The gig economy in India, accounting for more than 1.4 million jobs in India (Kar, 2019) has developed by leaps and bounds in recent times. With time, we all have gotten used to having all sorts of services at our door no matter our demands; be it ordering a cab, craving a midnight pizza, a makeover at your home, or any product we may want. In the times of COVID, this dependence on online gig services has increased considerably. Every day, as I walk out of my society door I see a number of Amazon and Myntra packages lying around and a truck by Big Basket, Grofers, Zomato, or Swiggy is frequented ever so often. While we are grateful for these services, one must spare a moment to think of the people who, for very little incentive, ensure that all of our smallest needs are met.
Online platforms have provided the unemployed workers an opportunity to work for flexible hours or even part-time to earn some extra money even while having a job or while studying. Delhi’s economy added 560,600 people to its gig economy in the last six months to 31st March 2019 which is an 88% jump from first half and similarly, Bangalore recorded a jump of 29% more workers joining the gig economy (S.H & Bansal, 2019). While there is an increasing influx of workers into the gig economy, the question that arises is if the Indian economy and especially, Indian laws and rules equipped to cope up with the contemporary methods of employment and definitions of employee and employer?
In a gig economy set up, the traditional definitions of an employer and employee don’t usually stand to be true as neither is the employer an owner of a factory and establishment nor is the worker treated as an employee of the firm. As per the Code on Wages Act (2019) recently passed, ‘employee’ refers to any person employed on wages by an establishment for any kind of skilled or unskilled labour, however, in a gig economy, the workers are more or less treated as ‘self-employed’ as a common misunderstanding who don’t exactly earn wages but commission from their work which can be done flexibly. To understand the employer-employee relationship in this regard, one can look at the precedents set by the Supreme Court in cases, especially on the cases of contractual labour. The Supreme Court had finally released a ‘two-pronged’ test to determine the definition of an employee in the case of Bharat Heavy Electricals Limited vs. Mahendra Prasad Jakhmola & Ors. The guidelines for classifying contract workers as direct employees of the employer were specified to be on the basis of two things. One, if the salary is paid by the principal employer and two, if he supervises and controls the work. In case of gig economy, it becomes much trickier as the salary is not exactly paid, but somehow is controlled by the employer only based on the incentive and commission mechanism. (Obhan & Dua, 2019) As per this definition, the gig economy workers should also be characterized as regular employees and should be eligible for the benefits provided to the regular employees. The workers get paid in ‘salary’ in the terms that they get their wages by the company after the cutting of some service or commission fee. Secondly, the supervision and control gets further enhanced as the drivers or delivery boys whose every movement is tracked through the application, GPS, and customer feedback. Secondly, they also take care of their vehicle for taxis or deliveries on their own which further reduces their earnings after we cut the maintenance charges from the pay.
Even in ‘The Officer-In-Charge, Sub Regional Provident Fund Office Vs. M/s Godavari Garments Limited’, where it was to be determined if women working at home and stitching on company equipment will be considered employees or not where it was ruled that employee means “any person who is employed for a wage in any kind of work manual or otherwise, in or in connection with the work of an establishment, and who gets, his wages directly or indirectly from the employer” (Bharathwaj, 2019). This definition also includes gig economy workers clearly; hence the disregard of the code on wages bill in this matter is no less than appalling.
Secondly, the employer or the owner is not the holder of a factory or an establishment, and is largely absent in case of a gig economy. A gig economy largely rests on the efficiency of a mobile or online aggregator to match supply with demand and ensure customers for the workers and supply for the customers by providing a common platform. The definition for Employer and Employee in the Code on Wages Act still fails to provide a definition that includes the gig economy in its purview and hence, in the provisions as well. While the act does include employees as declared by the ‘appropriate government’, still the ambiguity persists. Even for the employer, in case of multiple engagements of a worker with different app-based platforms, the classification of who will be characterized as the employer remains missing. (Kumar, 2019)
A huge misconception is that the workers employed in the gig economy do not need to be covered in the ambit of minimum wages as they usually work part-time or do not depend on this as their primary source of livelihood. However, this doesn’t stand true in most cases as certain cab aggregators such as Ola and Uber have incentives based on weekly and daily targets which are so ambitious that it ends up with the workers working for more than 14-15 hours a day and essentially ‘restricts’ the flexibility they have and they are essentially ‘pushed’ to work for longer hours compromising their health and safety (Kashyap & Bhatia, 2018).
A second issue pointed out by Kashyap & Bhatia (2018) is that most of these drivers are not the owners of the vehicles they drive, hence either most of their wage goes in paying the installments of the loan or commission to the owners of the vehicles which is largely the class that has ended up benefitting the most from the gig economy. This brings us to a conundrum at which the gig economy workers stand. They are largely called self-employed as they own the means of production, which excludes them from the safeguards and the benefits of the wage-worker. However, they still operate within the mechanisms of an abstract and online app aggregator to receive the assurance of customers and hence remain implicitly dependant on the ‘employer’ in this case for their earnings defeating the concept of being self-employed. This seems to be an innovative method to exploit the workers under the garb of flexible and task based wages (Booth, 2018).
