An Analysis of the Gig Economy in India

Introduction

A standard work arrangement comprises a traditional, long-term employee-employer relationship where an employee receives remuneration as a wage or salary from the employer on a monthly, hourly, or daily basis upon fulfilment of the terms of employment. However, where such an arrangement does not exist, workers tend to be employed temporarily for a specific project or task.[1] The duration of such employment is generally short. This is known as gig work and the workers are called gig workers. In its 2022 report, NITI Aayog defined gig workers as “those engaged in livelihoods outside the traditional employer-employee arrangement.”[2] “Gig worker means a person who performs work or participates in a work arrangement and earns from such activities outside of the traditional employer-employee relationship.”[3]

Generally, the company that pays such workers differs from the one that employs them. Some examples of gig workers are freelancers, employees of digital platforms, independent contractors. Organizations and governments are studying the fast-changing gig economy on a global as well as national scale. The UK government published a report on gig economy in 2018. The definition of gig economy, as given in the said report, is as follows: “involving an exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment by task basis.”[4] “The gig economy encompasses freelancers, online platform workers, self-employed, on-call workers, and other temporary contractual workers.”[5]

Gig culture has many benefits with both businesses and employees can gaining from it. For instance, a gig worker is at liberty to concurrently work for many employers. He can also select the projects he wishes to be a part of. For businesses, the biggest benefit is workforce flexibility. They can control expenses by modifying their flexible workforce in response to demand. The development of tech-based platforms, the demand for flexible work schedules, and the emphasis on skills are the primary factors driving the growth of the gig economy. India is the fifth largest in the world in flexi-staffing.[6] Gig employment is present in both blue-collar and white-collar jobs in India.

The Size of the Gig Economy is India

NITI Aayog, in June 2022, released a report on the gig economy in India titled “India’s Booming Gig and Platform Economy.” The report classifies gig workers into two broad categories, namely platform-based and non-platform-based. Platform workers are those who are engaged with some online software apps like Zomato or any other digital platform, while non-platform workers are those who are engaged in casual, conventional sectors.[7] The report focuses on the former.

NITI Aayog uses seven indicators to identify gig workers, namely location, age, education, income level, type of employment, ownership of mobile phones, and bank accounts (for online transactions). Estimation of the size of the gig economy posed several challenges. The employees are termed partners, while others are engaged in more than one employment. The statistical data available for the conventional sector is robust but severely lags in the case of platform gig workers.[8] Therefore, the report uses estimates from studies by various organizations, such as the 2019 study by Team Lease. According to the said report, the number of gig workers increased from 8.5 million in 2016 to 15 million in 2018, with 56% of alternative employment being generated through gig economy companies.[9] In a 2020 report by Michael and Susan Foundation and Boston Consulting Group (BCG), the estimated number of gig economy jobs is 8 million in India.[10] The said report expected an increase to 90 million jobs in the non-farm sector in about 8 to 10 years.

The NITI Aayog report makes a final estimation of 7.7 million platform gig workers in 2020–21, and this number will rise to 23.5 million by 2029-30.[11] About 47% of these are medium-skilled, 22% are high-skilled and 31% are low-skilled.[12] The report also highlights that while the medium-skill workers will dominate the gig economy until 2030, the number is declining and the number of high-skilled and low-skilled gig workers is increasing.[13]

The Gig Economy and Worker Demand in India

We cannot ignore the prominence of the gig economy in India. Gig workers “constitute 2.6% of the non-agricultural workforce or 1.5% of the total workforce in India.”[14] The gig economy even displayed resilience to the COVID-19 pandemic. The Ukraine-Russia crisis, increasing inflation rates, and slowdown in the economy accompanied by the pandemic are all adversely affecting the conventional work set-up and have resulted in the growth of the gig economy. While all seems shiny on the surface, gig workers face several challenges.

Problems Faced by Gig Workers

First, gig workers are not even covered under regular employee contracts. If a gig worker fails to do an assigned job because of sickness or any other reason, the employer can dismiss him. Gig workers are at the mercy of consumer demand. If the demand falls, they will be the first to be removed. There is no job security or sickness benefit or any other form of social security.[15] Self-employed gig workers cannot claim pensions, sick leave or maternity benefits. An individual has to qualify as an employee or worker to claim these benefits.[16]

Further, gig workers get paid per job and not per hour. For instance, if a person works as a delivery man, he will get paid for every delivery he makes. If he makes a delivery at 9 A.M., he will have to wait for another gig, which he may only get after many hours have passed. Thus, several gig workers are earning less than minimum hourly wages.[17]

