions:

They must be free from the employer's control.
Their work must fall outside the company’s usual business activities.
They must be involved in their own independently established business.

On the other hand, the European Union (EU) has taken a different route by setting minimum standards for gig workers. While these standards are universal, EU member states are allowed to adapt and implement them according to their individual needs.

Challenges in Implementing Gig Worker Regulations in India

In light of these varied global approaches, India faces significant challenges as it prepares to implement the Code on Social Security which aims to recognize and protect gig workers. A primary concern is defining who qualifies as a "gig worker" or "platform worker." Despite these uncertainties, the move to officially recognize gig workers under Indian law is seen as a step in the right direction. This recognition will provide some level of security and protection for this growing workforce.

Impact of the Code on Employers and Workers

One of the key motivations behind the Code is addressing how short-term or project-based employment is being used by companies to avoid compliance with traditional labour laws. The Code introduces specific definitions for gig and platform workers and seeks to bring them within the realm of social security. However, this could also mean an increase in labour costs for employers who rely heavily on gig workers.

Balancing Rights and Responsibilities

While the Code does not grant gig workers all the benefits of full-time employees—such as gratuity and employee provident funds—it does leave room for additional benefits through state-specific rules and welfare schemes. These provisions combined with judicial support and inspiration from international best practices could lead to a more comprehensive protection system for gig workers in the future.

While gig work presents numerous opportunities for flexibility, it also raises complex legal and economic questions. The recognition of gig workers in India's legal framework is a positive step, but it will require continuous effort to ensure their rights are balanced with the operational needs of employers. As the global debate continues, India's approach to regulating gig work will be closely watched with the hope that it can strike the right balance between protection and flexibility.

The Plight of Gig Workers: Lack of Social Security and Data Transparency

In the rapidly evolving gig economy, a significant portion of the workforce remains unprotected by formal social security programmes. Shaikh Salauddin, the elected National General Secretary and co-founder of the Indian Federation of App-based Transport Workers (IFAT), emphasizes the government's responsibility in establishing regulatory laws for aggregator companies. He argues that the absence of regulation creates loopholes by allowing companies to withhold crucial data from the public.

Lack of Transparency and Data Sharing

Salauddin questions the lack of transparency in gig companies, stating that Ola, Uber, Zomato, and Swiggy have never released accurate data on their full-time workforce. He finds it puzzling that these companies which meticulously gather customer data for sales and marketing purposes, lack information about the size of their workforce.

Absence of Social Security Benefits

Gig workers, unlike their counterparts in the formal sector, are not immediately plugged into the provident fund system and do not enjoy the same social security benefits. Salauddin argues that gig workers should have provisions for provident fund, emergency fund, and other social security benefits, similar to other employees. He also emphasizes the need for an eight-hour shift, minimum wage, health insurance, and an easy mechanism for insurance claims.

Resistance to Unionization and Collective Bargaining

Parthasarathy, a researcher, highlights the reluctance of gig companies to negotiate with unions, insisting on talking to workers individually. This strategy exploits the asymmetries between workers and technologically powerful, financially deep-pocketed companies.

Government Efforts to Provide Social Security for Gig Workers

The Government of India has taken a significant step towards ensuring social security for gig workers through the Code on Social Security, 2020. This code aims to extend benefits like healthcare and income security to all categories of workers including gig and platform workers. The initiative addresses the growing need to protect this workforce, often engaged in non-traditional and irregular employment patterns.

However, as noted by Pallavi Bansal, a gig work researcher and assistant professor at Bennett University, the implementation of the Code across different states is still pending. This delay leaves many gig workers without the crucial safety net the Code aims to provide. Also, most of the companies operating through applications like Swiggy, Zomato and Zepto always classify their delivery workers as a “Delivery Partner” and not “Delivery employee”. The reason is simple the moment they will categorise them specifically as an employee then labour law compliances will be required to be followed and this is how they want to save compliance and litigation costs.

Push from NITI Aayog and Political Parties

In support of these efforts, the NITI Aayog has advocated for not only extending social security but also providing training for gig workers. The growing gig economy demands a skilled workforce and training initiatives could help gig workers enhance their employability and income.

Political parties are also recognizing the importance of gig workers. The BJP’s manifesto for the 2024 Lok Sabha elections includes a promise to onboard gig workers onto the e-Shram portal, a platform designed to build a national database for unorganised workers. Similarly, the Indian National Congress (INC) has guaranteed to offer comprehensive social security coverage to gig workers by reflecting a growing political focus on this crucial segment of the workforce.

Challenges Faced by Marginalised Gig Workers

A significant barrier to creating effective policies for gig workers is the lack of public data, especially for marginalised sections of society. This absence of specific data disproportionately affects women, people with disabilities and non-heterosexual individuals by making it harder to develop targeted programmes to meet their needs.

According to Mounika Neerukonda, lead researcher at Fairwork India, women gig workers are particularly disadvantaged. Many are unaware of the social schemes and policies available to them and companies often fail to offer the necessary support. As a result, women in the gig economy continue to face additional hurdles, further widening the inequality in this sector.

While significant steps have been taken to address social security needs for gig workers in India, challenges remain, especially in operationalising policies and addressing the needs of marginalised groups.

The Way Forward

Experts emphasize the need for continuous data collection on gig workers, as they keep entering and exiting various platforms. The onus is on the platforms and government to maintain these records. It is suggested that the availability of data can raise awareness and enable gig workers, especially women, to find means to raise their concerns and demand changes in policies.

In conclusion, the lack of social security and data transparency in the gig economy is a pressing issue that requires immediate attention. The government and gig companies must work together to ensure that gig workers including those from marginalised sections of society have access to social security benefits and a voice in shaping their working conditions.

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