Home >Opinion >Columns >Gig economy workers need more protection of their rights

Three years ago, the chief executive officer of Walmart Doug McMillon said that the Flipkart-Walmart combination would generate 10 million jobs in India. That’s an eye-popping number, roughly equal to India’s annual job creation requirement, and considering the country’s demographic surge. Of course, just as Rome wasn’t built in a day, Flipkart didn’t say these jobs would materialize in one year. They would include direct as well as indirect jobs. These would come from its supply chains, logistics, warehousing and courier services. Also, from small businesses across the country hopping aboard this retail e-commerce intermediary’s platform as suppliers.

Then, last year, a report from the Ola Mobility Institute said that bike taxis had the potential to create two million jobs in India. The stock market’s darling unicorn this year, Zomato, would surely have boasted of large employment generation too. It too is an aggregator that connects 32 million hungry users to 170,000 restaurants and kitchens every month across 500 cities of India. Think of all the delivery guys rushing to beat the 30-minute deadline, and of cooks, the packaging crew and the whole supply chain. Then there are app developers, payments people, advertising folks and social media influencers. The “millions of jobs" story starts making sense.

There’s one hitch, though. These are not ‘jobs’ in the sense of stable and secure employment. These so-called jobs do not provide health insurance, nor pay for overtime, let alone allow you to take sick leave. There is usually no room for wage negotiations, and unions are mostly unheard of or absent. Some years ago, when hail-a-taxi firms like Ola and Uber started cutting back incentives, it pinched drivers badly. They learnt to their dismay that they were working nearly 14 hours a day, seven days a week, to barely be able to make money to pay for EMIs on the car loans they had taken to operate their taxis. So, the drivers (workers) in Mumbai decided to go on ‘strike’. If it weren’t for their genuine distress, it would have been comical. Who were they striking against? Shutting their shop and denying customer service was like shooting themselves in the foot. Cab aggregators were not obliged to cave in to their demands, except maybe to defend their reputation. When the strikers agitated at a local transport commissioner’s office, he had to tell them that he did not regulate the hail-a-taxi business. Only ‘kaali-peeli’ yellow-top cabs were his domain. The moral of this story is that in the gig economy, job creation should be seen as the provision of livelihoods for entrepreneurs.

The age of platform economics has created opportunities that can be a bonanza for small businesses but also entail high uncertainty. It is alright to exhort the youth coming out of India’s burgeoning demography to “be a job giver, not a job seeker". Unfortunately, it is a catchy but misleading slogan. The fact is that most people want a stable job with a salary at the end of the month. That is not the same as job security. It is about their ability to take risks. Since India has a large population below or near the poverty line, their vulnerability to an income shock (such as caused by illness in the family) is very high. So their risk-handling capacity is low and hence they display risk aversion toward entrepreneurship. Add to it, India lacks social security for the temporarily unemployed. The huge popularity of the National Rural Employment Guarantee Scheme is because it acts as a proxy for unemployment insurance. Witness the huge demand for jobs under it during the pandemic. It also acts as a wage floor in rural areas.

Many farmers would rather seek jobs than subject themselves to the vagaries of weather, volatility of prices, or pests. A national survey revealed that nearly 40% would gladly leave farming if a stable job was available in industry. A recent report indicates that farmers in India are earning more by serving as labour on someone else’s farm than cultivating themselves. But their labour does not get any protection from labour laws. The emerging gig economy is such that there is no employer-employee relationship. Rather, it is more like a business partnership, with gig workers often serving as independent contractors. This is not covered by conventional safeguards, which only apply to labour contracts.

It is as if the corporations that use gig workers do not have any responsibility towards their ‘vendors’, nor do gig workers have any rights. But conditions can become exploitative, like for the cab driver/entrepreneur having to work 14 hours to make just enough to survive. Or the food delivery guy who has to beat a 30-minute deadline, often leaving no time even for bathroom breaks. Such rights on working conditions would be routine under normal labour laws. Nearly 90% of India’s workforce is estimated to be in the unorganized or informal sector. So, much of the labour law framework anyway does not apply to most Indians at work. Also, there is the worrying multi-year trend of the country’s declining labour force participation rate. Are these showing up as ‘contractors’ in the gig economy?

This is where labour market reforms need to be focused. Protect workers, not jobs. Define gig workers as labour and not just contractors or partners. Surely, this much minimal protection of rights is only fair. The pendulum has swung too far away from labour rights in much of the world besotted with a gig economy. It is time to swing it back a little bit.

Ajit Ranade is chief economist at Aditya Birla Group.

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