Gig workers cannot access loans or plan for the future because of the very nature of their job.[18] The workers are always financially constrained with 90% running out of their salary before the month ends.[19] Much of the salary is used to meet the household and fuel expenses. Furthermore, their income is not constant. Flourish Ventures in their 2020 research pointed out that gig workers earned up to Rs 25,000/- before the pandemic. However, the income of 87% of these gig workers was substantially reduced to Rs. 15,000/- after the pandemic.[20] Overall, 81% of gig workers faced a significant decline in their income.[21]

ILO on Gig Economy

Since 2015, the International Labour Organization has been focusing on issues related to gig workers.[22] The organization adopted the “ILO Centenary Declaration for the Future of Work” in 2019. The report highlights that the work sphere is changing because of new technological innovations, climate change, globalization, etc. It stresses the urgency to adopt policies to keep up with these changes and ensure an “inclusive and secure future of work with full, productive and freely chosen employment and decent work for all.”[23]

Further, in February 2021, ILO released a report providing a broad overview of how digital platforms are transforming the world. The report focuses on platform workers and points out a 5-fold increase in digital labour platforms in the last ten years.[24] The digital platforms are providing men, women, disabled and marginalized new work opportunities. The workers face problems such as irregularity in work and wages, long and unpredictable working hours, absence of social security, and lack of rights such as freedom of association and collective bargaining. Half of the workers engaged in this field earn an hourly wage of less than 2 USD.[25]

While many governments, unions, and other organizations are taking steps to address these issues, their efforts are scattered and varied, leading to uncertainty. Many digital platforms function across multiple jurisdictions, so a coordinated and coherent dialogue is necessary among nations to create international labour standards.[26]

Laws in India: An Analysis

Unlike in developed countries, the exclusion of gig workers from labour laws has remained ignored and unnoticed since its emergence in the last decade in India. However, efforts were made by some unions to secure the rights of such workers and provide them with social security. But they have been unsuccessful. Gig workers in India face problems common to the unorganized sector, along with precarity, casualization and obsequiousness. Thus, government intervention is necessary and the need of the hour. With the enactment of the Social Security Code, 2020, India became the first country to cover gig workers within the ambit of labour laws.[27] Even the developed economies are yet to incorporate provisions for gig workers. However, the new Code is not devoid of flaws.

The yet-to-be implemented Code provides an unclear and broad definition for “gig workers.”[28] There is ambiguity regarding the adoption and implementation of the new Code. While all gig workers receive their tasks via the platforms, the conditions and types of work offered to vary between platforms. In terms of the type of labour, worker expertise, and hourly pay, platforms that use crowdsourcing differ greatly from those that use on-demand services. Therefore, some type of social benefit cannot apply to all.

The said Sec. classifies gig work as a separate form of employment, distinct from regular employment. Gig workers are not treated as employees under Sec. 2(26) of the new Code.[29] Only “employees” are entitled to benefits such as minimum wage, social security, maternity benefit, and insurance. Thus, the primary issue remains unaddressed. However, including gig workers within the meaning of employee has many disadvantages, such as an increase in the financial burden on businesses, leading to a decrease in research and development. The benefits that the gig economy brings to the overall economy cannot be negated. Further, as per surveys conducted, not all gig workers want to be “fully employed.”[30] They enjoy their freedom.

Conclusion

There are several definitions of the term “gig worker,” but none are adequate because it is practically impossible to give a uniform, one-size-fits-all definition. One cannot, however, dismiss the benefits that the gig economy offers, even though the insecure nature of gig work has exposed the gig economy’s negative side. The four newly merged labour codes include a section on the legislation governing gig workers. With the approval of the new labour bills by Parliament, India’s recently enacted labour rules include some provisions aimed at improving the welfare of gig workers, bringing them for the first time under the purview of labour laws. India is setting a benchmark. With the gig economy expanding, it is urgent that other countries also enact legislation on the recommendations of the ILO. A coherent and coordinated international dialogue is needed to set international standards for gig workers.

Author:

Kiran Singh (Chanakya, National Law University)

---

[1] Gig Economy Data Hub, https://www.gigeconomydata.org/basics/what-gig-worker (Assessed on Sept. 10 2022).

[2] Policy Brief: India’s Booming Gig and Platform Economy, NITI Aayog, Pg 2 (2022) https://www.niti.gov.in/sites/default/files/2022-06/Policy_Brief_India%27s_Booming_Gig_and_Platform_Economy_27062022.pdf (Assessed on Sept. 10 2022).

[3] Sec. 2(35) Social Security Code, 2020.

[4] The Characteristics of Those in the Gig Economy, Department for Business, Energy and Industrial Research, UK, Pg 9 (2018) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/687553/The_characteristics_of_those_in_the_gig_economy.pdf (Assessed on Sept. 10 2022).

