Context: The recent strike by Zomato-owned Blinkit delivery agents and recognition of gig work under only one of the four new labour codes have once again brought to the forefront issues plaguing the gig economy in the country.
Who is a ‘Gig Worker’?
- Gig workers refer to workers outside of the traditional employer-employee relationship.
- There are two groups of gig workers:
- Platform workers: When gig workers use online algorithmic matching platforms or apps to connect with customers, they are called platform workers.
- Non-platform workers: Those who work outside the above platforms are non-platform workers, including construction workers and non-technology-based temporary workers.
What is the challenge in categorizing Gig Workers?
- Whether gig workers should be categorized as ‘employees’ or as ‘independent contractors’ has been a heated debate.
- In India, employees are entitled to a host of benefits under statutes such as the Minimum Wages Act, 1948, Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPFA) etc.
- Similarly, contract labourers are governed under the Contract Labour (Regulation and Abolition) Act, 1970 and are also entitled to benefits such as provident funds.
- However, given the unique nature of gig work, gig workers display characteristics of both employees and independent contractors and thus do not squarely fit into any rigid categorization.
- As a result, gig workers have limited recognition under current employment laws and thus fall outside the ambit of statutory benefits.
Code on Social Security, 2020’s interpretation on Gig Workers
- The Ministry of Labour and Employment introduced the Code on Social Security, 2020 which brings gig workers within the ambit of labour laws for the first time.
- Key features of the code for gig workers:
- Definition of gig worker: Under section 2(35) of the Code, a ‘gig worker’ is defined as ‘a person who performs work or participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship’.
- Definition of platform work: The Code defines platform work as ‘a work arrangement outside of a traditional employer-employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services” in exchange for payment.
- The Code stipulates that 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 among others.
- The Code also mandates the compulsory registration of all gig workers and platform workers to avail of the benefits under these schemes.
What are some of the concerns?
- Exclusion from benefits: Out of the four new labour codes proposed, gig work finds reference only in the Code on Social Security. As a result, gig workers remain excluded from vital benefits and protections offered by other Codes such as minimum wage, occupational safety etc.
- Cannot form unions: They also cannot create legally recognised unions.
- Lack of redressal mechanism: Moreover, they remain excluded from accessing the specialized redressal mechanism under the Industrial Disputes Act, 1947, denying them an effective remedy for grievances against their employers.
- No collective bargaining: Considering the non-traditional nature of their work, gig workers also do not have the right to collective bargaining — a fundamental principle of modern labour law crucial to safeguard the rights of workers.
About the four New Labour Codes
- The new labour codes seek to consolidate 29 existing statutes on labour that require a critical reformation since decades.
- The Four Codes are:
- The Code on Wages, 2019;
- The Occupational Safety, Health and Working Conditions Code, 2020;
- The Code on Social Security, 2020;
- The Industrial Relations Code, 2020.
- The codes are based on recommendations of the Second National Commission on Labour (2002).
- The implementation process is delayed as states are yet to finalize their rules under these codes.
Potential of Gig Economy in India
- According to a report titled ‘India’s Booming Gig and Platform Economy’ released by NITI Aayog, 77 lakh workers were engaged in the gig economy in 2020–21. They constituted 2.6% of the non-agricultural workforce or 1.5% of the total workforce in India.
- The gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029–30.
- Gig workers are expected to form 6.7% of the non-agricultural workforce or 4.1% of the total livelihood in India by 2029–30.
- At present, about 47% of the gig work is in medium skilled jobs, about 22% in high skilled, and about 31% in low skilled jobs.
- Trend shows the concentration of workers in medium skills is gradually declining and that of the low skilled and high skilled is increasing.
Pros and Cons of Gig Economy
|Advantages of Working in a Gig Economy||Disadvantages of Gig Economy|
|Flexibility for Workers: Gig workers have the flexibility to work according to their own schedule and availability, and can often choose their own work hours.||Job Insecurity: Gig workers often work on a day-to-day basis and may be terminated without notice, as seen during the pandemic.|
|Cost Efficiency for Companies: Companies can save costs by hiring gig workers instead of full-time employees, and may be able to provide services more economically to users.||Lack of Benefits: Gig workers typically have no social security benefits, paid leave, or wage regulation, and may be at the mercy of platform companies.|
|Opportunities for Low-Skilled Workers: The gig economy provides jobs for many low and semi-skilled workers, often with minimal conditions.||Poor Work Conditions: Many gig workers are required to work long hours with little transparency on incentive structures and may have little bargaining power.|
|Experience Gain: Young workers can gain valuable work experience through gig work before transitioning to formal employment.||Hidden Charges: Platform companies may charge high commissions on gig workers to sustain discounts offered to users.|
|Economical: Gig workers can save costs by working remotely and avoiding expenses like office commute.||Low Bargaining Power: Gig workers often lack a voice and may face delays in payments or lack of access to basic amenities.|
|Entrepreneurial Opportunities: Gig work can also offer entrepreneurial opportunities, allowing workers to start their own businesses or work as independent contractors with multiple clients.||Unequal Treatment: Gig workers may be subject to unfair treatment or exploitation, such as low pay, long working hours, or unsafe working conditions.|
|Income Generation: Gig work can provide a source of income for individuals who may not have access to traditional employment, such as those with disabilities or those living in remote areas.||Limited Career Growth: As gig workers may not have access to training or development programs or be able to build long-term relationships with clients.|
|Access to Global Markets: The gig economy allows workers to connect with clients and customers from around the world, potentially expanding their customer base and income opportunities||Social Isolation: Gig work may be isolating, as gig workers often work independently and may not have the same social connections or support networks as traditional employees.|
Recommendations by NITI Aayog for Gig Economy
- Access to Skill and Finance: Provide financial products and cash flow-based loans to platform workers. Platforms can collaborate with the Ministry of Skill Development to promote skilling and job creation in the gig economy.
- Focus on Women: It recommends businesses to implement programmes for workers and their families that raise knowledge of gender issues and accessibility, especially to advance the rights of women and people with disabilities.
- Data Collection: Other recommendations include undertaking a separate enumeration exercise to estimate the size of the gig and platform workforce and collecting information during official enumerations (Periodic Labour Force Survey) to identify gig workers.
- Free trade agreement: creating pathways for education and certification acquired in India to be recognised globally, such as through FTAs.
- Innovation: Platforms and businesses can innovate to create new models that provide gig workers with better pay, benefits, and job security. This could include the development of new technologies, such as blockchain and AI that enable more transparent and secure gig work arrangements.