And hence, another provision in the act defines minimum wages as a minimum wage for time work and piece work, however, minimum wage based on a task or any guidelines for fixation for different aggregators have been skipped in the act altogether. While the gig economy workers are excluded from the social security benefits the employers enjoy, they are also excluded from the traditional definitions of minimum pay for a certain time or piece work as their nature of work is entirely different. Demos, an international think tank, in this case, urges the government to set a higher minimum wage for workers who are self-employed “to cover the additional risk lower paid self-employed workers are bearing as a result of their financial insecurity” (Glover, Lasko-Skinner, & Berry, 2019). Along with all of this, the life of a gig worker remains riddled with the problems of income fluctuation, constant financial insecurity due to lack of savings, lack of holidays and adequate rest, deteriorating health due to long hours. Apart from this, the report finds out that “the liquid workforce are more likely to earn very low incomes than non-liquid workers, with 22% of liquid workers earning under £10,000 per year compared to just 7% of employees” (Glover, Lasko-Skinner, & Berry, 2019).
The report argues that while estimating the minimum wage of the self-employed gig- economy workers, it must be taken into consideration that the workers have a financial cost of not receiving the usual benefits received by the usual employees of a firm. Hence, they should create a minimum wage that is higher than the general minimum wage for the gig economy workers. However, one apprehension to consider here is the fact that implementing minimum wages on gig economy would lead to two negative outcomes, which is the reduction of the supply of clients as the price will mostly be transferred to the consumer and hence will lead to a fall in their demand. Even though the perks will become better for gig workers, there will be an increasing supply of the workers in the economy which will further lead to a fall in general wages as happened during the initial gig economy revolution. Minimum wages, in this sense, presents an attack on the neo-classical definition of efficiency that is valued by the firms especially in terms of a gig economy.
Some companies have willingly made an effort to provide minimum wages to their gig workers; Favor, an online taxi aggregator, is one such company that has tried to innovate strategies to provide a safety net to its employees in the form of minimum wages. It also tries to solve the problem of ‘who provides the minimum wage’ in case of multiple employers in a gig economy by just monitoring the hours a driver stays online rather than creating minimum mandated online hours such as Uber (Kessler, 2016). Reducing the legal uncertainty of the status of a worker will solve majority of the problem itself.
AB5, a historic bill has been passed in California which could see gig workers from companies including Uber, Lyft, DoorDash, Postmates, and Instacart become legal employees. This would guarantee these workers a minimum pay, employee benefits like medical insurance, sick days, paid vacations, and so on (Grothaus, 2019). A model such as this could impact the lives of the workers by leaps and bounds. Even in Seattle, the city council has passed legislation to provide minimum wages to its drivers (Nickelsburg, 2019). As far as minimum wages go, even though minimum wages are specified in India as well for the gig economy workers, other benefits seem to be at the whim of the employer.
As per a study carried out by Fairwork Project (Fairwork) which is based on the principles of fairness of pay, conditions, contracts, management, and representation the different online gig economies have been ranked as per their meeting these principles. In that ranking Uber, Ola and Foodpanda are the ones at the lowest, all of these principles have been adopted by the aggregators as per their own convenience and we must go beyond the minimum wage argument and argue for these workers to have universal social security coverage considering the troubles and compulsions they face. Lastly, to mention one point that has been reiterated by a friend, one needs to stop thinking of the gig economy as a separate economy and hence, separate from our lives. The struggles of the gig workers are similar to the ones faced by a majority of contract and migrant workers and this is as much a part of our broken economy as any other business and hence essential safeguards must be developed.
(Pragya is doing her Masters in Public Policy. She spends her days debating herself on everything only to get confused further. Interested in a number of social and political issues and the difference of opinions on them, she can be spotted having a chai with the lefties and a coffee with the liberals. Now she’s looking for a good way to end this bio but as always, she couldn’t come to a decision. She can be reached at firstname.lastname@example.org)
Bharathwaj, R. (2019, August 22). mondaq. Retrieved from India: Workers Stitching Garments From Home ‘Employees’ Under Provident Fund Act: Hon’ble Supreme Court: https://bit.ly/2O88DIg
Booth, R. (2018, February 7). The Guardian . Retrieved from 700,000 gig workers paid below national minimum wage: https://www.theguardian.com/business/2018/feb/07/death-dpd-courier-don-lane-tragedy-business-secretary
Fairwork. (n.d.). Ratings. Retrieved from Fairowrk: https://fair.work/ratings/?location=India%20(Bangalore)
Glover, B., Lasko-Skinner, R., & Berry, A. (2019). The Liquidity Trap: Financial Experience and Inclusion of the Liquid Workforce. London: Demos.
Grothaus, M. (2019, Novemeber 9). Uber and Lyft drivers are one step closer to being classified as employees. Retrieved from Fast Company : https://www.fastcompany.com/90402522/uber-and-lyft-drivers-are-one-step-closer-to-being-classified-as-employees
Kashyap, R., & Bhatia, A. (2018, March 14). Taxi Drivers and Taxidars: A Case Study of Uber and Ola in Delhi. Journal of Developing Societies.
Kessler, S. (2016, June 4). Could A Minimum Wage Work In The Gig Economy? Retrieved from Fast Company: https://www.fastcompany.com/3058599/could-a-minimum-wage-work-in-the-gig-economy
Nickelsburg, M. (2019, November 25). Seattle raises fees for Uber and Lyft rides with new tax, passes minimum wage for drivers. Retrieved from GeekWire: https://www.geekwire.com/2019/seattle-passes-minimum-wage-uber-lyft-drivers-raising-fees-rides/
S.H, S., & Bansal, V. (2019, April 12). Delhi, and not Bengaluru, is the place to be for gig economy workers. Retrieved from Livemint: https://www.livemint.com/companies/start-ups/delhi-and-not-bengaluru-is-the-place-to-be-for-gig-economy-workers-1555013405684.html