Answer

The gig economy refers to a labour market characterised by short-term, flexible, and freelance work, primarily facilitated by digital platforms. This sector has seen significant expansion due to technological advancements and increased consumer demand for services like ride-sharing, food delivery, and freelancing. According to NITI Aayog, 77 lakh (7.7 million) workers were engaged in the gig economy in 2020-21, and this workforce is expected to expand to 2.35 crore (23.5 million) by 2029-30.

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Challenges of Gig Economy to Traditional Labour Laws and Social Security Framework

Labour Laws

• Ambiguous Employment Status: Gig workers often lack a clear employer-employee relationship, classifying them as independent contractors. This allows companies to circumvent labour laws like minimum wage and job security.
  For example: Aggregators like Uber label drivers as independent contractors, avoiding the obligation to provide minimum wage as required under the Wages Code.
• Lack of Job Security: Traditional labour laws emphasise permanent employment and job stability. Gig workers face precarious work conditions, with contracts subject to instant termination.
  For example: Under the proposed legislation, aggregators must provide a 14-day termination notice, but the lack of broader job security remains a concern.
• Inapplicability of Industrial Relations Code: The Industrial Relations Code 2020 ensures dispute resolution mechanisms for formal sector workers, excluding gig workers from these protections.
  For example: Disputes between Swiggy delivery partners and the company often remain unresolved due to the absence of formal grievance mechanisms.

Social Security Framework

• Limited Access to Social Security: While gig workers can register on the e-Shram portal, they have restricted access to only basic social security schemes like life insurance, missing out on more robust social benefits.
  For example: Formal sector employees receive comprehensive health and maternity benefits, while gig workers receive cash benefits like ₹5,000-₹10,000 for maternity needs under social security schemes.
• Absence of Occupational Safety: Traditional social security frameworks cover workplace safety regulations, but gig workers are often exposed to occupational hazards without protections.
  For example: Delivery agents working for Food delivery apps face traffic-related risks without being covered by occupational safety laws, unlike formal employees under the Occupational Safety and Health Code.
• Inadequate Pension and Retirement Benefits: Formal employees receive pension schemes and retirement savings plans. Gig workers, however, lack access to such long-term financial security.
  For example: The proposed legislation suggests aggregators contribute 1%-2% of revenue for gig workers’ retirement savings, yet this remains less comprehensive than Employee Provident Fund (EPF) for formal workers.

Potential Benefits of Proposed Measures

• Improved Social Security Access: Including gig workers in social security schemes ensures access to health insurance and retirement benefits, offering financial stability during adverse situations.
  For example: Contributions by companies like Zomato could cover medical expenses for delivery agents, aiding them during accidents or health emergencies.
• Formalization of Gig Work: Registering workers on the e-Shram platform provides a database that helps design targeted welfare schemes for gig workers, promoting inclusivity in social security systems.
  For example: The e-Shram portal has already registered 30 million gig workers, enabling the government to provide COVID-19 relief packages during the pandemic.
• Enhanced Transparency and Accountability: By mandating transparency in work allocation, gig workers gain more clarity on earnings and job availability, reducing arbitrary practices by platforms.
  For example: The proposed law could enforce clear criteria for ride allocation for Ola drivers, ensuring fair access to jobs.
• Welfare Board’s Role in Oversight: Establishing a welfare board ensures effective management of funds and distribution of benefits for gig workers, fostering better governance.
  For example: Welfare boards for construction workers in states like Kerala have successfully managed health and housing benefits.
• Improved Termination Procedures: The requirement of a 14-day notice period before terminating workers allows for greater job security, preventing sudden loss of income for gig workers.
  For example: This provision ensures that a Swiggy delivery agent gets prior notice and reasons for termination, aiding them in making alternative arrangements.

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Drawbacks of Proposed Measures

• Limited Contribution Rates: Requiring 1%-2% revenue contribution from aggregators may result in insufficient funds for covering comprehensive social security needs of gig workers.
• Ambiguity in Welfare Board’s Role: The effectiveness of a welfare board is uncertain without proper accountability mechanisms, risking mismanagement of funds.
• Potential for Increased Costs to Aggregators: The financial burden on aggregators could lead to reduced earnings for gig workers as platforms might adjust commission rates.
  For example: Uber might increase driver commission rates to offset the revenue contributions required under the proposed legislation.
• Exclusion from Broader Labour Laws: The proposed measures focus narrowly on social security without addressing job security and fair wages, maintaining the vulnerabilities of gig workers.
  For example: Delivery agents  might still face low earnings per trip, as minimum wage laws remain inapplicable.
• Challenges in Worker Registration: Ensuring universal registration of gig workers on platforms like e-Shram is challenging due to lack of awareness and geographical barriers.

Alternatives for Comprehensive Protection

• Expanding Coverage of Existing Labour Codes: Including gig workers in the Wages Code and Industrial Relations Code would provide them with minimum wage and dispute resolution mechanisms, improving their working conditions.
  For example: The U.K. Supreme Court classified Uber drivers as workers, providing access to minimum wage and holiday pay.
• State-Specific Social Security Models: States could create tailored social security schemes based on regional gig work patterns, addressing local needs more effectively.
  For example: Karnataka’s Sahayahastha scheme offers insurance and pension benefits to platform-based workers.
• Strengthening Digital Literacy and Awareness Programs: Educating gig workers about rights and registration processes on platforms like e-Shram ensures better coverage of benefits.
• Adoption of Flexible Benefits: Allowing gig workers to opt into benefits like pension schemes or health insurance could provide flexibility, catering to their specific needs.
• Direct Government Subsidies for Gig Workers: The government could offer subsidies for health insurance premiums to make coverage more affordable for gig workers.
  For example: A subsidised health insurance scheme similar to Ayushman Bharat could be adapted for gig workers.

The gig economy has reshaped the employment landscape, but existing frameworks remain inadequate to ensure fair treatment and security for gig workers. By redefining employment relationships and adopting a multi-pronged approach, India can achieve a balance between economic flexibility and social protection, fostering an inclusive labour market that benefits both workers and platforms.

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