Why in the news?
Gig workers suffer from lack of social security, regulations: Study
Source: The Hindu
Who is a gig worker?
A gig worker, as defined by the Code on Social Security, 2020 (India), refers to:
- individuals engaged in work outside conventional employer-employee structures, where they perform tasks or participate in work arrangements to earn income.
- These individuals operate as independent contractors, online platform workers, contract firm workers, on-call workers, or temporary workers.
- They function within a framework that deviates from traditional long-term employment relationships, often leveraging digital platforms or contractual arrangements to secure work opportunities and generate income.
- The median age of Indian gig workers is 27 and their average monthly income is Rs 18,000.
- Of these, about 71 percent are the sole breadwinners of their families. Additionally, gig workers operate with an average household size of 4.4. Rewrite the content without any plagiarism academically
What are the key drivers of the Gig Sector:
- Flexibility to Work from Anywhere:
- In the digital era, workers are no longer tethered to fixed locations, enabling employers to access the best talent worldwide for projects irrespective of geographical constraints.
- Changing Work Approach:
- The millennial generation exhibits a distinct career attitude, prioritizing fulfilling work over conventional career paths that may not align with personal aspirations.
- Business Models & Technology:
- Gig workers operate under diverse compensation models such as fixed fees (established during contract initiation), time and effort-based payment, actual output delivered, and quality of outcomes. While the fixed-fee model predominates, the time and effort model closely follows. Technological advancements have streamlined contracting processes, facilitating seamless collaboration between companies and non-employee contractors.
- The Emergence of a Start-up Culture:
- India's burgeoning start-up ecosystem relies on contractual freelancers for non-core functions, circumventing high fixed costs associated with full-time employment. Start-ups are increasingly engaging skilled technology freelancers, particularly in areas such as engineering, product development, data science, and Machine Learning (ML), to enhance their tech infrastructure.
- Rising Demand for Contractual Employees:
- Multinational Corporations (MNCs) are embracing flexible hiring arrangements, particularly for specialized projects, to mitigate operational expenses post-pandemic. This trend significantly fuels the gig economy in India.
Government’s Initiatives:
- The Code on Social Security (2020):
The Code on Social Security (2020) includes a dedicated section addressing the 'gig economy'. It mandates gig employers to contribute to a Social Security Fund, which will be managed by a government-led board.
- The Code on Wages, 2019:
- A minimum wage policy in India:
The Code on Wages, 2019, introduces provisions for a universal minimum wage and floor wage applicable across both organized and unorganized sectors, encompassing gig workers.
The primary objective of the Act is to overhaul antiquated labor laws, fostering accountability and transparency while ushering in minimum wage standards and labor reforms throughout the nation. It standardizes the provisions for minimum wages and ensures prompt wage payments to all employees, regardless of their sector or income threshold, with the overarching goal of guaranteeing the "Right to Sustenance" for every worker and enhancing legislative safeguards for minimum wage protection.
- Empowerment of Central Government:
Under this Act, the Central Government is vested with the authority to establish floor wages, taking into consideration the living standards of workers. It retains the flexibility to prescribe distinct floor wages for various geographical regions across the country. Additionally, minimum wages set by either the central or state governments must surpass the floor wage benchmark.
- Introduction of Floor Wage:
The Code on Wages Rules, 2020 introduces the concept of a floor wage, granting the central government the prerogative to determine this foundational wage level, which reflects the minimum living standards of workers. The floor wage serves as a foundational wage threshold, preventing state governments from setting minimum wages below this established level. While the Wage Code allows for the establishment of varied floor-level wages based on geographic considerations, concerns have arisen regarding the potential flight of capital from regions with higher wage standards to those with lower wage levels.
Challenges Faced by Gig Workers:
- Low Wages and Gender Disparities:
- Despite the opportunities created by platform companies, gig workers often encounter issues such as inadequate wages and unequal gender participation, hindering their financial stability and exacerbating gender inequalities.
- Limited Upward Mobility:
- Many gig workers face challenges in advancing within organizations, as opportunities for upward mobility are often scarce or non-existent, restricting their professional growth and development.
- Lack of Employee Status:
- Gig workers are typically engaged by companies on a contractual basis and are not recognized as formal employees. Consequently, they are deprived of various benefits enjoyed by on-roll employees, exacerbating their financial insecurity and social protection.
- Absence of Benefits:
- Due to their non-employee status, gig workers are often excluded from benefits such as paid sick and casual leaves, travel and housing allowances, and provident fund savings, among others, further exacerbating their vulnerability and financial instability.
Way Forward:
- Worker Classification:
It is imperative to establish clear guidelines for the classification of gig workers, delineating between independent contractors and employees. This clarity will ensure that gig workers receive the appropriate legal protections and benefits. India's evolving labor laws address this issue, underscoring the importance of distinguishing between gig workers and traditional employees.
- Social Security and Benefits:
There is a need to explore avenues for granting gig workers access to social security benefits, including retirement savings, health insurance, and unemployment benefits. One potential approach is the establishment of a portable benefits system tailored to the gig economy, facilitating the provision of essential protections and benefits to gig workers.
- Wage Protection:
Mechanisms must be implemented to safeguard gig workers' rights to fair compensation. Consideration should be given to setting minimum wage standards for specific gig roles to prevent exploitation and ensure adequate remuneration for gig workers.
- Skill Development:
Encouraging continuous skill development and training initiatives for gig workers is essential to enhance their employability and earnings potential. Collaboration between the government and industry stakeholders can facilitate the creation of tailored training programs designed to address the specific needs of the gig economy workforce.
Conclusion:
Addressing the challenges faced by gig workers requires a multifaceted approach that encompasses worker classification, social security provisions, wage protection, and skill development initiatives. By implementing clear guidelines, providing access to benefits, ensuring fair compensation, and promoting ongoing skill enhancement, we can create a more equitable and sustainable gig economy that supports the well-being and livelihoods of all workers.
