Relevance: GS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Key phrases: Gig worker, temporary, freelancing, social security code 2019, GRM

Why in News?

• The surge in demand for gig workers, particularly in the shared services and logistics segments, in the aftermath of the pandemic led to mushrooming of job discovery platforms specifically targeting this area.

What is Gig Economy?

• As per the World Economic Forum, gig economy is defined by its focus on workforce participation and income generation via “gigs”, single projects or tasks for which a worker is hired.
• Gig economy” refers to a general workforce environment in which short-term engagements, temporary contracts, and independent contracting is commonplace. It’s also referred to as the “freelancer economy,” “agile workforce,” “sharing economy,” or “independent workforce.”
• The gig economy is made up of three main components:

• Independent workers paid by the gig (i.e., a task or a project) as opposed to those workers who receive a salary or hourly wage.
• Consumers who need a specific service, for example, a ride to their next destination, or a particular item delivered; and
• Companies that connect the worker to the consumer in a direct manner, including app-based technology platforms.

Key Drivers for Gig Economy:

• Unconventional work approach by millennials: Hectic lifestyles of employees in private sectors have created a negative perception of full-time employment among millennials. Factors such as growth opportunities, flexibility, better work-life balance and option to not acquire a college degree are encouraging millennials to opt for freelancing opportunities as opposed to corporate work culture.
• Emergence of a start-up culture: The start-up ecosystem in India has been developing rapidly. For start-ups, hiring full-time employees leads to high fixed costs and therefore, contractual freelancers are hired for non-core activities. Start-ups are also looking at hiring skilled technology freelancers (on a per project basis) in areas such as engineering, product, data science and ML to bolster their tech platforms.
• MNCs are hiring contractual employees: MNCs are adopting flexi-hiring options, especially for niche projects, to reduce operational expenses after the pandemic. This trend is significantly contributing to the gig culture in India.
• Rise in freelancing platforms: Rise in freelancing platforms has also aided in the development of the gig economy. Many home-grown platforms such as Upwork, Truelancer and Guru provide access to high-skilled freelancers. The number of freelancing platforms has significantly increased—from 80 in 2009 to 330 in 2021. These platforms boast of a clientele comprising not only start-ups, but also Fortune 500 companies.
• Business Models: Gig employees work on various compensation models such as fixed-fee (decided during contract initiation), time & effort, actual unit of work delivered and quality of outcome. The fixed-fee model is the most prevalent; however, time & effort model comes a close second.
• Impact of Covid-19: According to the survey, India stands to lose ~135 million jobs because of the pandemic and this is likely to push the full-time workforce towards the gig economy. Moreover, many laid-off employees are focusing on developing skills to avail freelance job opportunities and become a part of this burgeoning economy.

Challenges faced by gig-workers in India:

• The main issue with the gig economy workers in India is no clear employment relationship. Most of the time, it is the ambiguity around the rights of workers and the responsibilities of platforms that allows businesses to treat their gig workers as employees in terms of the control they exert upon them, but without any employee entitlements like insurance, medical benefits, employees’ provident fund, bonus or gratuity, etc.
• No employment stability and heavy workload
• Low payment and Wages: According to gig workers in India, the low payment often pushes them to work longer than 8 hours and work on all days of the week.
• There is no proper Grievance Redressal Mechanism available to gig workers to solve their genuine problems.

Code on Social Security 2019

• To further aid these gig workers, the government passed the ‘Code on Social Security’, which will provide workers with life and disability cover, accidental insurance, health & maternity benefits old age protection and others.
• Under this code, the central and state governments will primarily fund social security measures, with a nominal contribution (1-2% of their annual turnover) by the aggregator. Also, the contribution made by the aggregator/platform will not exceed 5% of the amount payable to 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.

Way Forward:

• The gig economy has been on the rise and is expected to beat the pre-pandemic estimates due the expected influx of gig workers transitioning from full-time employment.
• While the government has taken the initial steps to ensure social security of gig workers, the ‘Code on Social Security’ needs to be fine-tuned. For example, the option to deduct 5% from the amount payable to gig workers should be voluntary (based upon income brackets). As most gig workers, especially delivery executives and drivers, are already facing declining income levels due to COVID-19, such deductions would not be amenable.
• Further, all platform workers should be offered mandatory coverage under the Bharat Pradhan Mantri Jan Arogya Yojana, Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana. This can be facilitated through the employer companies and will ensure employee protection; thus, guaranteeing a sustainable gig economy.

Source: Indian Express 

Mains Question:

Q. The pandemic-led boom in demand for gig workers, who is the gig worker? What are the challenges faced by gig-workers in India? Do gig workers have any social security in India? Illustrate.