HomeJAGRUK EMPLOYEESGig Economy - the Future of Work in India?

Gig Economy – the Future of Work in India?

The term “gig economy” refers to a type of work in which people have temporary jobs. They do separate types of work for income instead of working for a single employer. Here, each item of work is similar to an individual “gig” and differs from the typical practice of full-time employees. Gig workers involve the use of freelancers for a limited time or on a project basis. It is non-standard work in which freelancers do not have normal working hours, vacations, or pay. Instead of a regular wage, workers get an income for the “gigs” they do. For example, food delivery or a car ride. It’s also slowly becoming a trend in India.

The gig economy originally appeared in 1915 when a jazz musician got wages based on his individual performance. This was the first time the term “gig” was coined. Due to difficult times, organizations did not want to employ employees for lengthy periods of time; therefore, they hired workers for a short term, which led to the creation of the gig economy. However, after World War 2, the importance of the gig economy began to decline and people preferred permanent and long-term occupations over short-term ones.

gig economy

Worldwide Comparative Analysis of Gig Economy

In many countries, the legal classification of gig workers is still debatable. Some companies call their workers “freelancers,” while some do not. California voters approved Proposition 22 in 2020, creating a third employment classification in which gig-worker drivers are classified as “independent contractors.” But, they still receive some benefits like minimum wage, mileage satisfaction, etc. In foreign countries, there are a lot of approaches to labour rights and the categorisation of gig workers. New Zealand, Canada and USA have a similar approach to Australia. They classify people as either employees or contractors. Some situations indicate that gig workers have more rights, while others say the opposite.

Current trends suggest that millions of people will be a part of the gig economy by 2024. They may be a client, contractor, employee, investor or everything in between. According to a 2019 Mastercard report, the global gig economy generates 204 billion USD in gross volume. This will rise by 17% by 2023 in the USA alone (as per assumption). Some of the most well-known platforms for gig-workers are Airtasker, Freelancer, Uber, Doordash and Deliveroo. According to a 2019 World Bank analysis, in India, digital platforms have grown faster and at a cheaper cost than traditional businesses. Online retail penetration was 4.7 percent in 2019. By 2024, it will reach 10.7 percent.

Australia

In Australia, the subject has different opinions. Supporters of the gig economy value the flexibility and independence that comes with freelance work. People can select when and how much they work, which gives rise to support. The structure can also be charming; a customer needs a task completed, and a business person is capable of completing such a task. To bring the two together, an online platform provides an online marketplace.

According to the Australian Bureau of Statistics (ABS) data, around 265,000 freelancers worked in Victoria in August 2017. In Victoria, around 3,213,000 people were employed, making freelancers about 8% of the entire working population.

Governments across Australia are studying whether the present laws are enough. Consider the Senate Inquiry into Corporate Avoidance of the Fair Work Act in 2017. According to the Senate Inquiry Committee, the government should change the Fair Work Act to include all workers. This means they would have the rights to the Act’s labour rules, minimum salaries and working conditions. These rights should apply to both dependent and on-demand contracting, restricting those arrangements from simulating independence.

United Kingdom

‘Deliveroo’ is a British online food delivery service that has over 200 locations worldwide. Deliveroo believes that the platform benefits all parties involved. Its drivers and riders are freelancers. They get paid based on the number of deliveries they make. However, a number of food-delivery riders have complained about its working conditions and low pay. Three out of four earn less than the minimum wage.

Deliveroo has said that riders are paid more than £10 an hour on average. In 2021, an analysis by the Bureau of Investigative Journalism of invoices collected via the Independent Workers’ Union of Great Britain found more than half of the couriers were paid less than that. In fact, one cycle courier in Yorkshire was found to be paid £2 an hour over 180 hours of work.

New Zealand

New Zealand follows the Australian model in that there are two types of work: employee work and freelance work. The Employment Relations Act of 2000 defined employees and freelancers (NZ). The Minimum Wage (Contractor Remuneration) Amendment Bill 2017 tried to establish a minimum wage for contractors. The aim is to offer legal rights to “freelancers”. They are effectively workers under the control of an employer. However, they do not have the lawful protections that workers now enjoy under the law.

