Introduction
Gig economy in India has been growing at an impressive rate, opening up new opportunities for workers and businesses alike. With more people turning to freelancing, short-term contracts, and on-demand work, this sector is becoming an integral part of the country’s workforce. However, this growth comes with challenges. To support gig workers, the government is stepping in with policies aimed at integrating them into social security schemes. So, what’s driving this shift, and where are the gaps? Let’s dive in.
Government’s Push to Support Gig Workers
The Union Ministry of Labour and Employment is working to ensure gig workers gain access to crucial benefits like health insurance and retirement savings. The government aims to mandate that major aggregators—like Uber, Zomato, and Ola—contribute 1-2% of their revenue to a social security fund to support these workers. Efforts are also underway to revise definitions for gig and migrant workers, making these categories more inclusive and better suited to today’s changing employment landscape.
India’s Gig Economy: Present Scenario
Right now, India is home to about 7-8 million gig workers, and this number is on the rise. NITI Aayog estimates that the gig workforce could grow to 23.5 million by 2029-30, with gig workers making up 4.1% of India’s total workforce by then.
A report by the Boston Consulting Group (BCG) highlighted that the gig economy in India could create 90 million non-farm jobs and boost India’s GDP by 1.25%, reflecting its potential as a major economic driver.
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Key Drivers Behind the Growth of Gig Work in India
Several factors have contributed to the rapid expansion of the gig economy in India:
COVID-19 and its Aftermath
The COVID-19 pandemic forced many people to rethink their employment options. With traditional jobs disrupted during lockdowns, gig work became a fallback for many. As companies switched to remote work, the demand for freelancers and on-demand workers in sectors like healthcare, logistics, and food delivery surged. This showed the importance and resilience of gig work during crises.
India’s Digital Revolution
India’s digital boom has been another game changer. With affordable smartphones and low-cost internet, platforms like Swiggy, Uber, and Urban Company have made it easier for gig workers to connect with clients. This revolution has paved the way for freelancers in fields like writing, graphic design, and even consulting to find work not just locally, but internationally as well.
Shifting Preferences in the Workforce
More and more, millennials and Gen Z are gravitating towards gig work for the flexibility it offers. In a NITI Aayog survey, over 77% of young professionals said they were open to gig roles because of the control it gives them over their schedules. Platforms like UrbanClap (now Urban Company) have made it easier for skilled professionals to offer services like home repairs and beauty services on demand, contributing to this shift.
The Need for Additional Income
As inflation touched 7.44% in July 2023, many workers found themselves needing to supplement their income. Gig jobs, especially in food delivery and ride-hailing services, have provided that extra cushion. Delivery partners, for instance, can earn between ₹15,000 and ₹25,000 per month, depending on the hours they work, offering much-needed financial relief during these economically tough times.
Businesses Looking for Cost-Effective Solutions
From a business standpoint, gig workers provide a cost-efficient solution. Startups and SMEs can save 20-30% by hiring gig workers over full-time employees, according to the Indian Staffing Federation. Platforms like Upwork and Fiverr allow companies to easily hire freelance talent, boosting productivity while cutting costs.
Who Exactly Are Gig Workers?
According to NITI Aayog, gig workers fall outside traditional employment structures. They are classified into two main types:
Platform Workers: Individuals who work on online platforms, such as delivery drivers for apps like Zomato and Swiggy.
Non-Platform Workers: People engaged in more traditional sectors but in casual, part-time, or temporary roles.
The Code on Social Security, 2020 also defines gig workers as those engaged in livelihoods that fall outside the standard employer-employee relationship.
Government’s Efforts to Help Gig Workers
To address the challenges gig workers face, the government has rolled out several initiatives:
Labour Jurisdiction: Since labor falls under the Concurrent List, both the Centre and states can legislate on the issue.
Code on Social Security, 2020: This code provides a framework for gig workers to access benefits like life insurance, maternity leave, and disability coverage. A Social Security Fund has been set up to finance welfare schemes.
e-Shram Portal: This portal registers informal workers, including gig workers, to help them access various government benefits.
Rajasthan Act: In July 2023, Rajasthan became the first state to pass legislation for gig workers. This law set up a welfare board and a Central Transaction Information and Management System (CTIMS) to track payments and issue unique IDs for gig workers.
Karnataka Act: In 2024, Karnataka passed a bill to protect gig workers, including provisions to prevent unjust dismissals and set up dispute resolution mechanisms.
Challenges Facing Gig Workers
Despite these positive steps, gig workers in India still face significant challenges:
Lack of Employee Status
Gig workers don’t enjoy the same legal protections as traditional employees. This means they don’t have access to benefits like minimum wages, paid leave, or retirement plans. The use of terms like “aggregator” instead of “employer” in laws like the Karnataka Bill limits their access to comprehensive labor rights.
No Minimum Wage Guarantees
Unlike formal sector workers, gig workers aren’t guaranteed minimum wages. A 2023 ILO report showed that many delivery workers for platforms like Swiggy and Zomato in cities like Delhi and Mumbai earned below minimum wage.
Welfare Board Challenges
While welfare boards have been set up, they face implementation issues. A 2022 CAG report found that only 52% of allocated funds for unorganized workers’ welfare were used, highlighting gaps in the system.
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Exclusion from Industrial Relations Code
Gig workers don’t have access to the dispute resolution mechanisms provided by the Industrial Relations Code (2020). During the 2022 protests by Swiggy and Zomato delivery workers in Bengaluru, this exclusion became painfully clear, as workers had no legal framework to escalate their grievances.
Power Imbalance with Employers
Gig workers often face power imbalances with platform companies. A 2023 ILO study found that drivers for Uber in India reported up to a 40% decline in earnings due to frequent changes in commission structures.
Issues with e-Shram Portal
While the e-Shram portal was designed to help informal workers, it has faced self-declaration issues, leading to misclassifications. According to a 2023 NITI Aayog report, about 28% of the 28.5 million workers registered were from the gig economy, but the lack of verification raised concerns.
Gender Disparities
A 2023 study by SEWA Bharat revealed that women gig workers earned around 30% less than their male counterparts, primarily due to discriminatory practices and a lack of bargaining power. Women in the gig economy face significant barriers to equal pay and advancement.
The Road Ahead: What Can Be Done?
For the gig economy to thrive, certain steps must be taken:
Clarifying Employment Relationships: India could look to the UK Supreme Court’s ruling that classified Uber drivers as employees, ensuring they received benefits like minimum wage and paid leave.
NITI Aayog’s RAISE Framework: This plan aims to promote financial inclusion, skill development, and gender equality for gig workers, helping them access better social security and economic opportunities.
Conclusion
Gig economy in India is on a path of rapid growth, but it faces a host of challenges—from inadequate wages to a lack of formal worker protections. With the right policies and enforcement, India can build a gig economy that benefits workers and businesses alike, ensuring that gig workers are not left out of the future of work.
