India's Booming Gig and Platform Economy

JUL 2

Mains   > Economic Development   >   Indian Economy and issues   >   Informal sector

IN NEWS:

  • In a report titled 'India's Booming Gig and Platform Economy', government think-tank NITI Aayog has made observations on labour force participation of women and persons with disabilities, and made recommendations to companies.

GIG ECONOMY:

  • A gig economy is a free market system in which temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees.
  • Workers perform “gigs,” in which they are employed for a specific task or time. This is done to achieve advantage of cost, quality, and flexibility. Once the task is complete, the worker is free to move on.
  • Gig workers can be broadly classified into platform and non-platform-based workers.
    • Platform workers are those whose work is based on online software apps or digital platforms.
    • Non-platform gig workers are generally casual wage workers and own account workers in the conventional sectors, working part-time or full time.

NOTE:

The Code on Social Security, 2019 introduces definitions for ‘gig worker’ and ‘platform worker’:

  • Gig workers refer to “a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer- employee relationship”
  • Platform workers are “those who access organizations or individuals through an online platform and provide services for payment”.

STATISTICS:

  • The Global Gig Economy Index report,2020 which highlighted world’s fastest-growing freelance markets, has ranked India among the top 10 countries.
  • The NITI Aayog study estimates that:
    • In 2020-21, 77 lakh workers were engaged in the gig economy: about 47% of the gig work were in medium skilled jobs, about 22% in high skilled, and about 31% in low skilled jobs.
    • The gig workforce is expected to expand to 2.35 crore workers by 2029-30: while the domination of medium skills would continue till 2030, gig work with other skills will emerge.

CHALLENGES:

  • Issues of accessibility:
    • Access to internet services and digital technology is a restrictive factor, particularly for those residing in rural and remote areas. This has made the gig economy, largely an urban phenomenon.
  • Job and income insecurity:
    • Platform workers in India are classified as “independent contractors,” or as “driver/delivery partners.” As a result, workers do not benefit from labour regulations pertaining to wages, hours, working conditions, and the right to collective bargaining.
  • Occupational safety and health risks:
    • Workers engaged in employment with the digital platforms, particularly, women workers in the app-based taxi and delivery sectors, face various occupational safety and health risks.
  • Skills Mismatch:
    • According to ILO surveys, workers with higher educational achievements are not necessarily finding work commensurate with their skills. Eg: 24 and 21 per cent of app-based taxi drivers and delivery workers respectively are highly educated.
  • Weak Collectivization:
    • Since platform workers seldom meet or get together, it makes it difficult for them to form associations for collective bargaining. Weak collectivization constrains the ability of workers to negotiate with the platforms to settle disputes and redress grievances.
  • The opacity of algorithms:
    • Platforms are criticised for having opaque algorithms, imposing excessive control over their workers through “ratings-based reputation systems” and causing significant risk to workers who are unfairly penalised based on customer feedback.

RECENT STEPS TAKEN BY GOVERNMENT:

  • Code on Social Security:
    • The code has provisions to ensure labour benefits for gig-economy workers.
    • The code provides that central or state government may notify specific schemes for gig workers to provide various benefits, such as life and disability cover. Such schemes may be financed through a combination of contributions from the employer, employee, and the appropriate government.
    • The code also provided for the establishment of a national and various state-level boards for administering schemes for unorganised workers, gig workers and platform workers.
  • e-SHRAM portal:
    • The Ministry of Labour and Employment launched the e-Shram Portal for creating a National Database of Unorganized Workers. It is the first-ever national database of unorganised workers including migrant workers, construction workers, gig and platform workers, etc.
  • National Social Security Board:
    • It aims to recommend to the Central Government for framing suitable schemes for unorganised workers, gig workers and platform workers and to such monitor social welfare schemes.
  • State level initiative:
    • Karnataka drafted a bill to ensure basic facilities for labour employed in the gig economy sector, such as cab aggregators and delivery partners

WAY FORWARD:

  • Platform India initiative:
    • Like the immensely successful Startup India initiative, 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 may be started.
  • Access to finance:
    • Access to institutional credit may be enhanced through financial products specifically designed for platform workers and those interested to set-up their own platforms.
  • Platform-led skilling:
    • Ministry of Skill Development and Entrepreneurship, the National Skill Development Corporation (NSDC) and platforms can collaborate to create and nurture skilled workers and micro-entrepreneurship.
  • Gender Sensitisation & Accessibility Awareness Programmes for workers and their families:
    • Platform businesses can undertake partnerships with Civil Society Organizations (CSOs) to enable different sections of workers such as women workers and PwDs to take up employment opportunities in the platform sector.
  • Extend social security for platform workers:
    • Paid sick leave, health access, work accident insurance etc. must be extended to the platform workers also.
  • Legal framework:
    • Taking inspiration from UK Labour Party, India could ensure full employment rights for gig economy workers, including sick leave and maternity leave.
    • Government can create a new category of worker known as a "dependent contractor" that sits between contractors and those in full employment, and brings with it some benefits and wage protections.
  • International engagement:
    • India can engage with the European Union and the United States, where discussion on protections in a gig economy is already underway.
  • Introduce tripartite system:
    • Introduce tripartite system which includes labour unions, managements and the government to resolve disputes in gig economy.

BEST PRACTICE:

  • California's gig worker law
    • The state of California in U.S recently has legislated that workers in the gig economy be classified as workers and not as independent contractors >> thus guaranteeing minimum wage and welfare benefits

PRACTICE QUESTION: 

Q. “Gig or platform workers lack basic labour rights and social security in most of the economies including India”. In the light of this statement with special reference to the Code on Social Security 2020?