[5] Krishna Veera Vanamali, What is the gig economy and who are gig workers?, Business Standards https://www.business-standard.com/podcast/jobs/what-is-the-gig-economy-and-who-are-gig-workers-122032400060_1.html (Assessed on Sept. 10 2022).

[6] Impact Of Key Reforms On Job Formalization and Indian Flexi Staffing Industry, India Staffing Federation, Pg 10 (2019) https://www.indianstaffingfederation.org/wp-content/uploads/2019/07/ISF-Report-2019-Impact-of-reforms-on-Job-Formalisation.pdf (Assessed on Sept. 10 2022).

[7] Supra Note 2.

[8] India’s Booming Gig and Platform Economy: Perspectives and Recommendations on the Future of Work, NITI Aayog Pg 10 (2022) https://www.niti.gov.in/sites/default/files/2022-06/25th_June_Final_Report_27062022.pdf (Assessed on Sept. 10 2022).

[9] India’s Booming Gig and Platform Economy: Perspectives and Recommendations on the Future of Work, NITI Aayog Pg 11 (2022) https://www.niti.gov.in/sites/default/files/2022-06/25th_June_Final_Report_27062022.pdf (Assessed on Sept. 10 2022).

[10] Id.

[11] Policy Brief: India’s Booming Gig and Platform Economy, NITI Aayog, Pg 3 (2022) https://www.niti.gov.in/sites/default/files/2022-06/Policy_Brief_India%27s_Booming_Gig_and_Platform_Economy_27062022.pdf (Assessed on Sept. 10 2022).

[12] Id.

[13] India’s Booming Gig and Platform Economy: Perspectives and Recommendations on the Future of Work, NITI Aayog Pg 25 (2022) https://www.niti.gov.in/sites/default/files/2022-06/25th_June_Final_Report_27062022.pdf (Assessed on Sept. 10 2022).

[14] PIB https://pib.gov.in/PressReleasePage.aspx?PRID=1837277 (Assessed on Sept. 11 2022).

[15] Nilanjan Banik, All Is Not Well with India’s Gig Economy, The Wire https://thewire.in/economy/all-is-not-well-with-indias-gig-economy (Assessed on Sept. 11 2022).

[16] Worksmart https://worksmart.org.uk/news/what%E2%80%99s-wrong-gig-economy (Assessed on Sept. 11 2022).

[17] Id.

[18] Neelanjit Das, Gig Economy Workers Face Many Challenges In India; How Fintechs Are Trying To Solve Them, Outlook https://www.outlookindia.com/business/gig-economy-workers-zomato-swiggy-bigbasket-blinkit-uber-ola-face-a-many-challenges-in-india-how-fintechs-are-trying-to-solve-them-news-193217 (Assessed on Sept. 11 2022).

[19] Brinda Sarkar, Almost 90% of gig workers run out of their salaries before month-end: Survey, Economic Times https://economictimes.indiatimes.com/jobs/almost-90-of-gig-workers-run-out-of-their-salaries-before-month-end-survey/articleshow/ (Assessed on Sept. 11 2022).

[20] The Digital Hustle: Gig Worker Financial Lives Under Pressure, Flourish Ventures, Pg 3 (2020) https://flourishventures.com/wp-content/uploads/2020/10/FlourishVentures-GigWorkerStudy-India-FINAL-2020-09-29.pdf (Assessed on Sept. 11 2022).

[21] Id.

[22] ILO https://www.ilo.org/newdelhi/info/public/sp/WCMS_839490/lang–en/index.htm (Assessed on Sept. 12 2022).

[23] ILO, ILO Centenary Declaration for the Future of Work, Pg 2 (2019) https://www.ilo.org/wcmsp5/groups/public/—ed_norm/—relconf/documents/meetingdocument/wcms_711674.pdf (Assessed on Sept. 12 2022).

[24] ILO https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_771909/lang–en/index.htm (Assessed on Sept. 12 2022).

[25] Id.

[26] World Employment and Social Outlook: The role of digital labour platforms in transforming the world of work, ILO, Pg 26 (2021) https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_771749.pdf (Assessed on Sept. 12 2022).

[27] Deepika M G, Madhusoodhan M, Labour Laws for Gig Workers in the Context of Labour Law Reforms, EPW https://www.epw.in/journal/2022/30/perspectives/labour-laws-gig-workers-context-labour-law-reforms.html (Assessed on Sept. 12 2022).

[28] Supra Note 3.

[29] Sec. 2(26) of Social Security Code, 2020.

[30] Supra Note 27.