How the Gig Economy Exploits Urban Workers

Source: The post How the Gig Economy Exploits Urban Workers has been created, based on the article “The dystopian side of Insta-commerce” published in “The Hindu” on 19th March 2025. How the Gig Economy Exploits Urban Workers

UPSC Syllabus Topic: GS Paper2- Governance-mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.

Context: In urban areas, daily wage laborers gather in labor markets, waiting for work. Contractors (thekedaars) exploit their desperation by bargaining for the lowest wages. The gig economy has extended this exploitation through digital platforms, where workers compete for jobs in a system designed to maximize profits for aggregators while stripping workers of rights and security.

For detailed information on Gig Economy in India and the Issues faced by Gig Workers read this article here

How the Labour Market is Being Exploited

1. Auction-Based Hiring in Traditional Labour Markets: In urban areas, daily wage laborers gather at labor chowks, hoping for work. Contractors bargain for the lowest wages in an auction-like system, where workers compete against each other, and the lowest bidder gets hired, leaving them powerless.
2. Gig Economy Replicating Exploitation – Digital platforms function as virtual thekedaars, eliminating direct employer responsibility. Workers must accept low pay, no benefits, and poor working conditions to stay employed. For example, Insta Maids offers house help for just ₹49 an hour, devaluing domestic work.
3. Algorithm-Driven Labour Control – Platforms use hidden algorithms to set wages, control job distribution, and manipulate incentives. Workers have no say in pricing or conditions. They are forced to accept jobs instantly, similar to traditional labor chowks but with greater opacity and reduced bargaining power.
4. Absence of Worker Rights – Gig workers lack social security, protection from arbitrary termination, and grievance redress mechanisms. Rajasthan passed a gig worker law to address these issues, but the government has stalled its implementation.
5. Corporate Influence and Government Inaction: NASSCOM and CII oppose laws that recognize gig workers as employees. Karnataka has put the proposed gig worker law in cold storage under corporate pressure.

Initiatives taken to Overcome Labour Market Exploitation

1. Legislative Efforts: Rajasthan passed a law to protect gig workers by ensuring social security, data access, and grievance redress. However, it remains unimplemented due to government inaction.
2. State Promises: The Congress-led governments in Karnataka and Telangana drafted progressive laws for gig workers, but corporate lobbying stalled them.
3. Worker Protests: Gig workers are resisting exploitation with slogans like “We want rights, not ratings!” and “We are humans, not slaves!”

Way Forward

1. Enforce Legal Frameworks: The government must implement the laws already passed and introduce stronger protections for gig workers.
2. Transparency and Data Access: Workers should have access to their data and earnings breakdown to prevent exploitation.
3. Worker Representation: Establish tripartite boards where workers, employers, and the government can negotiate fair working conditions.
4. Public Awareness: Consumers must be made aware of the exploitation behind these services and push for ethical labor practices.

Question for practice:

Examine how the gig economy has replicated and intensified labor market exploitation through digital platforms, reducing worker rights and bargaining power.