Context: Recently, Rajasthan Platform Based Gig Workers (Registration and Welfare) Bill, 2023 was passed by Rajasthan Assembly.
About Gig Economy:
Probable Question: Q. What are the challenges that the Gig Economy faces in India, and what steps can be taken to ensure its sustainable growth? |
- A gig economy is a labor market that relies on independent contractors and freelancers rather than full-time permanent employees.
- Classification of Gig Economy:
- Platform-based: They use online apps or digital platforms to find and perform work, such as ride-hailing, food delivery, e-commerce, online freelancing, etc.
- Non-platform-based gig workers: They work outside the traditional employer-employee relationship, such as casual wage workers and own-account workers in sectors like construction, domestic work, agriculture, etc.
- Benefits of Gig Economy:
- For Workers: Gig economy can provide more flexibility, autonomy, income opportunities, skill development, and inclusion.
- For Employers: It can enable access to a large and diverse pool of talent, lower fixed costs, higher scalability, and better customer satisfaction.
- For Customers: It can offer more choice, convenience, quality, and affordability.
- Prospect: According to a report by NITI Aayog, the platform-based gig economy in India has grown rapidly in recent years, driven by factors such as demographic dividend, urbanisation, digitalisation, and consumer demand.
- Platform Based: There are about 24 million platform-based gig workers in India as of 2020-21, accounting for about 6.5% of the non-agricultural workforce or 4% of the total workforce in India.
- The report also projects that the platform-based gig economy in India can create up to 56 million new jobs by 2029-30, adding up to 1.3% to India’s GDP in the long run.
- Non-Platform Based: According to Invest India, there are about 120 million non-platform-based gig workers in India as of 2019-20, accounting for about 32% of the non-agricultural workforce or 20% of the total workforce in India.
- The report suggests that the non-platform-based gig economy in India can create up to 34 million new jobs by 2029-30.
- Economic Contribution: In 2020, ASSOCHAM projected that India’s gig economy would rise at a compound annual growth rate of 17% to $455 billion by 2023.
- According to a report by Nasscom, the gig economy is expected to contribute around 1.25% to India’s GDP by 2025, with the potential to create 90 million jobs.
- Pillar of Strength: Gig economy has proven its resilience and potential in the wake of the Covid-19 pandemic, by continuing to unlock jobs in the millions and keeping communities connected.
- Employment Opportunity: India as a developing country is faced with the challenge of providing employment opportunities to all. Gig economy has expanded the availability of jobs and improved labour force participation.
- Catering demand of low Skilled: At present, about 47 per cent of the gig work is in medium-skilled jobs, about 22 per cent in high skilled, and about 31 per cent in low-skilled jobs.
- Young demographic dividend: India has a large and growing population of young people who are well-educated and tech-savvy.
- Many millennials value flexibility and work-life balance and are drawn to the gig economy because of the opportunities it provides.
- Youth participation in the Gig economy has seen an 8-fold increase between 2019-2022.
- Female Labour Force: Female gig workers benefit from the income-generating potential, choice and the flexible work modalities of the gig economy.
- Women’s participation in the gig economy has increased from 18% to 36%.
- Catering to Retired Persons: Due to the flexibility that contract work offers, many people after retirement start working for themselves.
- Democratization of Jobs: The gig and platform sector has low-entry barriers and hence holds enormous potential for job creation in India.
- Technological Disruption: Tech advancements, particularly in AI, robotics, and data analytics, have eliminated workplace limitations. Tech integration in the gig economy can boost productivity and improve gig workers’ living standards.
- Last Mile Delivery: It has revolutionized the last-mile delivery industry, making it more accessible, affordable, and efficient.
- Remote Working: Telecommunications have made work more dynamic, allowing individuals to collaborate regardless of where they are geographically located.
- Start-Up Culture: Gig workers can be a cost-effective alternative to traditional employees, as they can be hired on a project-by-project basis, without the need to provide benefits or other forms of compensation.
- Central Legislation: Code on Wages, 2019, a universal minimum wage and floor wage should be provided to all organized and unorganized sectors, including gig workers.
- Code on Social Security, 2020, the gig workers are provided with recognition as a new occupational category.
- Dedicated Social Security Fund to extend Social Security benefits to gig workers.
- State Government Initiatives: Karnataka government has announced for gig workers an accident and life insurance cover of Rs 4 lakh for which it will entirely bear the cost of the annual premium.
- Rajasthan Platform Based Gig Workers (Registration and Welfare) Bill, 2023
- Defines Gig Worker: Person who performs work or participates in a work arrangement and earns from such activities outside of the traditional employer-employee relationship and who works on a contract that results in a given rate of payment, based on terms and conditions laid down in such contract and includes all piece-rate work.
