The rapidly burgeoning gig workforce is ushering in a new economic revolution globally. India is the new frontier of this transformation, with its half-billion labor force, the youngest population in the world, growing urbanization, and extensive use of smartphones and related technology, accelerated by the emergence of digital platforms, making it easier to connect job seekers with job providers at low cost and maximum flexibility. The gig economy accounts for 1.5% of the total working class or the labor class in the country. According to the NITI Aayog study, 77 lakh workers were engaged in the gig economy in 2020-21and the workforce is expected to “expand to 2.35 crore workers by 2029-30”generating up to 4% of the country’s income.[1] The gig economy, which is changing how we live, work, and travel, has an impact on GDP. The employment agreements between the platform and its employees do not align with the conventional employer-employee dynamic in India, as workers who work via digital platforms are exempt from labor laws. One of the unique features of India’s gig economy is the use of contract labor. Employing freelancers or independent contractors is a common alternative to recruiting staff members, letting companies avoid paying benefits and adhering to labor laws, like those pertaining to minimum wage and social security obligations.
Notwithstanding its advantages, the industry’s explosive expansion—especially in metropolitan India—has brought to light serious regulatory deficiencies, notably regarding the defense of the fundamental rights of gig workers. Because gig work is informal and is mediated by digital platforms, it presents special difficulties for maintaining fair labor practices and defending the rights of employees. Although the gig economy has opened new opportunities for Indian workers, concerns have also been raised about how this new kind of employment may impact labor laws and social rights.
MEANING OF GIG ECONOMY AND GIG WORKERS
The term “gig economy” is borrowed from the music world, where performers book gigs, or single or short-term engagements at various venues. A 2017 Ernst and Young study on the “Future of Jobs in India” even found that 24% of the world’s gig workers come from India.[2] The gig economy refers to the short-term, payment-by-task exchange of labor for money between people or businesses using digital platforms that actively match providers and clients. Gig work can include various activities, such as driving for rideshare companies, freelance writing, tutoring, caregiving, and more. In the gig economy, most organizations do not treat workers like employees. Rather, they hire employees on a contractual basis, with the potential for little control over their work hours called “gig workers.” Gig workers are defined by the NITI Report 2022 as those who work outside the conventional employer-employee relationship.[3] They are further divided into two categories: non-platform workers and platform workers. Non-platform workers are people who work in industries like construction, day jobs, and other temporary professions that don’t require technology, while platform workers connect with clients through online algorithmic matching platforms like Amazon or Uber. While gig workers can benefit from freedom and flexibility, they may also face challenges with job security and standard perks like paid time off and health insurance.
PRESENT SCENARIO OF GIG WORKERS IN INDIA
India, which has 15 million skilled workers, has emerged as a major player, accounting for 40% of all available freelance labor worldwide, surpassing the US, China, Brazil, and Japan to become the world’s fifth-largest gig economy[4]. According to the International Labour Organization (ILO), India is home to the second-largest gig economy in the world, employing over 56% of all gig workers in the Asia-Pacific area, leading to a surge in employment in India, in both the white-collar and blue-collar sectors. [5]Ernst & Young also points out that about 40% of gig workers globally are based in India. At present, about 47% of the gig work is in medium skilled jobs, about 22% in high skilled, and about 31% in low skilled jobs, largely working in the non-agricultural sectors and mostly in the urban areas.[6] The trend indicates that the proportion of workers with medium skills is progressively decreasing while the proportion of workers with low and high abilities is rising. The freelancing jobs have been historically present in India for a prolonged period, for instance, in industry sectors where temporary workers are employed on an as-needed basis. On-demand laborers are also frequently used in Indian homes for personal services. Although India’s gig economy is booming, those employed at the bottom of the pyramid are subject to extremely difficult conditions. India, with its large informal economy and workers, has always had the equivalent of gig work – and the current scenario presents an opportunity to formalize and organize it.
