Why India's Burgeoning Gig Economy Needs to be Formalized

With more than 40% of the total workforce engaged in part time or gig work, it is high time governments worldwide took steps to mainstream them and their occupation. This can take the form of allowing Labor Unions for Gig Workers, providing them with healthcare and social security benefits, and fixing minimum wages that are legally mandated. In addition, developing countries can take additional steps such as recognizing Gig Workers as full time occupation professionals and extending the protections that are available to workers and professionals in the Formal Economy such as No Hire and Fire at Will etc.

While there are many such proposals before policymakers in various countries, it is a fact that they have not translated into concrete policy initiatives which would ease the lives of Gig Workers. For instance, India is yet to come out with a comprehensive policy or law on regulating the Gig Economy with the result that the sector resembles a Slave Shop at the moment. Not only are Gig Workers being forced to work longer hours for less pay, they are also being denied even the basic and rudimentary protections that workers in the Formal Economy enjoy such as Barring Layoffs at Will as well as minimum wage laws.

Moreover, despite this Year’s Budget recognizing Gig Work as an occupation, in many cases, there are no proper statistics as to how many Indians are into Gig Work and whether they are dispersed or concentrated in many or few sectors. Of course, it is not always easy counting the numbers of Gig Workers as due to the Fungible nature of the occupation, movement between Gig Work and Full Time work as well between Jobs in Gig Economy firms and Formal Full Time work makes it difficult to be precise about their numbers and other employment statistics that are necessary for any Census type of Enumeration.

As the cliche goes, You Cannot Measure What You Cannot Count, which means that extending subsidies and other incentives to Gig Workers becomes difficult in the absence of any concrete statistics. This is something that is not that much of a problem in the West, where the Labor Bureaus Monthly and Quarterly Payroll Data often captures all types of employment. Therefore, the need of the hour in developing countries such as India, is to first record the Gig Workforce and then take steps to classify and categorize them into neat or even rough slots based on which they can then be extended protections.

While the government has its task cut out, the bigger challenge is to ensure that Gig Economy firms honor the commitments they make to their workers in terms of providing Minimum Wages and other such mandates. Indeed, it took Uber a while in India to even consider Group Medical and Accident Insurance for its drivers. So, passing laws is just the easy part and the harder part is in enforcing them. Moreover, Gig Economy firms usually operate as App based Aggregators that provides them with the necessary “opacity” behind which they quote the Fine Print, whenever there is any problem. So, the laws have to address this lacunae as well.

At present, the Gig Economy in many countries, including India, operates like the Wild West, where anything goes and where both the firms and the workers are in a Free for All with each other and with their clients. Indeed, it is high time that all stakeholders stop exploiting the Grey Areas in the laws and ripping off each other and the larger client base. This is crucial for the longer term survival of the Gig Economy since the present Trust Deficit between the various actors only exacerbates the difficulties of regulating and formalizing this sector.

Last, much like the First Industrial Revolution birthed the Social Contract that underpins the Modern Westphalian Nations, the Emerging Fourth Industrial Revolution should engender a New Social Contract that takes into account the Realities of the Digital Age of which the Gig Economy is an integral part. To conclude, the Gig Economy is Here to Stay and hence, it is high time to Formalize and Regularize it.