Date: 01/04/2023

Relevance: GS-2: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development, and Employment.

Key Phrases: gig economy, Industrial Revolution, unit economics, Free-market solutions, platform-based gigs, 10-minute delivery, Dependence on algorithms, pooling small orders, Fair Trade Certification.

Why in News?

• At the heart of India’s gig economy is a paradox: gig platforms are worth billions of dollars, yet a large part of their workforce struggles to make a living wage.
• If this is the ‘future of work’, it looks alarmingly like the past—the Industrial Revolution of past centuries.

Free-market solutions unlikely to work:

• Free-market solutions are unlikely to work as most services lose money on every order they complete.
• Instead, the gig economy is focused on improving “unit economics,” and its chosen path is to scale even faster.
• This is because platform-based gigs are the primary form of work for 10% of workers in the US, but only about 1.5% in India.
• Therefore, investors are doubling down on gig platforms by pouring in vast sums of money to encourage more online ordering, with even wilder bets like free ‘10 minute delivery’.

Strict regulation is challenging:

• While some common-sense new rules such as mandatory insurance coverage, standard leave policies, and protection of the individual’s right to work for multiple platforms at the same time would help, they cannot fix the fundamental economic reality of platforms, which is low or no profits.
• This is because the gig industry is not rich and reluctant to share the spoils.

Challenges faced by gig workers:

• Low and unpredictable wages:
  • Despite working long hours, gig workers struggle to make a living wage due to low pay rates and unpredictable work schedules.
• Lack of benefits:
  • Gig workers are not entitled to any benefits, such as insurance coverage, standard leave policies, or protection of their right to work for multiple platforms at the same time.
• Discrimination:
  • Gig workers face discrimination from consumers, such as being asked to use separate elevators or staircases, and this discrimination can make their work even more challenging.
• Dependence on algorithms:
  • The algorithm-based nature of gig work means that workers are subject to the vagaries of how the black-box algorithm treats them, and this can be a significant source of frustration and uncertainty for them.
• Limited job security:
  • Gig work is often temporary, and workers do not have the same level of job security as traditional employees.
• Difficulty in organizing:
  • Because gig workers are often scattered and work independently, it can be difficult for them to organize and advocate for better working conditions.
• Lack of regulatory protections:
  • Despite the need for better regulation to protect gig workers, the economic reality of platforms, which is low or no profits, makes it difficult to introduce regulations that can truly improve working conditions.
• Dependence on consumer behaviour:
  • The personal choices of consumers can significantly impact the earnings and quality of life of gig workers, and consumers have a role to play in improving their working conditions.
• Limited access to amenities:
  • Gig workers may not have easy access to amenities in the homes and apartments where they deliver, which can make their work more challenging.
• Uncertainty of demand:
  • The gig work model relies on demand, and this means that work schedules are often unpredictable and subject to fluctuations in demand.

Way forward:

• Consumers can make a difference:
  • Even small changes in ordering habits by consumers could offer delivery workers a big help.
  • Examples include pooling small orders, resisting (or at least not wantonly using) ‘10 minute’ delivery, and rating them with compassion.
  • Consumers can also ensure delivery workers have easier access to amenities in their own homes and apartments.
  • Consumer action will not merely be a ‘feel good’ change or ameliorative; it can be the catalyst needed to make both platforms and regulators act.
• Fair work certification in Europe:
  • The Fair work certification project in Europe, aims to set and measure decent work standards in the platform economy.
  • Companies are rated on a scale of 1 to 10 based on five principles:
  • fairness in pay
  • conditions
  • contracts
  • management
  • representation.
  • The project echoes the highly successful Fairtrade International, formed in 1997 to help small farmers around the world get paid a fair price for their produce.
  • At its peak, millions of farmers and thousands of companies, including the world’s biggest retailers, accepted the conditions needed to get Fair Trade Certification.

Conclusion:

• While the challenges faced by gig workers are significant, there is hope that consumer action can help catalyse change.
• By making small changes in their ordering habits and treating gig workers with compassion, consumers can help improve the day-to-day lives of millions of workers.
• With continued efforts from both consumers and regulators, it is possible to improve working conditions for gig workers and create a more equitable future of work.

Source: Live-Mint

Mains Question:

Q. Examine the challenges faced by gig workers in the digital platform economy in India. Discuss the role of consumers in addressing these challenges and suggest measures that can be taken to improve the working conditions of gig workers.