Ensuring Social Security for India's Gig Workforce: A Critical Analysis
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Author: Ms. Mahek Syed is a penultimate year student pursuing LLB in English Commercial Law from Middlesex University Dubai.
Introduction
In a significant development, Karnataka has become the second state in India, following Rajasthan, to introduce legislation aimed at safeguarding the rights and social welfare of gig and freelance workers. The Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024 represents a firm step towards extending security and welfare benefits to gig workers, which represent a rapidly growing segment of the Indian workforce. A gig worker is defined as an individual performing work based on a predetermined payment rate under the terms and conditions of a contract, encompassing all work sourced through a platform as outlined in Schedule 1 of the Bill. This article explores the gig economy in India, examines the legal framework, addresses the challenges faced by gig workers and the critical importance of social security measures for their well-being.
The Rise of the Gig Economy in India
The gig economy in India has seen remarkable growth in recent years, driven by the increasing need for remote/ hybrid and flexible work arrangements. Digital platforms have increased within the workforce, making it easier for people to engage in flexible work. This has led to a significant rise in the number of gig and freelance workers, which includes delivery personnel, ride-hailing drivers, freelance professionals, and other platform-based workers. These individuals operate in a non-traditional, task-based employment model which offers flexibility and autonomy, making it particularly appealing to the youth of India. A 2022 report by NITI Aayog, titled 'India’s Booming Gig and Platform Economy,' indicates that the proportion of gig workers among the total workforce increased from 0.54% in 2011-12 to 1.33% in 2019 - 20. Supporting this, a report by the Boston Consulting Group highlights that India's gig economy is on track to reach $455 billion by the end of 2024-25, with around 23.5 million gig workers. The advancement of technology has further enabled the rise of temporary/freelance workers through online digital platforms, thereby increasing the focus on the gig workforce. In Bengaluru alone, more than 200,000 gig workers are employed by platforms such as Swiggy, Zomato, Amazon, Flipkart and more.
The Challenges Faced by the Gig Economy
Immediate and arbitrary terminations have long been a significant concern for gig workers. Online working - platforms implement immediate terminations through automated monitoring and decision-making systems, which track workers' activities and earnings, record customer feedback, and make firm decisions based on these pre - documented data. There have been numerous instances where workers are blacklisted or terminated without having the opportunity to present their side of the story, which is considered heavily biased towards the customers and their feedback. The absence of human intervention eliminates any possibility for grievance redressal for the workers.
Furthermore, gig workers frequently lack access to essential social security benefits, such as health insurance, retirement savings, and maternity leave, leaving them vulnerable to financial instability and health risks. The unstable nature of gig work, with no guaranteed income or long-term employment contracts, can lead to significant financial stress for all workers. Additionally, gig workers are typically classified as independent contractors rather than employees, which excludes them from many labour protections and benefits available to traditional employees. This lack of regulatory oversight can result in unfair practices, including low wages, long working hours, and poor working conditions.
Recently, the People’s Association in Grassroots Action and Movements and the Indian Federation of App-based Transport Workers conducted research on the most frequent challenges faced by gig workers on a daily basis.
Low Pay - Over 43% of gig workers earn less than Rs 500 daily or Rs 15,000 monthly after costs are deducted. Furthermore, 34% of app-based delivery drivers earn less than Rs 10,000 a month.
Financial Strain - 72% of cab drivers and 76% of delivery persons struggle to manage expenses. Additionally, 68% of cab drivers report that their overall expenses exceed their earnings, potentially leading to debts.
Unsatisfactory Compensation - Over 80% of app-based cab drivers are dissatisfied with the fares offered by companies, and over 73% of app-based delivery persons are unhappy with their rates. Companies are reportedly deducting up to 40% of the commission per ride, whereas the officially claimed figure is 20%.
Work Conditions - Demanding work hours result in physical exhaustion for drivers, increasing the risk of road traffic accidents, particularly due to policies like '10-Minute Delivery at the Doorstep'. Moreover, many drivers and delivery persons struggle to take regular days off.
Issues with Platforms - Workers encounter numerous issues, including ID deactivation and customer misbehaviour, which negatively impact their ability to work effectively. A significant majority of drivers and delivery persons report negative effects from customer interactions.
Therefore, it was essential to establish a firm legal and social security framework to support the diverse, growing and dynamic workforce of gig workers.
The Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024
On June 29, 2024, the Labour Department of the Government of Karnataka released the draft of the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024. This Bill aims to protect the rights and social welfare of digital platform-based gig workers by imposing obligations on ‘aggregators’ regarding social security, occupational health and safety, and working conditions in Karnataka.
