GIG ECONOMY - ECONOMY

News: Explained | Rajasthan’s draft Bill for gig workers

 

What's in the news?

       The Rajasthan government recently released the draft Rajasthan Platform Based Gig Workers (Registration and Welfare) Bill, 2023 — the first legislation of its kind in India outlining social security and welfare measures — and invited feedback from stakeholders, including the State’s approximately three lakh gig workers, till July 7.

 

Gig workers:

       Gig workers are those engaged in livelihood outside the traditional employer-employee arrangement.

       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.

       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, such as they often do not receive benefits like paid sick and casual leaves, travel and housing allowances, and provident fund savings, among other things.

 

How big is the workforce engaged in the gig economy?

       Niti Aayog estimates that more than 7.5 million workers were engaged in the gig economy in 2020-21. This could grow to 23.5 million workers in the next eight years, making up for 4.1 per cent of total livelihood in India.

       According to the report, at present, about 47 percent of the gig work is in medium skilled jobs, about 22 percent in high skilled, and about 31 percent in low skilled jobs.

 

Reasons for worker's preference for Gig economy:

       One can work on freelancing as well as work full-time somewhere else. Hence it is profitable to the worker as he can hit two targets together and multitask.

       It is very beneficial for women who work on this concept when they cannot continue their work or take a break from career due to marriage or child birth.

       Retired people can stay active after retirement as this will keep them engaged away from loneliness and depression and can earn as well on their own rather than depending on their children or pensions.

       It offers flexibility and diversity to the workers. It offers flexibility when workers can work according to their convenience and schedule rather than routine like in full-time jobs.

       The travel costs and energy to travel to the workplace is reduced.

 

Advantages of Gig economy:

1. Benefits to Gig Workers:

       Gig workers have the flexibility to work according to their convenience and availability. There are less restrictions related to fixed work-hours, attendance etc.

       Workers have some flexibility in choosing their work hours. Some workers take gig jobs on a part-time basis to supplement their income from regular jobs.

2. Cost Efficiencies for Companies:

       The companies are able to save costs on hiring full time employees. They are able to provide services more economically to the users.

3. Jobs for Low-skilled workers: Gig economy provides jobs to many low and semi-skilled workforce with minimum conditions.

4. Gain Experience: It enables the young undergraduates to gather valuable work-experience before joining formal employment.

5. Economical: Many gig workers work remotely and save costs (e.g., on office commute).

 

Concerns of Gig Economy:

              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. This has triggered protests from workers at companies like Swiggy, Zomato, Ola, Uber, and Urban Company, among others.

 

1. Job Security:

       Most gig workers work on a day-to-day basis, and can be terminated from their jobs without any notice.

       Many gig workers were laid off during the pandemic.

2. Lack of Benefits:

       Gig workers have no social security benefits like ESI, PF or insurance. They have no paid leaves so failure to work means loss of wage.

       Gig/Platform workers are not covered in all the labour codes, specifically the ‘Code on Wages, 2019’ which prescribes minimum wages for various jobs. There is no wage regulation and the workers are at the mercy of aggregators.

3. Work Conditions:

       Most workers have to put in long hours of work in order to make the job viable.

       A large components of worker's wages consists of incentive which coerces workers to work for long hours. This reduces the advantage of ‘flexible work’ in gig economy. There is lack of transparency on incentive structures.

4. Hidden Charges:

       Many aggregators/platforms are burning cash by giving large discounts to users in order to capture larger market share.

       Companies try to sustain this by charging high commissions on gig workers.

5. Low Bargaining Power:

       Platform workers have little or no voice. Technology has tilted the power and bargaining scales strongly in favour of the platform companies.

6. Platforms have multiple other issues like

       Frequent and random changes to the commission structure.

       Delays in payments.

       Deliberate miscommunication of earnings potential to attract gig workers.

       Lack of access to basic amenities.

        

What are Niti Aayog’s recommendations for the gig economy?

       The NITI Aayog Report, ‘India’s Booming Gig and Platform Economy has analysed the gig economy from gig worker's perspective and has made several recommendations.

 

1. Fiscal incentives:

       Provisions of fiscal incentives such as tax-breaks or startup grants may be provided for businesses that provide livelihood opportunities where women constitute a substantial portion (say, 30 percent) of their workers.

       Likewise, a platform with high accessibility or high degree of participation of PwDs too may be rewarded with fiscal incentives.

2. Gender Inclusion:

       Apart from incentivising platforms that focus on recruiting women workers, the report recommended that businesses have a higher share of women managers and supervisors in the organisation to ensure that communication to workers does not perpetuate gender stereotypes.

3. Social security:

       The report also recommended firms adopt policies that offer old age or retirement plans and benefits, and other insurance cover for contingencies such as injury arising from work that may lead to loss of employment and income.

       A social security cover out of a corpus fund can also help gig workers in case of contingencies.

       The report also recommended extending social security measures such as income support, paid sick leaves, insurance and pension plans to people working for platform companies like Swiggy, Zomato, Ola, and Uber.

4. Income support:

       The report marked the importance of providing income support to workers as it would be a critical step in providing assured minimum earnings and social security from income loss in the wake of uncertainty or irregularity in work.

5. Platformization:

       A Platform India Initiative can be launched on the lines of Start-up India. The purpose would be to increase access to the platforms.

       This can be achieved by simplification and handholding, funding support and incentives, skill development, and social financial inclusion. The horizon of platforms can be broadened e.g., Self-employed individuals engaged in the business of selling regional and rural cuisine, street food, etc. may be linked to platforms.

6. Skill Development for Workers:

       Platform-led models of skilling and job creation need to be promoted for the gig and platform sector. Platforms can collaborate with the Ministry of Skill Development and Entrepreneurship, and the National Skill Development Corporation (NSDC) to nurture skilled workers and micro-entrepreneurship.

       Transformational upskilling for workers presently engaged in the informal sector in trades such as construction, driving and other services can be undertaken. This will create avenues for horizontal and vertical mobility for workers to take up jobs in the gig and platform sector, empowering them to augment their earnings.