Gig Economy of India – Issues & Solutions in 2020

Project-to-project basis work is soon gaining momentum even in India, as the gig economy is entering its second phase of organised development (with market-wide acceptance and adoption). The application-based platforms offering services like cab booking, house renting, food (doorstep) delivery are estimated to employ over 2 lakh people in companies such as Ola, Zomato, Swiggy, UBER, etc. While profitability has soared for such companies, employee exploitation has also increased resultant to which the government has exhibited mindfulness towards ensuring employee welfare by developing the required legal framework.

The gig economy is here to stay in India, as is evident by the recent initiative taken by the prestigious National Law School of India University (NLSIU), Bengaluru, of submitting draft guidelines for the gig economy. NLSIU is set to submit the draft guidelines to the government in February 2020, thereafter; the Karnataka government would either table a bill in the assembly or frame suitable guidelines under the purview of the incumbent laws meant to protect the rights of employees. Notably, the Karnataka state legislature’s upcoming budget session might see the draft getting tabled, reports Times of India. It has also been clarified that upon the draft being prepared by NLSIU, it might get debated in an open forum.

However, it’s a fair question to ask that has our labour market matched the pace with the incoming of the gig nature of work? Assuming a full-time gig work summons constant development of certain innate skills that are vital for gig workers, these are: entrepreneurship, networking, financials, and a knack of deciphering human psyche. While in India, at present there isn’t any regulation to standardise rates paid to gig workers. This makes mastering the art of negotiation a prerequisite to a thriving gig work career. Soaring tech usage in India has escalated those who have previously worked in the unorganised sector to be able to obtain better employment. However, even then, the jobs created in the gig economy mostly still get developed in the informal space, wherein some red flags do exist when attempting to apply this model in reality.

Essentially, new concepts like the formation of a Universal Basic Income (UBI), skill development programmes, ensuring availability of secured gig-based employment and freelance opportunities, and workplace protection, among others, is necessary to be looked upon. Hopefully the draft guidelines for the gig economy initiative underway at the NLSIU is received well by the Karnataka government and the state legislature, and upon implementation of the same, other states and governments also show active interest in inculcating the same spirit and safety in their respective regional gig workforce. The flexible work economy isn’t going anywhere, with increased adoption of technology and the availability of seamless payment avenues all that is remaining to be dealt with to make the gig economy a thriving market for the workforce is safety, security, and assurance of reasonable remuneration.

The BCG 2019 Report: The New Freelancers, states, “As per a survey of 6500 senior executives worldwide, 40% of respondents said they expected freelance workers to account for an increased share of their organization’s workforce over the coming five years.” (FlexingIT Project Trend Data: 2018-2019.

FlexingIT research also states that, “over a 3rd of companies in India estimate up to 50% reliance on flexible talent in the next 5 years.” Per a study conducted by McKinsey, estimations indicate that up to 20%-30% of the workforce in developed markets is engaged in independent work.Also, as reported by ASSOCHAM recently, the Gig Economy of India is definitely marching towards becoming a strong component of India Inc’s strategy as the sheer size of the gig economy is projected to grow at a CAGR of 17%, whereas it is likely to hit a gross volume of $455 billion by 2023.

The Code on Social Security, 2019 – What’s in it for Gig Workers?

The Code on Social Security (“the Code”), having the capacity of impacting over 50 crore workers in India, now stands approved by the Union Cabinet. The Code, introduced by the Labour Minister Santosh Kumar Gangwar on Wednesday (December 11, 2019) in Lok Sabha, swaps 9 laws associated with social security; noteworthy among these is the Unorganised Workers’ Social Security Act, 2008. Social security generally signifies various measures initiated to make sure reasonable access to healthcare and the provision of income security to workers if offered. Establishing a social security fund with the help of the corpus available under corporate social responsibility is advised, so as to offer welfare benefits to all workers. Why this proposal is special is since it also includes gig workers under its purview.

Gig workers

The Code indicates that as for the schemes for gig workers, platform workers, and unorganised workers, the financing of these is planned to be done via a mixture of contributions from the employer, employee, and the appropriate government. However, there is more to it than this; the central or state governments could also, under the purview of the Code, notify specific schemes for gig workers, platform workers, and unorganised workers, say in the form of offering such service professionals with various reimbursed benefits, viz. life and disability cover. The Code identifies Gig workers as those workers who work outside of the traditional employer-employee relationship (e.g., freelancers or independent contractors). Platform workers, for instance, are such workers who access other organisations or individuals via online platforms and earn money by offering them with specific services. Unorganised workers also comprise of home-based and self-employed workers.

Talking about home-based unorganised (gig) workers, it should be mentioned that even though the third-largest economy in the world is amidst a slowdown (per the International Monetary Fund), the skillful housewives of India are joining the promising trend of “cloud kitchens” to feed today’s hungry urbanites (millennials), that also too late in their (ripe for retirement) lives. Various app-based startups such as Curryful (dubbed to be the UBER of home-cooked food), Homefoodi, etc., have started offering a platform to housewives for offering home-cooked meals to the modern millennials. What this means is that the demography of the gig workforce is innovating with each passing month in India as various forms of service professionals are joining the market that erstwhile were expecting retirement in their lives. With such a robust presence of demand and supply matchup in the gig workforce and the startup markets, it certainly makes sense for the government to ensure timely social security measures for its unorganised, independent, young, adult, middle-aged, and also ageing elderly (still zealous) workforce.