REASONS FOR GROWTH OF GIG ECONOMY IN INDIA
Due to the benefits that the gig economy offers, both developed and developing countries around the globe are seeing a rise in the adoption and utilization of gig employment.[7]
- Technological advancements and rapid digitization
Technological developments have totally transformed the way organization’s function, facilitating more effective connections between enterprises and independent contractors. Gig employment expands the pool of potential employers by ‘sachetizing’ demand and lowering entry barriers to employing labor or services. Employers can now hire the person only for the hours needed for the service. One major factor propelling the gig economy ahead is this inclusive development of the E- Commerce industry in the country. The rapid digitization of the economy and the advent of app-based models for activities such as delivery, logistics and home services has resulted in certain regulation in this sector, causing it to grow dramatically.
- EMPLOYEES FOCUS ON WELL- BEING
Many people want more flexibility in their work, breaking away from traditional 9-to-5 occupations that may limit their personal life. The gig economy gives people the freedom to choose their workdays, holidays, shifts, and preferred employers, when and where they work rather than being pushed into a job and thus allowing them to strike a better balance between professional and personal obligations and eventually increasing the proportion of the temporary workers. Individuals prioritize finding work that matches their passions and interests above settling for standard career routes that may not satisfy their deepest ambitions.
- ECONOMIC INCENTIVES
Platforms benefit both companies and workers by lowering fixed labor costs. Employers can save money by just paying for their employees’ productive time, even if it means paying more per unit. Gig workers benefit from only being paid for productive time, which frees up non-value-added time enabling the workers to take in more work at hand at the same time which results in higher pay per unit of time and increase earning potential. Technology platforms may align incentives through enhanced price transparency, tracking work quality, and motivating employees to improve efficiency.
- INCREASED GENDER INCLUSITIVITY AND STUDENT PARTICIPATION
People from various walks of life–skilled, semi-skilled, and unskilled–discovered the elements of the gig economy and benefited during the Covid-19. The epidemic enabled the family’s female members to work as they could manage both household and job responsibilities from the comfort of their own homes and with flexible working hours. The advent of the gig economy has also enabled students to work part-time in addition to their studies, allowing them to obtain practical experience in their field of study while still earning enough money to support their families.
Gig labor, far from being a stopgap or transitory employment alternative, is a significant and growing contributor to global economic growth and job creation. It is an exciting work arrangement that can boost demand and improve livelihood chances, particularly for low-income workers in the Indian economy.
CHALLENGES FACED BY THE GIG WORKERS IN INDIA
In India, the unorganized economy is a vast and intricate web of independent contractors that operate outside official government regulations, and it employs a sizable fraction of the workforce and makes a substantial economic contribution to India.
The gig economy in India thrives primarily unregulated because platforms classify these workers as ‘contract workers,’ denying them employee benefits such as access to minimum wages, overtime compensation, annual leave, severance pay, pension pay, employee provident fund (EPF) accounts, and anti-discrimination laws.
The survey, which included 10,000 cab drivers and delivery people in cities, was the basis for the report. According to the survey, 41% of delivery workers and 48% of taxi drivers said they couldn’t take even one day off in a week. Additionally, 86% of delivery staff members stated that they found the 10-minute fast delivery to be totally inappropriate. Nearly 83% of cab drivers reported working more than 10 hours per day, while 78% of delivery personnel worked the same amount of time. Cab drivers and delivery people’s monthly incomes are below the basic pay range, making it difficult to manage household expenses, as reported by more than 70% of them. Because of the absence of holidays, drivers are more likely to experience physical and mental health problems. Among drivers, 99.3% reported experiencing body pain, working in inclement weather, or other health problems. In a similar vein, 98.5% of participants said that this work had caused one or more mental health problems, such as tension, anxiety, panic, irritability, short-temperedness, and panic attacks, among others.[8]
SOME OF THE OTHER MAJOR CHALLENGES ARE: –
- RATINGS- BASED REPUTATION SYSTEM- One concern frequently raised is the algorithmic control of platform labor by digital platforms. Platforms are criticized for having opaque algorithms, imposing excessive control over their workers through “ratings-based reputation systems”, allocating “disproportionate power” to customers over workers, and creating major risk to workers who are unfairly penalized based on client feedback. According to studies, algorithmic management and power inequalities diminish the agency of platform workers, resulting in emotional labor and prejudices. Platforms’ current method is attacked for biasing evaluations and distorting worker rights.