The courts in New Zealand have been interested in the position of gig economy workers. The plaintiffs in a dispute involving LSG Sky Chefs NZ were workers looking for a ruling that they were not contractors, but workers. The Court observed that the employer watched the plaintiffs. They wore workplace uniforms. They also attended company meetings as company workers. Similarly, the tax laws did not register them as “contractors”. They did not sell their services to other firms or hire others, which means they were freelancers. Workers were considered employees even if they signed contracts as freelancers.

South Asia

According to the World Bank, gig employment in Southeast Asia has been rising since 2010, with a continuous 30% annual growth rate. As of 2019, the region’s workforce consisted of approx 150 million self-employed individuals. COVID-19 has sped up that trend. McKinsey predicts that 540 million people will be looking for jobs through “online talent platforms” by 2025, with up to 230 million gaining employment.

This trend is gaining importance in nations like the Philippines too. In Philippines, freelancer income has increased by 35%. It is now the sixth fastest-growing place for this profession. For certain nations, such as Cambodia, the figures are shocking, with the informal sector employing 94 percent of the workforce. In Myanmar, this figure is around 80%, while in Thailand it is 64%.

Philippines

Senate Bill 1834, the Philippine Digital Workforce Competitiveness Act, recently became law. This bill takes steps to enhance the digital competence and abilities of people of the working age. It also guarantees digital literacy and 21st-century capabilities to Filipinos. This refers to abilities like critical thinking, problem-solving, open dialogue, cooperation, technology and information literacy, flexibility and adaptation, creativeness, and originality.

The development of the Filipino digital workforce would fall under the Inter-Agency Council for Development and Competitiveness of the Philippine Digital Workforce. It would also act as a source of cutting-edge techniques and incentives for the use of digital technology, such as full or partial grants or subsidies and credit support from government financial institutions at low-interest rates.

Singapore

According to the Ministry of Manpower (MOM), freelancers accounted for around 10% of all Singaporeans workers. The Covid-19 outbreak has also played a significant part in this spread. In 2020, there were approximately 228,200 freelancers in Singapore, up from 211,000 in 2019. According to a 2019 World Bank estimate, gig economy labour has been steadily increasing at a rate of around 30% each year.

The Tripartite Alliance for Fair and Progressive Employment Practices was established in May 2006. This was in response to the Tripartite Committee on Employability of Older Workers’ recommendation to promote employment practices that are fair and equitable to all workers. Members of this Alliance represent employers, labourers, and the government.

To mitigate the consequences of Covid-19 and ensure that Singapore’s gig economy continues to grow, the government has taken aggressive efforts to ensure that its freelancing population does not stagnate. When the city-state has fully recovered from the crisis, its gig economy will bounce back faster and stronger than before.

Contribute-As-You-Earn (CAYE) is a pilot program that commenced on 1st January 2020. It transfers a percentage of freelancer earnings into MediSave accounts, providing improved medical coverage for gig workers. These rules make it possible for more residents, especially the unemployed, to participate in the gig economy. 

The rate of gig workers may be rising in South Asia. However, the legislation protecting their interests is still lacking, which needs to be addressed soon.

China

China’s internet sector has established a proper ground for the gig economy. It has gained 986 million mobile internet users and 853 million mobile payment users by 2021. It is estimated that there are around 200 million gig workers in China. They represent nearly one-fourth of the total labour force.

In December 2021, the Standing Committee of China’s 13th National People’s Congress decided to rewrite the People’s Republic of China’s Trade Union Law. The newly updated Trade Union Law went into effect on January 1, 2022. Article 3 has been revised, to give a legal foundation for couriers, online ride-hailing drivers, food delivery workers, and other gig workers to organise and join a trade union.

China’s present policy does not call gig workers as “employees” of an employer. But they have the same rights as regular workers. The government announced a policy titled “Guiding Opinions on Protecting the Rights and Interests of Employees Under New Forms of Employment” on August 18, 2021. China’s State Council adopted it on July 16, 2021. The Guiding Opinions wanted to draw a balance between platform operators and workers. This is by publicly confirming that drivers on ride-hailing platforms like Uber are freelancers rather than workers.

Judicial View on Gig Workers in India

The legal evolution of the gig economy in India, like its emergence, was delayed. Following different judicial decisions on the subject, the legal growth of the gig economy began.