The Bill defines an 'aggregator' as a digital intermediary that connects buyers and sellers of goods or services, including entities coordinating with other aggregators to provide services. Its provisions apply to all aggregators in Karnataka involved in ride-sharing, food and delivery, logistics, e-commerce marketplaces, professional services, healthcare, travel & hospitality, and content & media services. A 'gig worker' is defined as someone who performs work or participates in a work arrangement for a given rate of payment or piece-rate work sourced through a platform in the specified services. Unlike the Code on Social Security, 2020 (COSS), which separately defines and regulates 'gig workers' and 'platform workers,' this Bill focuses solely on platform-based gig workers.
The Bill proposes establishing a 'Karnataka Platform-Based Gig Workers Welfare Board' at the state level to secure the welfare of gig workers. The Board's duties and functions are also outlined in the Bill. Aggregators must provide fair contracts in a language understood by the gig worker, give fourteen days' advance notice for changes in terms, terminate contracts only on pre-defined grounds with fourteen days' notice, and allow gig workers to refuse work without adverse consequences. Upon request from the gig workers, aggregators must share details of work allocation parameters, work distribution, assessment of work, rating systems, personal data processing, and grounds for denial of work. They must also provide information about automated monitoring and decision-making systems that affect working conditions, including fares, earnings, and customer feedback. The Bill includes provisions for a welfare fund and welfare fees. It establishes the Karnataka Gig Worker’s Social Security and Welfare Fund, funded by welfare fees charged to aggregators. These fees will be based on the gig worker's pay per transaction or the aggregator's annual state-specific turnover, as notified by the government. For grievance redressal, aggregators with more than 50 gig workers must establish an Internal Dispute Resolution Committee to address grievances regarding payments, benefits, etc. Additionally, gig workers can seek resolution under the Industrial Disputes Act of 1947 (ID Act). The Bill is expected to have implications, introducing welfare measures for gig workers and compliance requirements for aggregators.
However, such provisions such as dispute resolution through the ID Act may be challenging to implement, given that the ID Act is designed for employer-employee relationships. Clarity on the interplay between the Bill and the COSS, particularly regarding the duplication of contributions by aggregators in Karnataka, is crucial. The Bill is currently open for public comments, which can be submitted to the Principal Secretary, Department of Labour, Government of Karnataka, by July 12, 2024. This rights and welfare-based legislation aims strictly to prevent arbitrary dismissals, provide human grievance redress, and bring firm transparency to automated monitoring and algorithm-based payments. It goes beyond the Union Government's Code on Social Security 2020 by offering social security through a welfare board and fund, with contributions from the government and aggregators. Workers' unions have also suggested that the welfare fee be charged on each transaction. Despite concerns about the effectiveness of other sector welfare boards, mandatory registration with such a board will make gig workers legally visible and recognised. Comprehensive legislation is needed not only to set minimum wages, reasonable working hours, and social security conditions but also to grant gig workers the ‘employee status’.
Conclusion
The enactment of the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024 marks a pivotal advancement in the protection and welfare of gig workers in India. As the second state to introduce such legislation, Karnataka has set an example for other states to follow, recognising the growing importance of gig workers in the modern economy. This Bill addresses critical issues such as arbitrary terminations, lack of social security benefits, and unfair working conditions, aiming to provide a comprehensive legal framework that supports the diverse and dynamic gig workforce. The rise of the gig economy in India, fuelled by technological advancements and the increasing demand for flexible work arrangements, has created new opportunities and challenges. The significant growth in the number of gig workers, as evidenced by reports from NITI Aayog and the Boston Consulting Group, underscores the urgent need for regulatory measures to ensure their rights and well-being. The Bill is a significant step in this direction, offering a structured approach to social security, fair contracts, grievance redressal, and transparency in work conditions. While the Bill represents progress, it also highlights the need for further clarity and integration with existing legal frameworks, such as the Code on Social Security, 2020. The effectiveness of the welfare measures proposed will depend on their implementation and the ability of the Welfare Board to address the unique challenges faced by gig workers. Ultimately, the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2024 exemplifies a forward-thinking approach to labour law, aiming to bring equity and security to one of the most rapidly expanding segments of the workforce. By setting a legal and social security framework, Karnataka is not only protecting its gig workers but also paving the way for a more inclusive and fair market practice in India.
References –
· India’s Booming Gig and Platform Economy – NITI Aayog
· Unlocking the Potential of the GIG Economy of India – Boston Consulting Group
· Challenges Faced by the Gig Workers – Social Justice
· Even the odd jobs: On the Karnataka gig workers bill – The Hindu
New Bill Proposed to Regulate Platform Based Gig Workers in Karnataka
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