Challenges And Solutions In Gig Economy: How To Empower Workers For More Secure Future

Gig workers are neither permanent nor fixed-term employees but partners, as such, they become ineligible for social security benefits and schemes under the present labour law regime

Gig economy has gained immense popularity among the workforce, with over 7 million people being active as micro-entrepreneurs.

By Sandeep Agrawal

Technology has transformed every aspect of our society and economy. One modern consequence of the promulgation of the Internet into our daily lives is the rise of a gig economy. This gig economy has gained immense popularity among the workforce, with over 7 million people being active as micro-entrepreneurs. These workers are engaged primarily with aggregator businesses and are engaged in fulfilling online transportation services, delivering food items, medicines, and other goods, products, and services (pest control, sanitisation, and repair, among others).

However, these gig workers are neither permanent nor fixed-term employees but partners. As such, they become ineligible for social security benefits and schemes under the present labour law regime. The existing framework classifies workers into employees, contract and migrant workers, and workers in the unorganised sector.

A typical employee receives benefits under a range of acts and schemes, such as the Payment of Bonus Act, 1965, the Maternity Benefit Act, 1961, as well as the Employee Provident Fund (EPF) and Employee State Insurance (ESI) schemes, among others. Whereas contract and migrant workers are protected under the Contract Labour (Regulation and Abolition) Act, 1970 and the Inter-State Migrant Workmen (Regulation of and Conditions for Service) Act, 1979. Even the unorganised workers have their welfare looked after under the Unorganised Workers’ Social Security Act, 2008. The existing laws, schemes, and regulations do not encompass any provisions specifically addressing gig workers.

Consequently, gig workers represent a convenient workforce for businesses without any statutory requirements. These workers can be categorised as either platform workers or non-platform workers (non-technology-based temporary workers). They can be hired and fired per the business requirements and seasonal demands. While the gig economy allows workers flexibility regarding skill sets, location, and age groups, it also makes it so that they are devoid of any minimum wage, social security, or any other benefit. However, the ease of finding employment has led to a surge in individuals seeking gig projects.

As per NITI Aayog estimates, the number of gig workers will grow three times the present strength by the end of the decade. As such, the lack of social security, labour benefits, and statutory protection can lead a large part of the workforce towards financial insecurity. The lack of recognition gives businesses the leeway to decrease remuneration or establish a complete reliance on end users to cover the costs of their labour. As a result, these workers find themselves in a vulnerable position, subject to the influence of market forces and face issues related to deficiencies in salary, absence of insurance coverage, obstacles in obtaining credit, and fluctuations in income.

The codification of the labour laws addressed this issue, and the gig workers have been identified under the Code of Social Security, 2020. Section 2(35) of the code defines them as individuals who engage in work arrangements and generate income outside the conventional employer-employee dynamic. While it marks a pivotal step for the future of gig workers, the codes are yet to be implemented at the central level. However, as labour is a subject that can be legislated by both the Union and state governments, pressure groups are demanding state governments adopt the provisions of the new codes. Some states have already introduced bills, while there are strikes and protests in other states to push the government into action.

Furthermore, there is ongoing deliberation regarding the integration of the gig economy and the unorganised sector with the ESIC schemes and EPFO. The National Social Security Board, as stipulated in the Code on Social Security, 2020, assumes the responsibility of supervising and proposing schemes pertaining to contract and platform workers. Employees who are engaged in contractual employment for a specified duration, commonly referred to as fixed-term employees (FTAs), are entitled to receive benefits that are equivalent to those provided to regular employees. Despite being fixed-term employees, these workers will be entitled to receive gratuity. Aggregator enterprises will be mandated to make contributions towards welfare initiatives aimed at supporting gig workers.

Moreover, it should be noted that aggregators are also responsible for compensating gig workers, typically ranging from 1 per cent to 5 per cent of the overall turnover. Furthermore, the Occupational, Safety, Health, and Working Conditions (OSH&WC) Code of 2020 acknowledges the inclusion of gig workers within the purview of social security schemes. This provides individuals with the opportunity to avail insurance, provident and pension funds, health and maternity benefits, as well as programmes aimed at enhancing their skills.

Upon implementation, the labour codes are expected to play a crucial role in mitigating income inequality and addressing the potential challenges posed by the growing gig economy. The presence of inherent social structures facilitates accelerated skill acquisition, thereby augmenting the proportion of the formal economy within the labour market.

The workforce in question will assume a pivotal role in India's endeavour to achieve a $10 trillion economy by the conclusion of the current decade. Each year, there is a growing presence of a younger workforce entering the labour market. Achieving a harmonious equilibrium between policy interventions and technology is imperative to enable the workforce's effective participation in the formal sector, thereby preventing their confinement to limited gig projects.

The writer is the director and co-founder at Teamlease Regtech.

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