Currently, Indian labour and employment regulations recognise three types of employees: government employees, employees in Public Sector Undertakings (PSUs), and private sector employees who may be managers or workmen. Employees have certain working conditions. For example, minimum wages under the Minimum Wages Act of 1948; a fixed number of working hours, termination pay, etc. Currently, gig workers in India lack the “workmen” or “employee” status under Indian law, which has many disadvantages like lack of protection, exploitative connections, etc.

However, there are two major associations for gig workers in India. These unions are working for their rights and entitlements:   

  1. Indian Federation of App-based Transport Workers (IFAT) – primarily for ride-sharing and other gig transport workers such as Rapido, Zomato, Ola, Swiggy, Uber.
  2. All India Gig Workers Union (AIGWU) – predominantly in food delivery services, affiliated with the Center of Indian Trade Unions. 

The court established the control and supervision test in Dhrangadhara Chemical Works v. the State of Saurashtra [1] to determine the employer-employee relationship. Due to the big increase in the number of gig workers in India, the legislature has to create separate legislation to protect their interests. Both the Houses of Parliament passed the Social Security Code in 2020 to protect gig workers. This Act defines a “gig worker” as someone who performs labour or engages in a work arrangement and earns money from it. Also, this has to be outside of the usual employer-employee relationship.

A glance on Gig Workers’ rights

Right to Work

They must have:

  • The authority over what, when and how they do it;
  • The negotiating power over how they are paid;
  • A contract specifying the parameters of work (when it will be completed).

This is an important part of the gig economy. Since, unlike full-time employees, freelancers have more freedom to work as they see fit. There is no need to go through a long term engagement if the client is unwilling to pay a higher wage. In these cases, the freelancer has greater potential to produce work that is both rewarding and pleasant.

Right to Proper Categorization

A freelancer has the right to keep his capacity down to his own taxes. Also to ensure that companies classify him or her as a non-employee. Other than the project, this person has no employment contract with the company. Working on certain duties can bring the freelancer into a contract with the company. But the employer must tag him as a non-employee.

Right to Avail Benefits

Gig workers demand to be considered at par with employees, not merely workmen. They should get the same benefits as employees in a company. Half-day leave pay, insurance benefits, maternity leave, and minimum salaries are all examples of employee perks. The government should also include them in the “Employee” bracket.

Legal Rights

Back in January 2017, Ola and Uber drivers in Hyderabad went on a strike. Their requests were for the companies to stop registering new drivers. Since the existing drivers were not making enough money due to the policies. Drivers from Delhi-NCR, Mumbai, Bangalore and Kolkata joined them. Drivers demanded a part of the route charges, more flexible hours to meet targets, and accident insurance. 

Then, the IFAT, Tulasi Jagdish Babu (an Ola taxi driver), and Kaushar Khan (a former Ola and Uber driver), filed a Public Interest Litigation (PIL) before the Supreme Court. They claimed that agreements between service aggregator companies and gig workers violate Articles 14, 21, and 23 of the Constitution. The IFAT relied on and asked for the same relief as given by the UK Supreme Court’s ruling in Uber BV vs. Aslam. The UK SC defined Uber drivers as “workers,” entitling them to benefits such as minimum pay and paid vacations. Although the PIL in India is still pending, it reflects that people are becoming more aware of their rights and that change will come gradually and steadily.

Other rights

Other rights which can be provided are as follows:

  • Employment rights with no exceptions for minimum wage, sick leave, vacation pay, or other employment criteria.
  • Compensation for work-related expenses so that gig workers’ real wages do not fall below the minimum wage.
  • There must be data transparency, including on disciplinary actions taken against them.
  • Employers must prove that their employees are not employees for exemptions.
  • A clear legislative test for job status.
  • Recognize gig workers’ freedom to join a union of their choice to have a collective voice at work.

Conclusion

The “gig economy” may be the only method to create jobs for freshers, semi-skilled and unskilled workers. As a result, it is critical to support and strengthen this sector. We require policies and practices defining how the industry should operate. This trend of autonomous agreements between workers and buyers is likely to continue. However, the collapse of formal employment contracts between companies and employees is not inevitable. Countries must band together to create a platform for extending labour protection to part-time workers in their countries. Companies that hire temporary workers must be bound to contribute to their social security and insurance in addition to tax obligations. The government must enact legislative measures to empower and incentivize many people to choose this route.

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