This is because in stressed times (as the ones currently being experienced by our nation in the form of unrests), it gets difficult for gig workers who are discharging their duties in the middle of the road as food delivery-agents or cab drivers or e-commerce delivery agents to comfortably and safely fulfill their service obligations. In such uncertain times, it surely makes sense to have social security benefits of the required nature in place to make such vulnerable gig workers be able to protect themselves and safeguard the future of their dependent family members (via referring the code on occupational safety, health, and working conditions). The same goes for elderly home-cooking housewives who juggle with multiple duties, more so in their later years. Where in the western countries the trend of platform (app) economy jobs have been received negatively for having destroyed stable industries – the reasoning being the absence of the following: (i) workplace benefits. (ii) labor unions –, in India, the government has exhibited the necessary mindfulness towards initiating proactive steps (such as the Code on Social Security, 2019) in the direction of addressing these warranted concerns of the gig workers, their families, and various stakeholders.

GSTN for Gig Workers on Government’s Agenda

The Gig Economy service professionals in India are soon likely to officially fall under the purview of the Goods & Services Tax (GST) Network, per the Department for Promotion of Industry and Internal Trade (DPIIT). Doing so would entail placing online platforms such as UrbanClap, UBER, Ola, Zomato, BigBasket, etc. under the obligation to employ only such service professionals (gig workers) who have acquired a GST Number or GSTIN.

Intending to maintain a database of gig economy professionals in an organised format, the government is addressing much larger concerns that committed gig economy service professionals and the stakeholders have been voicing since long all over the nation (even internationally) – i.e., accessing the provisions of availing gratuity perks, consumer safety (ensured via gig workers’ tracing, and credential and qualification database), safeguarding workers’ rights, health and maternity benefits for gig workers, life and disability cover, old age protection, and the extension of Employees’ State Insurance Corporation (ESIC) workers’ benefits to gig workers.

This promising initiative is formulated under the auspices of the Social Security Code Bill (“the Bill”) that received approval from the Union Cabinet in December 2019. The Bill recommends formation of a social security fund via a corpus presented under the corporate social responsibility (CSR) framework.

The government, in its efforts to legitimise the gig economy and protect its workforce, is following the footsteps of other developed nations having already introduced GST liabilities to their independent workers. These include, for example, Canada and Australia, wherein, the former makes it mandatory for independent contractors to have to pay GST/HST (Goods and Services Tax / Harmonised Sales Tax) if earning above $30,000 per year; in the case of the latter, earning over $75,000 attracts the liability to pay GST. Apart from this, in Australia, those offering ride-sharing services are required to acquire an ABN and also register for GST irrespective of their income, per the mandate given by the Australian Taxation Office (ATO).

Formalisation of the gig economy in itself has also emerged as a promising forte as startups like HelloVerify now offer artificial intelligence and machine learning (AI & ML) powered gig workers’ screening services. Here, it’s worth noting that the nature of services offered by HelloVerify, complement the objective that the government of India is striving to achieve in its efforts to maintain a central database of gig workers’ credentials and informational particulars.

How Millennials are making their way in the Gig Economy?

Over the last decade and still now, there have been immense job opportunities opening up for the gig economy and millennials are continuing to take a bigger piece of it.  Even the companies have started to attract this kind of workers to get jobs done in a more flexible, cheaper and efficient manner. To support this, a recent 2017 study reports that overall self-employment is likely to triple to 42 million workers by 2020, with Millennials leading the way.

A research by Deloitte has also used data collected over the years of millennials entering and exiting the gig economy which provides us with notable trends of the same that every leader who plans to hire this kind of workforce should keep in mind.

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The Rise of the Gig Economy in India

Earlier in India, every one wished to get a permanent job with a fixed salary, timing, and some specified work but with changing times, the way people work has also changed. The gig economy is on the rise which is clearly backed by an estimate from the BusinessWorld that it is creating almost 56% of the employment opportunities in India and would even be increasing 25-30% annually.

What is the Gig Economy?

Gig economy is a temporary work system based on a short-term relationship between workers and companies. Workers perform “gigs,” in which they are employed for a specific task or time. This is done to achieve the advantage of cost, quality, and flexibility. Once the task is complete, the worker is free to move on.

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Empowering The Gig Economy: All You Need To Know

The expression “gig economy” alludes to a general workforce condition in which here and now commitment, impermanent contracts, and independent contracting is ordinary. It’s additionally alluded to as the “specialist economy,” “agile workforce,” “sharing economy,” or “independent workforce.” You may believe it’s a trendy expression, and you’d be correct, yet the boundless development of new businesses supporting the gig economy (and the number of laborers utilizing them) is a certain sign that the idea of work as we know it is changing. Continue reading “Empowering The Gig Economy: All You Need To Know”