- ISSUES OF ACCESSISIBILITY- The gig economy is primarily reliant on technology and internet connectivity, poses a barrier for those without these resources and exacerbates economic disparity. This is especially valid for people who live in isolated and rural locations.
LEGAL STATUS OF THE GIG WORKERS AND LAWS THAT REGULATE THEM
As a relatively new type of workforce engagement, gig labor has not yet been tried in Indian courts. Gig workers lack ’employee’ status under Indian law, which has a number of ramifications, including the inability to join unions to advocate their interests, exploitative interactions, and so on. Additionally, gig workers are not entitled to the same benefits as most regular long-term employees because there is no explicit legislation in place. This is because gig workers’ type of employment is not covered by the labor laws that are now in effect. At the moment, public sector undertakings (PSUs), government employees, and private sector employees are the three primary categories of employees recognized under Indian labor and employment regulations. Certain working conditions, including minimum wages under The Minimum Wages Act, 1948, a maximum number of hours worked, compensation for termination, etc., are guaranteed to all these employees.[9]
Social Security Code, 2020
In 2019, the Indian Parliament adopted a new social security fund code that included the concept of gig and platform workers and determined the most favorable plans for such individuals. The social security code in 2020 combined nine enactments, including the Employees’ Provident Fund Act of 1952, the Maternity Benefit Act of 1961, and the Unorganized Workers’ Social Security Act of 2008, to include informal or gig workers in the plan. It also passed some labor laws that provide advantages to workers in the unorganized sector. The new codes are listed below.
The 2019 Code of Wages
This code applies to all employees in the organized and unorganized sectors and regulates salaries and bonus payments during employment. It also pays equal wages to people performing similar tasks in any industry, trade, business, or manufacturing facility.
The Code for Occupational Safety, Health, and Working Conditions, 2020
This code contains regulations to control the health and safety conditions of workers in workplaces with ten or more employees, including mines and dockyards.
The Code of Industrial Relations, 2020
This code combines the Industrial Disputes Act of 1947, the Trade Unions Act of 1926, and the Industrial Employment (Standing Orders) Act of 1946. The code’s goal is to improve the country’s business environment by decreasing industry-specific labor adherence issues.
STEPS TAKEN BY THE BIG PLAYERS IN THE MARKET
- ZOMATO- has just unveiled a novel way to fight worker fatigue: shelter rest areas. Given the physical toll that delivery work may have, these spaces are set aside to provide employees a chance to unwind and recover in between deliveries. This action not only demonstrates Zomato’s dedication to worker welfare but also establishes a standard for the sector to give the health and welfare of its gig workforce top priority.[10]
- SWIGGY- has launched skill-building initiatives aimed at empowering gig workers through the development of their professional abilities. This raises the bar for service across the board and creates new opportunities for professional and personal development. Swiggy’s strategic decision to prioritize skill development is a recognition of the possibilities of a highly skilled and driven gig workforce.[11]
- URBAN COMPANY- a platform providing various home services, is adopting a novel strategy by providing its partners with an Employee Stock Ownership Plan (ESOP). Gig workers now have a sense of ownership and a possible financial stake in the company’s growth as a result of this initiative, which matches their interests with the platform’s performance.[12]
STEPS TAKEN BY STATE GOVERNMENT
RAJASTHAN
On 24 July 2023, the Government of Rajasthan passed the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, becoming the first state to regulate platform-based gig workers at the legislative level. The law defines a Gig Worker. The Act establishes the Rajasthan Platform Based Gig Workers Welfare Board, which is responsible for registering platform gig workers, aggregators, and primary employers, notifying registered platform-based gig workers about social security schemes, and ensuring that workers have access to the plans’ benefits. By the fifth of each month, all aggregators and primary employers must deposit a welfare cess known as the “Platform Based Gig Workers Welfare Cess” (at a rate set by the Government of Rajasthan), which is equivalent to a minimum of 1% and a maximum of 2% of the value of each platform-based gig worker transaction. The Act calls for the creation of the Rajasthan Platform Based Gig Workers Social Security and Welfare Fund, which would hold and use all funds received for the benefit of registered platform-based gig workers, including donations, sums received as grant-in-aid from the State Government. The Board shall track and supervise all payments made through the platforms. Employers who breach the provisions of the law may face severe fines.[13]
