Gig Workers in India – Challenges and Way Forward – Explained Pointwise

The Union Ministry of Labour and Employment is drafting a national law to incorporate gig workers into social security schemes. This move aims to provide benefits such as health insurance and retirement savings to gig workers, a growing segment in the Indian economy. The government plans to require aggregator companies to contribute 1-2% of their revenue to create a social security fund for gig workers. The proposed law will establish a welfare board model to create a fund for gig workers’ social security.

In the light of this development, we need to analyse the present status and challenges faced by gig workers in India.

What is the present status of gig economy and gig workers in India?

Gig workers include ridesharing drivers, food delivery couriers, parcel delivery etc.

As of now, India has around 7-8 million gig workers, and this number is rapidly growing. NITI Aayog estimates that the numbers of gig workers could expand to 23.5 million by 2029–30.

The gig economy is expected to expand at a Compound Annual Growth Rate (CAGR) of 12%, reaching 23-25 million workers by 2030. This would mean that gig workers would make up 4.1% of India’s total workforce by that time.

A report by Boston Consulting Group (BCG) suggests that the gig economy could potentially create 90 million non-farm jobs.

The gig economy could create 90 million non-farm jobs and contribute an additional 1.25% to India’s GDP, reflecting its potential as a significant economic driver.

What are factors behind rapid growth of gig economy in India?

The COVID-19 Pandemic During the lockdowns, many traditional jobs were disrupted, pushing people to seek alternative employment opportunities. With companies moving toward remote work and freelancers offering essential services like food delivery, healthcare support, and logistics, the gig economy became a viable option for many.

Digital Revolution: India’s rapid digitalization has been a game changer. The increased access to smartphones, affordable internet, and the rise of platforms like Zomato, Uber, Swiggy, and Ola have provided gig workers with more opportunities.

Changing Workforce Preferences: Today’s workforce, particularly younger generations, prefer flexible work arrangements over traditional full-time employment. The gig economy offers workers autonomy, allowing them to manage their own schedules and choose tasks or projects based on their interests or needs.

Additional income: Due to increasing cost of living and inflations, many people, especially those in lower-income groups, are turning to gig work to supplement their earnings.

Business Demand for Cost-Effective Solutions: Companies, particularly startups and small businesses, are leveraging gig workers to reduce costs. Instead of hiring full-time employees, businesses can hire gig workers for specific projects or tasks.

Who are gig workers?

As per NITI Aayog, Gig workers are those engaged in livelihoods outside the traditional employer-employee arrangement. It classifies gig workers into platform and non-platform-based workers.

1. Platform workers are those whose work is based on online software apps or digital platforms.
2. Non-platform gig workers are generally casual wage workers in the conventional sectors, working part-time or full time.

The Code on Social Security, 2020 also defines gig workers as those engaged in livelihoods outside traditional employer-employee relationship.

Government initiatives for gig workers in India

Labour falls in the Concurrent List of the Constitution, meaning both the Centre and states have jurisdiction over the sector.

Code on Social Security, 2020: The Code on Social Security, 2020 provides for framing of suitable social security measures for gig workers and platform workers on matters relating to life and disability cover, accident insurance, health and maternity benefits, old age protection, etc. The Code also provides for setting up a Social Security Fund to finance the welfare scheme. Section 113 of the Code on Social Security, 2020 provides for registration of unorganized workers, gig workers and platform workers. However, Social Security Code passed by Parliament in 2020 hasn’t been implemented yet because the rules are yet to be framed by all states.

e-shram Portal: Government of India has also launched an online portal – e-shram – for registration of all informal and gig workers.

Rajasthan Act: Rajasthan was the first state to introduce a law for gig workers, enacting the Platform Based Gig Workers (Registration and Welfare) Act on July 24, 2023. This law established a welfare board and unique IDs for workers, and a system to monitor payments through a Central Transaction Information and Management System (CTIMS).

Karnataka Act: Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill-2024 provides provisions against unjust dismissal of gig workers and a dispute resolution mechanism. The labour department will set up a welfare board and a welfare fund for the workers.

What are the downsides of non-recognition of gig workers as Traditional formal employees?

