Mains – 7th Nov 23

Gig Workers

Why in News?

• Taking note of absence of any specific welfare scheme by the government for gig and platform workers, a parliamentary panel has asked the Ministry of Labour and Employment to formulate and implement welfare schemes for such workers at the earliest.

What is Gig Economy?

• A gig economy is a labor market that relies heavily on temporary and part-time positions filled by independent contractors and freelancers rather than full-time permanent employees.
• Startups like Ola, Uber, Zomato, and Swiggy have established themselves as the main source of the gig economy in India.

Who is a Gig Worker?

• According to the Code on Social Security, 2020 (India), “A gig worker is a person who performs work or participates in work arrangements and earns from such activities, outside of the traditional employer-employee relationship.”
• Gig workers can be broadly classified into platform and non-platform-based workers.
  • Platform workers: These workers are those whose work is based on online software apps or digital platforms such as food aggregator platforms Zomato, Swiggy, Ola, and others. Theyuse online algorithmic matching platforms or apps to connect with customers.
  • Non-platform workers: These workers are generally casual wage and own-account workers in conventional sectors engaged part-time or full-time.
• Participation in the gig economy is higher in developing countries(5-12 percent) versus developed economies(1-4 percent).
  • Most of these jobs are in lower–income job-types such as deliveries, ridesharing, microtasks, care and wellness.
• 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), and the Payment of Bonus Act, 1965.
• 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 categorisation. As a result, gig workers have limited recognition under current employment laws and thus fall outside the ambit of statutory benefits.
• 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.

What is the size of Gig Economy in India?

According to a 2019 report by the India Staffing Federation, India is the fifth largest in flexi-staffing globally, after the US, China, Brazil and Japan.

• In 2020-21, ~77 lakh workers were engaged in the gig economy. The gig workforce is expected to expand to 2.35 crore workers by 2029-30.
• The median age of Indian gig workers is 27 and their average monthly income is Rs 18,000.
• Of these, about 71 per cent are the sole breadwinners of their families. Additionally, gig workers operate with an average household size of 4.4.
• These figures clearly indicate the importance of the gig working community in the Indian economy.
• Ensuring the comfort and security of this community is investing in a more progressive and prosperous future.

Factors driving gig sector

• Flexibility to work from anywhere
• Changing work approach
• Emergence of start-up culture
• Rising demand for contractual employees

Labour Code

4 labour codes were introduced in 2020 which replaced 29 sets of labour laws.

1. Code of Wages
2. Industrial Relations Code
3. Social Security Code
4. Occupational Safety, Health and Working Conditions Code

Labour Code on Gig Economy

• The Code on Wages, 2019, provides for universal minimum wage and floor wage across organised and unorganised sectors, including gig workers.
• The Code on Social Security, 2020, recognises gig workers as a new occupational category.
• In the Code on Social Security bill, 2020, platform workers are now eligible for benefits like maternity benefits, life and disability cover, old age protection, provident fund, employment injury benefits, etc.However, eligibility does not mean that the benefits are guaranteed.
  • None of the provisions secure benefits, which means that from time to time, the Central government can formulate welfare schemes that cover these aspects of personal and work security, but they are not guaranteed.
• The Code states the provision of basic welfare measures as a joint responsibility of the Central government, platform aggregators, and workers.However, it does not state which stakeholder is responsible for delivering what quantum of welfare.
• The Code also mandates the compulsory registration of all gig workers and platform workers to avail of the benefits under these schemes.
• 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. They also cannot create legally recognised unions.

Challenges Faced by Gig Workers:

• While platform companies have created avenues of employment, it has often been marred by low wages, unequal gender participation, and a lack of possibility for upward mobility within an organisation.
• Gig workers are typically hired by companies on a contractual basis and are not considered their employees.As a result, they do not receive some of the benefits that an on-roll employee of the company may have.
• Rising stress due to uncertainty is associated with regularity in available work and income.

What needs to be done in order to improve the Living Standards of these Gig Workers?

• Fiscal Incentives –
  • NITI Aayog’s “India’s Booming Gig and Platform Economy” report highlights that fiscal incentives such as tax-breaks or startup grants may be provided for businesses that provide livelihood opportunities to women.
• Retirement Benefits –
  • The report also recommended firms adopt policies that offer old age or retirement plans and benefits, and other insurance cover for contingencies such as the Covid-19 pandemic.
  • Such plans and policies may be envisaged under the Code on Social Security, 2020.
• The Rajasthan Platform Based Gig Workers (Registration and Welfare) Act 2023 –
  • Under the Act, a board will be established to ensure gig workers’ registration and welfare, addressing their vulnerabilities and providing a platform for collective bargaining and negotiations.
  • The board can serve as an independent grievance redress mechanism.
  • The Act also has a provision of establishing a social security fund funded through a fee on every transaction.