KARNATAKA
The new draft seeks to increase openness on the automated monitoring and decision-making processes used by platforms, provide protections against wrongful terminations, and provide a two-tiered grievance redressal process for employees. According to the draft, aggregators must pay workers at least once a week and notify them of any reductions made from their wages. The revised draft stipulates that an employee may decline up to a certain number of engagements per week for “reasonable cause” without facing repercussions.[14]
LOOPHOLES IN THE CURRENT LAWS AND LEGISLATION
The earlier set of laws gave a very narrow definition to the idea of gig workers. The main problem with the existing legal framework is that it does not adequately define and categorize contract labor, which leaves ambiguity in what digital platforms are required to do with respect to their employees and facilitates gender inequality as women are often underutilized and forced into lower-paying segments of the freelancing industry. Population groups with limited access to opportunities for skill development and modern employment markets are therefore largely engaged in this kind of activity. This blatant disadvantage exposes them to abuse, exploitation and unawareness of their rights and the procedure associated with filing complaints and seeking a resolution.
The overlap and disarray in the current labor regulations pertaining to gig workers is another problem. The unorganized worker economy is the only focus of Chapter IX of the Code on Social Security, 2020. Section 112 grants permission to government agencies to establish hotlines or centers for assistance for these workers. All workers engaged in the unorganized sector are required by Section 113 to register with the central government and meet specific requirements. It adds that the worker will only be entitled for benefits that any scheme provides, upon registration. A clause in Section 114 gives the Central Government the authority to create social security programs for gig and platform workers that cover things like health and maternity benefits, accident insurance, life and disability insurance, old age protection, childcare, and anything else the government deems necessary.[15]
The problems with fluctuating revenue are not addressed by the code. A subset of gig workers refuses to pay into social security if they are required to deduct it from their salary. While the code prohibits employers from deducting any amount from their employees’ income, the expenses that gig workers’ employers are expected to cover for the benefits mentioned in the Code, 2020, will eventually affect hiring gig workers and the employers would not document the gig worker workforce.
Sexual harassment and safety remain unaddressed concerns for gig and platform workers. Even while the POSH Act provides a thorough answer to what falls under the umbrella word “workplace,” it is unclear if the concept applies to the digital workspace used by platform workers.[16]
Gig workers are not eligible for the Industrial Disputes Act’s specialist redressal process that would provide gig workers with genuine redress for grievances against their employers. Gig workers do not currently have the explicit right to collective bargaining, which plays an important role in protecting workers’ rights notwithstanding the disparity in bargaining power between employers and employees. organizations like the All-India Gig Workers Union find it difficult to register as a trade union due to the ambiguous status of gig workers. Without this registration, trade unions will not be protected from legal, criminal, and contractual risks, which would otherwise enable them to successfully communicate their demands to their employers.
CONCLUSION
The way the gig economy has developed in India is indicative of a larger worldwide trend that is changing the definition of employment. Although the gig economy provides workers with freedom and possibilities, it also presents issues with social security and labor rights. The peculiarities of gig work combined with unclear regulations have made it possible for businesses to continuously take advantage of their employees without having to answer for their actions under labor laws. The convergence of innovative technology, adaptable work schedules, and legal obstacles highlights the urgent need for a well-rounded strategy that upholds gig workers’ rights and solves their vulnerabilities. The gig economy has completely changed how people work and how businesses operate. However, this paradigm shift highlights intricate legal and ethical issues, especially regarding the rights and status of gig workers. In summary, the gig economy offers chances for creativity and financial independence, but its long-term viability depends on how well gig workers’ welfare and rights are safeguarded. Establishing a consistent global standard would protect gig workers’ rights while also fostering a strong working environment that can handle the changing nature of employment in the twenty-first century.