Currently, Indian labour and employment laws recognize three main categories of employees:

1) Government employees,

2) Employees in government-controlled corporate bodies known as Public Sector Undertakings (PSUs)

3) Private sector employees who may be managerial staff or workmen.

All of the above formal employees are ensured certain working conditions, such as minimum wages under the Minimum Wages Act, 1948, a set number of hours of work, compensation for termination, etc.

Since gig workers in India lack the ‘employee’ status under Indian law, it has resulted in several consequences, such as an inability to form unions to represent their interests, exploitative contacts, etc. Therefore, there is also an absence of any tripartite dialogue between the government, employer’s organizations and gig worker’s unions.

What are the lacunas in present initiatives of government?

Absence of traditional employee status: The Karnataka Bill and Rajasthan Act, like the Code on Social Security 2020, avoids defining employment relations in gig work by using “aggregator” instead of “employer,”. It places them outside traditional employer-employee relationships, which limits their access to full labor rights and protections. This prevents the application of protective labor laws to gig workers.

Minimum wages: Institutional protection such as minimum wage protection are missing for gig workers. Occupational safety and health regulations do not apply for gig workers.

Welfare Boards shortcomings: Historically, welfare board models have been poorly implemented, as shown by the Construction Workers Welfare Act of 1996 and the Unorganized Workers Social Security Act, where available funds were underutilized.

Exclusion: Gig workers are not included under the Industrial Relations Code 2020 and are not covered under the dispute resolution mechanism.

Misuse of Power balance by employers: As per the ILO study, asymmetric relations of power and control between workers and platform companies lead to many issues. Not only are workers are working without legal status and safety nets, there has also been a gradual pullback of the incentive structure and income levels of workers which had motivated them to join the platform economy in the first place.

e-Shram portal: Like informal workers, gig workers are required to register themselves under the e-Shram portal through self-declaration.

Formal companies with informal workers: Many gig employers, as in some of the well-known companies, operate as formal entities within the formal sector. Therefore, exclusion of gig workers from the traditional employment framework is not justified.

Social Security Gap: The Social Security Code 2020 sets to provide gig workers with only certain social security schemes but not institutional social security, which is provided to formal employees. For example, under institutional social security coverage, formal workers get 26 weeks of paid leave along with job security for the entire period of maternity under the Maternity Benefit Act, 1961. Whereas, under social security schemes, for maternity benefits, there is a cash benefit such as ₹5,000-₹10,000 for registered informal workers.

Low Compensation and platform related issues: Despite being easy to enter, many gig jobs offer inadequate compensation and lack the benefits typical of traditional employment. Platforms have multiple other issues like (a) Frequent and random changes to the commission structure, (b) Delays in payments, (c) Deliberate miscommunication of earnings potential to attract gig workers

Gender Disparities: Women in the gig economy face challenges such as limited career advancement, lack of bargaining power, and lower pay due to gender-based discrimination.

Bad treatment: Due to non-recognition of workers, food delivery workers are often treated badly by the restaurants and order placing stores and even by security guards of housing societies.

What should be done?

Defining Employment Relations: The article argues that the key to securing gig workers’ rights lies in clearly defining the employment relationship between aggregators and gig workers. U.K. Supreme Court ruled in the Uber case, where Uber drivers were classified as workers and Uber was considered an employer. A similar approach in India could formalize gig work and provide workers with necessary protections.

NITI Aayog’s recommendations for welfare of gig workers in India

Financial Inclusion: Access to institutional credit may be enhanced through financial products specifically designed for platform workers and those interested to set-up their own platforms.

Skill development: Platform-led models of skilling and job creation need to be promoted for the gig and platform sector. This will create avenues for horizontal and vertical mobility for workers to take up jobs in the gig and platform sector.

Enhancing Social Inclusion: Gender Sensitisation and Accessibility Awareness Programmes for workers and their families should be undertaken. Platform businesses can undertake partnerships with Civil Society Organizations (CSOs) to enable different sections of workers such as women workers and PwDs.

UPSC Syllabus : GS Paper 3 – Indian Economy – Issues related to growth and employment

Source: The Hindu