Gig economy workers need more protection of their rights

Then, last year, a report by the Ola Mobility Institute stated that bike taxis have the potential to create two million jobs in India. This year the darling unicorn of the stock market, Zomato would surely have claimed massive job creation as well. It is also an aggregator that connects 32 million hungry users to 170,000 restaurants and kitchens every month across 500 cities in India. Think of all those delivery guys rushing to pass a 30-minute deadline, and think of the cooks, packaging crew, and the entire supply chain. Then there are app developers, paying people, advertisers and social media influencers. The “millions of jobs” story starts to make sense.

However, there is a bottleneck. 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 take sick leave. There is usually no room for wage negotiations, and unions are mostly unheard or absent. A few years back, when ola-as-taxi firms like Ola and Uber started cutting incentives, it hit drivers badly. They were frustrated that they were working almost 14 hours a day, seven days a week, so that they could barely make money to pay the EMIs on the car loans taken to operate their taxis. Hence, the drivers (workers) in Mumbai decided to go on a ‘strike’. If it weren’t for his real distress, it would have been comical. Against whom were they striking? Closing my shop and refusing customer service was like shooting myself in the foot. Cab aggregators were not bound to give in to their demands, except to protect their reputation. When the strikers agitated at a local transport commissioner’s office, he had to tell them he did not regulate the hail-a-taxi business. Only the ‘kaali-peeli’ yellow-top cabs were his domain. The moral of the story is that job creation in the gig economy should be viewed as a provision of livelihood for entrepreneurs.

The era of platform economics has created opportunities that can be a bonus for small businesses, but can also create high uncertainty. It is okay to encourage youth coming out of India’s growing demographic to “be a job creator, not a job seeker”. Unfortunately, it’s a catchy but misleading slogan. The fact is that most people want a stable job with salary at the end of the month. This is not the same as job security. It’s about their ability to take risks. Since India has a large population at or near the poverty line, income shocks (such as illness due to family) are much greater. Hence their risk appetite is less and hence they are risk averse towards entrepreneurship. In addition, 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. It has witnessed a huge demand for jobs during the pandemic. It also acts as a wage laborer in rural areas.

Many farmers would prefer to look for a job rather than being subject to the uncertainty of weather, fluctuating prices or pests. A national survey showed that about 40% would happily leave farming if a stable job was available in the industry. A recent report indicates that farmers in India are earning more by working on someone else’s farm than by doing farming themselves. But their labor does not get any protection from labor 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 working as independent contractors. It is not covered by traditional safeguards, which apply only to labor contracts.

It is as if companies using gig workers have no responsibility to their ‘vendors’ nor do gig workers have any rights. But conditions can become exploitative, such as the cab driver/entrepreneur having to work 14 hours a day to make enough to survive. Or the food delivery man who has to cross a 30-minute time limit, often not even leaving time for bathroom breaks. Such rights would be regular on working conditions under normal labor laws. About 90% of India’s workforce is estimated to be in the unorganized or informal sector. Therefore, much of the labor law framework does not apply to most Indians anyway. Also, there is a worrying multi-year trend of the country’s declining labor force participation rate. Are they showing up as ‘contractors’ in the gig economy?

This is where labor market reforms need to focus. Protect workers, not jobs. Define gig workers as laborers, not just contractors or partners. Certainly, such minimal protection of rights is justified. In much of the world surrounded by the gig economy, the pendulum has gone too far from labor rights. It’s time to back it up a bit.

Ajit Ranade is the Chief Economist of Aditya Birla Group.