- Registration: It seek to register all gig workers and aggregators in the state, facilitate guarantee of social security to gig workers, and give them an opportunity to air any grievances.
- State government will maintain a database of the gig workers and generate a unique ID for every one of them.
- Rajasthan Platform Based Gig Workers Welfare Board: It will have two members each from gig workers and aggregators to be nominated by the state government besides two civil servants.
- Rajasthan Platform Based Gig Workers Social Security and Welfare Fund: For the benefit of registered gig workers. Welfare fees will be charged from aggregators.
- Penalties on Aggregators: State government may impose a fine which may extend up to Rs 5 lakh for the first contravention and up to Rs 50 lakh for subsequent contraventions.
- Increase in Voluntary Unemployment: It has led to an increase in voluntary unemployment as some workers prefer the flexibility and autonomy of gig work over traditional employment.
- Disrupting Work-Life Balance: Flexibility of working gigs can actually disrupt the work-life balance, sleep patterns, and activities of daily life.
- It often means that workers have to make themselves available any time gigs come up, regardless of their other needs, and must always be on the hunt for the next gig.
- Job insecurity: Gig workers in India often lack job security, as they are typically engaged on a project or assignment basis, rather than as permanent employees.
- Income instability: Gig workers in India may experience fluctuations in income due to the irregular and unpredictable nature of gig work.
- Lack of formalization: Many gig workers in India operate in the informal sector, which can limit their ability to access credit, government support programs, and other resources.
- Lack of legal protection & social security: Gig workers are not covered under India’s labor laws and do not have legal protection in case of workplace harassment, discrimination, or unfair termination.
- Gig workers do not have access to social security benefits such as health insurance, retirement benefits, and paid leave.
- Unequal bargaining power: Gig workers in India may lack the bargaining power to negotiate fair compensation and working conditions, particularly when they are competing against a large pool of other workers on digital platforms.
- Training and upskilling: Many gig workers lack the necessary skills to perform their work effectively. Gig workers often have limited opportunities for upskilling and career advancement.
- Social stigma: Gig work is still viewed by some in India as a temporary or low-paying option, which can result in social stigma and lack of recognition for the work done by gig workers.
- Payments, Incentives, and Growth Models: Absence of a minimum wage guarantee makes workers susceptible to financial vagaries during crises/disasters
- Workplace Conditions & Interaction: Lack of appropriate forums that capture concerns of gig-workers and help platforms to understand the challenges and problem-solve
- Health Benefits and Leaves: Gig economy platforms can provide health insurance benefits to their workers to ensure their well-being and safety.
- These include coverage for medical costs, hospitalization, preventive care services such as regular health check-ups and vaccinations, as well as paid leaves for workers.
- Skill Development for Informal Gig Employees: Platform-led upskilling initiatives are essential for enabling workers in the informal sector, such as driving or masonry, to take up jobs in the gig sector.
- Platform businesses can provide certifications, allowing workers to progress better in their careers.
- Adequate Protection: Although gig workers get minimum wages, they need certain legal protection, policies, and opportunities like other employees protected under labour laws.
- This can protect the rights of gig workers and help curb labour disputes.
- Addressing Gender Bias: Incentivise more women to take up the role, enabling platforms to expand markets and attract more women customers.
- Adopt gender-inclusive language and imagery to normalize participation of women platform gig-workers enabling platforms to expand markets and attract more women customers.
- NITI aayog recommended five-pronged RAISE approach to ensure realization of full access to social security for all gig and platform workers:
- Recognise the varied nature of platform work to design equitable schemes.
- Allow augmentation of social security through innovative financing mechanisms.
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- Incorporate, while designing schemes, the specific interests of platforms, factoring the impact on job creation, platform businesses and workers.
- Support workers to subscribe to government schemes and welfare programmes through widespread awareness campaigns.
- Ensure benefits are readily accessible to workers.
- Incentivising ‘platformization’: To accelerate ‘platformisation’ i.e., give impetus for more platform businesses by starting a program called ‘Platform India’ along the lines of the government’s earlier Start Up India initiative.
- The increasing demand for gig workers and the rise in participation of gig workers, especially the youth and women indicate that the gig economy in India is gaining popularity.
- According to a report by the International Labour Organization (ILO), India is the second-largest gig economy in the world, with around 56% of all gig workers in the Asia-Pacific region working in India.
- The gig economy is predicted to be a significant building block in achieving India’s aim to become a $5 trillion economy by 2025. This would help in bridging the income and unemployment gap.
- Greater collaboration between the government, employers, and workers’ organizations is needed to ensure that gig workers are able to enjoy their rights and access the benefits they are entitled to.
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