Credit: DH Illustration
It is argued that digital technology constitutes the fourth industrial revolution. The gig and platform economy is at the heart of this structural transformation, disrupting a range of sectors such as ride-hailing transport services, professional, education, home services, and retail. Globally, there are 200 million gig-workers. The ILO (2021) reports that 8% of web-based and location-based platforms are concentrated in India, second only to the US with a 29% share. By 2020, an estimated 8 million gig economy jobs were present in India which could increase to 90 million in the long-term. Over the past decade, there have been substantial changes in the workplace as technology has become increasingly incorporated into various job types. These new technological interventions are incorporated into work as disruptions to the way the old economy operated. Uber, Ola, Zomato, and Swiggy represent this new gig economy, where tech corporates float platforms that are ‘lean’ without significant asset ownership – no cars, no restaurants – and where there are no workers, only a world of self-employed, independent contractors who use these platforms to engage with consumers.
Gig workers can be broadly classified into platform and non-platform-based workers. Platform workers are individuals whose work is based on online software apps or digital platforms while non-platform gig workers are generally casual wage workers and own-account workers in the conventional sectors, working part-time or full-time. According to the NITI Aayog report (2022) and IBEF (2022), the gig workforce in India is 7.7 million and is expected to expand to 2.35 crore (23.5 million) by 2029-30.
The gig economy encompasses freelancers, online platform workers, delivery partners, self-employed, on-call workers, and other temporary contractual workers. These new business models and working arrangements have been ushered in by the development of technology and the ensuing digitalisation in metropolitan cities. Economic liberalisation and the digital revolution, the rise of mobile and internet usage, and the expansion of retail e-commerce have enabled India’s gig economy.
All digital/app-based jobs share the existential issues of precarity, instability, unemployment, and informal employment circumstances within “formal” sector organisations. Due to contractual obligations, there are no workplace entitlements. Social inclusion in the platform economy is hampered by structural issues, particularly for women. There has not been a shift in the manufacturing sector to the service sector in Indian cities, which would have increased work opportunities for the young people. To put it another way, gig economy employees typically lack social security in the form of EPF or pension, exposure to expertise, and little to no negotiating power. This has an impact on their pay and their working conditions. There has been a sizeable difference in the compensation before and after the COVID-19 pandemic. For instance, those who were working before the outbreak were earning between Rs 12,000 and Rs 15,000 per week but their earnings after the outbreak are only between Rs 5,000 and Rs 7,000.
The policy shift
Following the pandemic, it is reported that incentives were significantly reduced, which had an impact on the average monthly income. These new developments in Indian cities have led to a growing ‘informalisation’ in terms of lack of jobs, and the lack of income security further increases the vulnerability. A mismatch of skills between informal workers and the availability of jobs in Indian cities is rampant. To aid gig workers, the government recently passed the Code on Social Security 2020, providing them with advantages like life and disability insurance, accidental injury coverage, health and maternity care, old age protection, and other benefits. Following this code, social security initiatives will be primarily funded by the federal and state governments, with a small contribution of 1-2% of yearly revenue from the aggregator. Also, the contribution made by the aggregator/platform will not exceed 5% of the amount payable to the gig and platform workers. In addition, the code proposed to establish a National Social Security Board which will supervise and formulate schemes for the well-being of gig and platform workers. Health coverage worth Rs 3 to 4 lakh extended to families of delivery workers has been put into place
as a pilot in New Delhi, Hyderabad,
and Ahmedabad.
Rajasthan was the first state to introduce a law for gig workers, enacting the Platform Based Gig Workers (Registration and Welfare) Act, on July 24, 2023. This law established a welfare board and unique IDs for workers, and a system to monitor payments through a Central Transaction Information and Management System (CTIMS). Other states such as Karnataka and Telangana are developing policies to provide minimum wages, health benefits, accident insurance and other benefits to gig workers. In the meantime, a gig worker welfare board was promised to be established with an allocation of Rs 3,000 crore in Karnataka. A Rs-4 lakh insurance coverage for gig workers has been announced in the state budget. At present, no reliable governance measures are in place for gig workers.
The gig economy and the formal-informal divide are closely related. The availability of jobs in cities and the skills of informal labourers are consistently out of sync. The political economy trend of unemployment has exacerbated extreme poverty and prevented India’s cities from realising demographic dividends which are essential for boosting productivity and, in turn, economic growth. While there are numerous opportunities in the gig economy, particularly for city-based migrants looking to make a living and obtain flexibility in their schedules, governance policies need to emphasise social inclusion through improved regulation and state protection.
(Smitha is an assistant professor and Anil Kumar is a professor in the Centre for Political Institutions, Governance and Development, at the Institute for Social and Economic Change, Bengaluru)