The Threat to the Gig Economy
Duplication of social security benefits by states can end up harming a viable model
Rameesh Kailasam
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01 Sep, 2023
PRIME MINISTER NARENDRA MODI recently said that “the whole world is appreciating the efforts of the Indian government that ensured the poor did not sleep hungry during and post the pandemic”. The Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY), which provided free ration to more than 80 crore people, is an incredible achievement that ensured a very large chunk of the population lived to see another day. It generated hope and the promise of a future that appears brighter now thanks to the India growth story powering on. India continues to be that island of optimism in the world’s ocean of pessimism and chaos.
The vast number of people who depended on these rations also indicates that this section of the population is still in the vulnerable category and, therefore, there is a greater need for the creation of work opportunities and livelihoods.
While we have a large emerging workforce, with significant additions to the growing number of people seeking jobs, it is tough to create that many jobs as evidenced globally. As manufacturing becomes more and more capital-intensive and innovation across sectors demands precision engineering for new-age products, labour-intensive activities will continue to decline. Thus, the emergence of a new form of work, such as gig, is what will keep people gainfully engaged.
The gig economy covers everything from cab-hailing, ride-sharing, food deliveries, home-services, including wellness, to even high-end tech work, marketing, edu-tech, etc. A vast majority of the population not in the job economy in the 1960s to the early 2000s preferred to set up shops or sell goods, which is why we have seven crore shops and six crore hawkers who are self-employed and honourably earn their livelihood. The current generation of youth may have less affinity towards these and prefer to engage in gig work and are more nomadic by nature as well. While gig is the buzzword these days, we must not forget that the informal job sector has existed in India for a long time. The insufficiency of jobs in the formal sector supplemented by an individual’s aspirations has ensured that the informal sector is a viable alternative. A gig platform worker is free to log in and out of work at will and is also free to switch among platforms as they desire.
Most of the startups in the gig economy already provide gig workers with social cover like accident, health insurance and other benefits. The food delivery platforms already provide accident and health insurance free of charge to gig workers and the premiums are borne by the platforms themselves
Today, the gig economy is offering such aspirations to millions who prefer to enter the earning stream due to its near-zero entry barrier. With the relative ease of entry and exit for platform workers, this industry is answering the growing employment concerns of the huge population wanting to enter the workforce every year. The startup ecosystem has also greatly contributed to this story by creating and enabling models that now connect the provider with the customer electronically, thereby getting this vast majority into the formal economy. The government’s and the private sector’s endeavour to push internet and smartphone availability at affordable prices has also contributed greatly to the growth of the gig economy. Due to its flexible and participatory nature, the gig economy has empowered workers to choose the days or hours they wish to be gainfully engaged.
Most of the startups operating in the gig economy space already provide gig workers with social cover like accident, health insurance and other benefits. The food delivery platforms already provide accident and health insurance free of charge to gig workers and the premiums are borne by the platforms themselves. Some even provide period rest days to women delivery partners.
The emergence of impact-driven startups like Jeevitam (livelihood) is also greatly contributing to this endeavour to create livelihoods by combining Interactive Voice Response System (IVRS) and artificial intelligence (AI) to enable sourcing and matchmaking for new-age startups and conventional companies. Their efforts in sourcing and connecting a large populace seeking work opportunities, in collaboration with government bodies like the CSC Academy and various states, connecting with several towns and hinterlands, is commendable. They also map aspirational jobs for various gig workers and aid their progress. In addition, their efforts in imparting financial and digital literacy have rapidly helped organisations speed up their outreach, including through CBSE schools.
It is a very high probability that one would have used the services of a gig worker in recent times as it has solved last-mile logistics and ushered in business growth for even small traders, restaurants and the self-employed. The huge influence the platform economy has had on our daily lives is seldom appreciated and has, unfortunately, been taken for granted. Apart from consumers benefiting in a big way, the platform economy is also a means of livelihood for over eight million workers and is projected to grow over 20 million in the next six years. Startup platforms for their part have done their bit to keep the ecosystem going by adequately equipping workers with the required soft skills as well as getting them the necessary insurance cover.
The National Council of Applied Economic Research (NCAER) recently released its report ‘Socio-Economic Impact Assessment of Food Delivery Platform Workers’. It highlights in its key findings that “food delivery platforms act as a tool for social protection”. This reaffirms the claim that the platform economy is providing work to those seeking it. It also states that the workers comprise the young population with many active as short-shift workers. This indicates that while some are using this work as a means of livelihood, some others are willing to put in the extra hours to earn more than what their regular jobs pay in a bid to realise their aspirations. The survey shows that the workers are gaining skills in communication and digital literacy and, therefore, in future, there is a promise that these will extend to financial literacy, management skills, and career progression.
One needs to also understand that in the gig economy, the database of workers is highly dynamic due to greater interest and a high churn. Being flexible and task-based in nature, workers can simply register and undertake deliveries/ gigs as per their availability and willingness. They may even choose to log out and log in when they want. There are also gig workers who register but may not have undertaken a single delivery or gig. In view of these industry realities, governments need to be more nuanced about the eligibility criteria. Voices speaking about the gig economy should not compare it with conventional jobs and try to work out solutions. The gig economy is a positive disruption in the creation of work opportunities and in the livelihood space. It has to be handled in a manner that respects its uniqueness.
The need of the hour is practicality backed by addressing the social security needs of gig workers. Without resorting to populism that may look good but not work on the ground. Either states should work towards aligning themselves with the national code or work closely with the centre
THE UNION GOVERNMENT, through the Ministry of Labour and Employment, made a commendable effort by coming out with reforms in labour laws and also brought out the Code on Social Security 2020 that aims at providing social security for unorganised workers, gig workers and platform workers, besides making provisions for their manner of registration. The code aims at providing universal coverage and is more inclusive in nature. It requires contribution between 1 and 2 per cent of the annual turnover of the aggregators, not exceeding 5 per cent of the amount paid/payable to gig and platform workers. Subject to certain areas that needed clarifications on the operational and contribution front, it is a step in the right direction as it targets all gig workers in the country, irrespective of domicile, and grants benefits and universal coverage without distinction.
The biggest threat to any sector is duplication of laws and multiplicity of compliances. Unfortunately, this segment is beginning to witness similar efforts by various states that may prove counterproductive to the cause. States like Rajasthan and Karnataka are now making efforts to provide similar social security to gig workers through a cess-driven model. States duplicating such efforts may end up alienating or excluding a large chunk of those who may be migrant gig workers with domicile in other states. For the industry and startup ecosystem, multiple regulations and costs may end up hurting and killing the basic framework of the model that is currently economically viable and calls for an immediate need for predictability, consistency and synergy between the Union government and states. The need of the hour is practicality backed by addressing the social security needs of gig workers in a manner that they get access to the same without anyone resorting to impractical populism that may look good but not work on the ground. Either states should work towards aligning themselves with the national code or work closely with the Centre in rolling the benefits out.
The industry needs a predictable regulatory environment and it is important for the Centre to step in, take charge, and work closely with states. Otherwise, this potential golden goose, too, will get killed.
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