About Gig Economy

Context:

The recent strike by Zomato-owned Blinkit delivery agents has once again brought to the forefront issues plaguing the gig economy in the country.

Relevance:

GS III- Indian Economy

Dimensions of the Article:

1. Who is a ‘gig worker’?
2. Proposed Law
3. Concerns related to gig workers and the proposed labour codes in India
4. Advantages of Gig economy.
5. Challenges related to Gig economy
6. Measures to address the issues related to Gig economy

Who is a ‘gig worker’?

• Gig workers are those who work outside the traditional employer-employee relationship.
• There are two groups of gig workers – platform workers and non-platform workers.
• Gig workers who use online platforms are called platform workers, while those who work outside of these platforms are non-platform workers.
• Gig workers have characteristics of both employees and independent contractors and do not fit into any rigid categorization.
• As a result, gig workers have limited recognition under current employment laws and fall outside the ambit of statutory benefits.

Proposed Law:

• The Code on Social Security, 2020, brought gig workers within the ambit of labor laws for the first time.
• The Code defines a gig worker as a person who performs work outside of a traditional employer-employee relationship and earns from such activities.
• The Code recognizes both platform workers and non-platform workers as gig workers.
• Central and State governments must frame suitable social security schemes for gig workers on matters relating to health and maternity benefits, provident funds, and accident benefits.
• The Code mandates the compulsory registration of all gig workers and platform workers to avail of the benefits under these schemes.

Concerns related to gig workers and the proposed labour codes in India:

Limited benefits and protections:

• Gig workers are excluded from the benefits and protections offered by the other proposed labour codes, such as minimum wage and occupational safety.
• They are also not allowed to create legally recognised unions.

Lack of effective remedy:

• Gig workers are excluded from accessing the specialised redressal mechanism under the Industrial Disputes Act, 1947.
• This denies them an effective remedy for grievances against their employers.

No right to collective bargaining:

• Gig workers do not have the right to collective bargaining, which is a fundamental principle of modern labour law crucial to safeguard the rights of workers.

Poor working conditions:

• A 2022 report by Fairwork India highlighted the deplorable working conditions of digital platform workers in India.
• There is a need for statutory affirmation of the rights of gig workers.

Delay in implementation:

• The proposed labour codes have received the assent of the President, but are still awaiting implementation three years on.
• The Centre has cited the delay in framing of rules by the States as the reason for the delay.

Advantages of gig economy:

• Cater to immediate demand: Gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and demand for flexible lifestyles.
• Cheaper and more efficient: Most times, employers cannot afford to hire full-time employees. In a gig economy, large numbers of people work part-time or in temporary positions. The result is cheaper, more efficient services, such as Uber or Airbnb, for those willing to use them.
• Wider choice to employers: Technology and connectivity through the internet don’t require the freelancer to come into the office for work. Hence, employers have a wider range of applicants to choose from as they don’t have to hire someone based on their proximity.
• Offers specific expertise: Professional services firms are hiring gig workers to add deep domain expertise to client-impact teams. Majority of professional services contact workers have years of domain-specific knowledge, like consultants.
• The wider choice to employees: People often find they need to move around or take multiple positions to afford the lifestyle they want. These days, people also tend to change careers many times throughout their lives; the gig economy is a reflection of this rising trend.
• Youth economic productivity: India has a high share of young population which is only expected to grow. According to economists at IMF, youth inactivity in India is at 30%, the highest amongst developing countries.
  • Gig economy offers the perfect platform for engagement of youth in productive employment activities.
  • It is also estimated that the gig economy offers a relatively high gender-parity in the workforce, as compared to traditional employment.

Challenges related to Gig Economy:

• Erosion of traditional economic relationships: Gig economy can have downsides due to the erosion of traditional economic relationships between workers, businesses, and clients. This can eliminate the benefits that flow from building long-term trust, customary practice, and familiarity with clients and employers.
  • It could also discourage investment in relationship-specific assets that would otherwise be profitable to pursue since no party has an incentive to invest significantly in a relationship that only lasts until the next gig comes along.
• Crowding out traditional workers: Workers who prefer a traditional career path, stability and security that come with it are being crowded out in some industries.
  • The gig economy makes it harder for full-time employees to develop fully in their careers since temporary employees are often cheaper to hire and offer more flexibility in their availability.
• Disrupted work-life balance for gig workers: Flexibility in a gig economy often means that workers have to make themselves available at any time the gig comes up, regardless of their other needs, and they must always be on the hunt for the next gig.
  • Hence, for some workers, the flexibility of working gigs can disrupt the work-life balance, sleep patterns, and activities of daily life.
• No employment-related rights: Unlike traditional employment, workers in the gig economy are usually ineligible for any social benefits such as insurance, medical benefits, employees’ provident fund, bonus or gratuity.

Measures to address the issues related to gig workers:

• Evaluating scale of Gig economy: As of now there exists no authoritative estimate on the total number of gig workers in India, though the centralised nature of the platforms, and the larger platform labour market should make the collating of this data relatively straightforward for the Labour Ministry.
• Making regulations related to Gig economy: A more viable strategy then would involve conditional government partnerships with platforms under some of its flagship schemes. Here, the successful pilot of Swiggy’s Street Food Vendors programme under the PM SVANidhi, or PM Street Vendor’s Atma Nirbhar Nidhi scheme, may prove to be an illustrative example.

-Source: The Hindu