[1] In the Present and Towards the Future of Gig Economy and Workers in India available at: https://tatvita-analysts.com/present-and-future-of-gig-economy-and-workers-in-india/ ( last visited on August 23, 2024)
[2] Simrandeep Kaur, ‘ THE IMPACT OF THE GIG ECONOMY ON LABOUR LAWS AND SOCIAL PROTECTION IN INDIA’, Volume 12 of International Journal of creative research thoughts 4 (2024)
[3] Landscape of Gig Economy in India: Opportunities, Challenges, and the Quest for Workers’ Rights available at https://www.linkedin.com/pulse/landscape-gig-economy-india-opportunities-challenges-quest-kapil-45fkc#:~:text=With%2015%20million%20qualified%20workers,gig%20economy%20in%20the%20world. (last visited on August 23, 2024)
[4] Regulatory Framework and the Protection of Basic Rights of Gig Workers available at https://www.barandbench.com/law-firms/view-point/regulatory-framework-and-the-protection-of-basic-rights-of-gig-workers ( last visited on August 23, 2024)
[5] NITI Aayog, “India’s Booming Gig and Platform Economy” 59 (2022)
[6] In the Present and Towards the Future of Gig Economy and Workers in India available at https://tatvita-analysts.com/present-and-future-of-gig-economy-and-workers-in-india/ (Last visited on August 24, 2024)
[7] BCG, “Unlocking the Potential of the Gig Economy in India” 60 (2023)
[8] Regulatory Framework and the Protection of Basic Rights of Gig Workers available at https://www.barandbench.com/law-firms/view-point/regulatory-framework-and-the-protection-of-basic-rights-of-gig-workers ( last visited on August 20,2024)
[9] Radhika Dinesh & Tathya Sarkar,” WORKERS RIGHTS IN GIG ECONOMY- LEGAL FRAMEWORK AND CHALLENGES”, Manupatra (2024)
[10] NITI Aayog, “India’s Booming Gig and Platform Economy” 59 (2022)
[11] Landscape of Gig Economy in India: Opportunities, Challenges, and the Quest for Workers’ Rights available at https://www.linkedin.com/pulse/landscape-gig-economy-india-opportunities-challenges-quest-kapil-45fkc#:~:text=With%2015%20million%20qualified%20workers,gig%20economy%20in%20the%20world. (last visted on August 23,2024)
[12] Landscape of Gig Economy in India: Opportunities, Challenges, and the Quest for Workers’ Rights available at https://www.linkedin.com/pulse/landscape-gig-economy-india-opportunities-challenges-quest-kapil-45fkc#:~:text=With%2015%20million%20qualified%20workers,gig%20economy%20in%20the%20world. (last visted on August 23,2024)
[13] rajasthan Platform-Based Gig Workers (Registration and Welfare) Bill, 2023 available at https://www.drishtiias.com/daily-updates/daily-news-analysis/rajasthan-platform-based-gig-workers-registration-and-welfare-bill-2023 (Last visited on August 23,2024)
[14] The legal status of Gig workers in India available at https://aarambhlegal.com/the-legal-status-of-gig-workers-in-india/ ( last visited on August 23,2024)
[15] Radhika Dinesh & Tathya Sarkar,” WORKERS RIGHTS IN GIG ECONOMY- LEGAL FRAMEWORK AND CHALLENGES”, manupatra articles (2024)
[16] Regulatory Framework and the Protection of Basic Rights of Gig Workers available at https://www.barandbench.com/law-firms/view-point/regulatory-framework-and-the-protection-of-basic-rights-of-gig-workers
Author: Khushi Agarwal
Juris Centre 