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Gig economy

GS Paper 3

Syllabus: Indian Economy and related issues

 

Source: TH

 Context: The recent strike by Zomato-owned Blinkit delivery agents has once again brought to the forefront the issues plaguing the gig economy in the country.

 

Background: The strikes began when Blinkit slashed the minimum payout per delivery to Rs 15 per delivery from Rs 25.

 

The gig economy in India:

  • According to the NITI Aayog estimates, nearly 23.5 million workers will be engaged in the gig economy by 2029.
Gig worker
Gig workers refer to workers outside of the traditional employer-employee relationship. There are two groups of gig workers – platform workers and non-platform workers.
Platform workers  Non-platform workers
When gig workers use online algorithmic matching platforms or apps to connect with customers, they are called platform workers. Those who work outside of these platforms are non-platform workers, including construction workers and non-technology-based temporary workers.

 

Issues faced by gig workers:

  • Since the gig economy falls outside the scope of traditional, full-time employment, gig workers usually lack basic employment rights such as
    • Minimum wages,
    • Overtime pay,
    • Medical leave, and
    • A statutorily bound resolution of employer-employee disputes.
  • Whether gig workers should be categorised as ‘employees’ or as ‘independent contractors’?
  • It depends on the extent of control and supervision exercised by the employer and the integration of the worker with the organisation.
    • In India, employees are entitled to a host of benefits under the Minimum Wages Act 1948, EPF Act 1952 and the Payment of Bonus Act 1965.
    • Similarly, contract labourers are governed under the Contract Labour (Regulation and Abolition) Act 1970 and are entitled to benefits under the EPF.
    • However, gig workers display characteristics of both employees and independent contractors → as a result fall outside the ambit of statutory benefits.

 

What is the proposed law for gig workers? In keeping with the National Commission on Labour’s recommendation to consolidate central labour laws, the Ministry of Labour and Employment introduced the Code on Social Security 2020.

  

Salient provisions in the Code on Social Security 2020:

  • It brings gig workers within the ­ambit of labour laws for the first time.
  • It distinguishes between such workers and employees.
  • It stipulates that Central and State Governments must frame suitable social security schemes for gig workers.
  • A social security fund for gig workers, to which Gig employers must contribute 1-2% of their annual turnover → to be used for the aforementioned schemes.
  • It also mandates the compulsory registration of all gig workers to avail of benefits under these schemes.
  • It also envisages the constitution of a National Social Security Board by the Central government to monitor the implementation of such schemes.

 

Concerns:

  • Out of the four new labour codes proposed, gig work finds reference only in the Code on Social Security.
  • Hence, they cannot create legally recognised unions and access a national minimum wage that applies to all forms of employment.
  • Gig workers are excluded from the category of ‘unorganised workers’ or ‘wage workers’.
  • Gig workers also remain excluded from accessing the specialised redressal mechanism against their employers.
  • They also do not have the right to collective bargaining – a fundamental principle of modern labour law.
  • All the above leads to the violation of their fundamental rights under Articles 14 and 21 and comes within the meaning of forced labour under Article 23.

 

Can judicial intervention be expected? A petition demanding that gig workers or platform workers be declared as ‘unorganised workers’ so that they come under the purview of the Unorganised Workers’ Social Security Act, 2008, is pending in the SC of India.

 

Best practices:

  • In 2021, the UK Supreme Court classified Uber drivers as ‘workers’ under the UK Employment Rights Act 1996.
  • Germany’s Temporary Employment Act provides for equal pay and equal treatment of gig workers.
  • Singapore has also proposed legislative changes to extend work injury insurance and pension coverage to such workers.

 

Way ahead for India:

  • The Labour Codes need to be implemented as soon as possible.
  • For this, State governments should frame rules as soon as possible.

 

Insta Links:

Gig economy

 

Mains Links:

How globalization has led to the reduction of employment in the formal sector of the Indian economy? Is increased in formalization detrimental to the development of the country? (UPSC 2016)