India's Gig Economy

Table of Contents

Context: Rajasthan became the first state to enact legislation on the rights of gig workers titled ‘The Rajasthan Platform-Based Gig Workers (Registration and Welfare) Bill, 2023.’

Key Highlights of the Bill

Applicability: The Bill applies to “aggregators” (digital intermediaries connecting buyers and sellers) and “primary employers” (individual or organisations engaging platform-based workers).
Welfare Board: The Bill proposes a Welfare Board comprising State officials, five representatives each from gig workers and aggregators, and two others from civil society.
- The Board will set up a welfare fund, register platform-based gig workers, aggregators and primary employers.
- The board will facilitate guarantee of social security to platform-based gig workers.
- The Board will maintain a database of companies and workers and each worker will receive a unique ID which “shall be valid in perpetuity.”

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.

Status 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.

Growth Drivers of Gig Economy in India

Role of Technology: The rise of technology, which has made it easier for people to find and work with clients online.
Work Flexibility: The increasing demand for flexible work arrangements, which allows people to balance work and other commitments.
Demographic Factors: The growing number of young people in India, who are more likely to be open to working in the gig economy.

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.
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.
Opportunities for Low-Skilled Workers: The gig economy provides jobs for many low and semi-skilled workers, often with minimal conditions.
Experience Gain: Young workers can gain valuable work experience through gig work before transitioning to formal employment.
Economical: Gig workers can save costs by working remotely and avoiding expenses like office commute.
Entrepreneurial Opportunities: Gig work can also offer entrepreneurial opportunities, allowing workers to start their own businesses or work as independent contractors with multiple clients.
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.
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.

Job Insecurity: Gig workers often work on a day-to-day basis and may be terminated without notice, as seen during the pandemic.
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.
Poor Work Conditions: Many gig workers are required to work long hours with little transparency on incentive structures and may have little bargaining power.
Hidden Charges: Platform companies may charge high commissions on gig workers to sustain discounts offered to users.
Low Bargaining Power: Gig workers often lack a voice and may face delays in payments or lack of access to basic amenities.
Unequal Treatment: Gig workers may be subject to unfair treatment or exploitation, such as low pay, long working hours, or unsafe working conditions.
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.
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.

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.

Recommendations by NITI Aayog for Gig Economy

A Platform India initiative, built on the pillars of accelerating platformization by simplification and handholding, funding support and incentives, skill development, and social financial inclusion, like the immensely successful Startup India initiative, may be introduced.
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.