Gig Economy in India, Regulation for Gig Workers

Table of Contents

Context: The Karnataka government plans to introduce a bill aimed at improving the welfare of gig workers.

What is the Gig Economy?

The gig economy refers to a free market system in which temporary positions are commonly characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs.
Workers in the gig economy are often referred to as “gig workers” or “independent contractors” and typically work on a project or task basis, rather than being employed full-time by a company.
The rise of the gig economy has been facilitated by the growth of online platforms such as Uber, Lyft, Airbnb, and TaskRabbit, which connect workers with customers or clients.
Gig work can include a wide range of activities, from driving for a ride-sharing service to renting out a spare room on Airbnb to performing freelance writing or design work.

Who is a ‘Gig Worker’?

Gig workers refer to workers outside of the traditional employer-employee relationship.
There are two groups of gig workers:
- Platform workers: When gig workers use online algorithmic matching platforms or apps to connect with customers, they are called platform workers.
- Non-platform workers: Those who work outside the above platforms are non-platform workers, including construction workers and non-technology-based temporary workers.

Addressing Myths in the Gig Economy

Myth of Independence: The first myth is that gig workers are their own bosses, with titles like “partners” or “captains.”
- In reality, their work is heavily dictated by algorithms and local team managers, controlling work hours, tasks, and performance metrics.
- The Karnataka Bill aims to reduce this algorithmic control by making companies disclose how work is allocated and how personal data influences these decisions.
Myth of Flexibility: Studies suggest that flexibility primarily benefits employers, not workers, who must adhere to strict schedules to earn the minimum required income.
- The proposed bill mandates fair contracts and income security, allowing workers to refuse tasks without penalties.
Myth of Part-Time Engagement: Studies reveal that a significant majority of gig workers, such as cab drivers and delivery workers, rely on gigs as their primary income source, working long hours daily.
- The bill acknowledges this by making social security mandatory for gig workers.

Broader Implications and Future Directions

National and State Responses: While the Indian government’s Code on Social Security offers limited protections for gig workers.
- State governments like Karnataka are leading the initiative to provide more comprehensive rights and protections.
Economic Responsibilities: The legislation emphasises that social security should not solely depend on state funding but also involve contributions from market actors.
Areas for Improvement: The bill currently lacks provisions on minimum wage, occupational safety, working hours, and collective bargaining rights, which leaves room for further enhancement.

Classification of Gig Workers

Platform-based workers: These are gig workers who provide services through digital platforms such as Uber, Lyft, Airbnb, Upwork, and TaskRabbit. Platform-based workers often have limited control over their working conditions, pay, and benefits, and are typically classified as independent contractors rather than employees.
Non-platform-based workers: These are gig workers who provide services outside of digital platforms, such as freelancers, independent consultants, and temporary workers. Non-platform-based workers often have more control over their working conditions, pay, and benefits, but may also face challenges such as income uncertainty and lack of job security.

Potential of Gig Economy in India

According to a report titled ‘India’s Booming Gig and Platform Economy’ released by NITI Aayog, 77 lakh workers were engaged in the gig economy in 2020–21. They constituted 2.6% of the non-agricultural workforce or 1.5% of the total workforce in India.
The gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029–30. Gig workers are expected to form 6.7% of the non-agricultural workforce or 4.1% of the total livelihood in India by 2029–30.
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.
The trend shows the concentration of workers in medium skills is gradually declining and that of the low skilled and high skilled is increasing.

Advantages of Working in a Gig Economy	Disadvantages of Gig Economy
Flexibility for Workers: Gig workers have the flexibility to work according to their own schedule and availability, and can often choose their own work hours.	Job Insecurity: Gig workers often work on a day-to-day basis and may be terminated without notice, as seen during the pandemic.
Cost Efficiency for Companies: Companies can save costs by hiring gig workers instead of full-time employees, and may be able to provide services more economically to users.	Lack of Benefits: Gig workers typically have no social security benefits, paid leave, or wage regulation, and may be at the mercy of platform companies.
Opportunities for Low-Skilled Workers: The gig economy provides jobs for many low and semi-skilled workers, often with minimal conditions.	Poor Work Conditions: Many gig workers are required to work long hours with little transparency on incentive structures and may have little bargaining power.
Experience Gain: Young workers can gain valuable work experience through gig work before transitioning to formal employment.	Hidden Charges: Platform companies may charge high commissions on gig workers to sustain discounts offered to users.
Economical: Gig workers can save costs by working remotely and avoiding expenses like office commute.	Low Bargaining Power: Gig workers often lack a voice and may face delays in payments or lack of access to basic amenities.
Entrepreneurial Opportunities: Gig work can also offer entrepreneurial opportunities, allowing workers to start their own businesses or work as independent contractors with multiple clients.	Unequal Treatment: Platform companies like Blinkit offer a route to survival for young workers in urban India with limited employment options. Gig workers may be subject to unfair treatment or exploitation, such as low pay, long working hours, or unsafe working conditions.
Income Generation: Gig work can provide a source of income for individuals who may not have access to traditional employment, such as those with disabilities or those living in remote areas.	Limited Career Growth: Gig work may not offer the same career growth opportunities as traditional employment, as gig workers may not have access to training or development programs, or be able to build long-term relationships with clients.
Access to Global Markets: The gig economy allows workers to connect with clients and customers from around the world, potentially expanding their customer base and income opportunities	Social Isolation: Gig work may be isolating, as gig workers often work independently and may not have the same social connections or support networks as traditional employees.

Recommendations by NITI Aayog for Gig Economy

Code on Social Security: The report puts forth suggestions for platform-led transformational and outcome-based skilling, enhancing social inclusion through gender sensitization and accessibility awareness as envisaged in the Code on Social Security 2020. NITI Aayog has also proposed the RAISE Approach for operationalizing the CoSS, 2020
Access to Skill and Finance: Provide financial products and cash flow-based loans to platform workers. Platforms can collaborate with the Ministry of Skill Development to promote skilling and job creation in the gig economy.
Focus on Women: It recommends businesses implement programmes for workers and their families that raise knowledge of gender issues and accessibility, especially to advance the rights of women and people with disabilities.
Data Collection: Other recommendations include undertaking a separate enumeration exercise to estimate the size of the gig and platform workforce and collecting information during official enumerations (Periodic Labour Force Survey) to identify gig workers.
Free trade agreement: creating pathways for education and certification acquired in India to be recognised globally, such as through FTAs.
Innovation: Platforms and businesses can innovate to create new models that provide gig workers with better pay, benefits, and job security. This could include the development of new technologies, such as blockchain and AI that enable more transparent and secure gig work arrangements.Gig Economy