Gig economy weighs impact of social security for workers

Details : In News:

  • Internet companies are fast expanding their hyperlocal delivery services to reach customers faster, preferably in less than an hour.
  • To make this happen, companies need more delivery and warehouse personnel, and they are adding hires to a pool of tens of thousands of ‘gig’ workers.
  • However, discontent in the workforce was starting to boil over, with them protesting polices of their companies, which had revised incentive structures to bring down costs.

In focus: Gig economy

  • ‘Gigs’ are one-time, short-term assignments or projects. 
  • In a digitalised world that is rapidly changing the work environment, more and more people, globally, are opting for gigs. Examples include delivery agents for e-commerce sites and food delivery companies, cab drivers for Uber and Ola etc.
  • A ‘gig economy’ refers to a condition in which flexible jobs become a routine as companies tend to hire independent contractors and freelancers instead of hiring full-time permanent employees.
  • The idea of a gig economy is based on the premise that workers get to choose the hours, a freedom which may not come with traditional employment. Companies pay as per services used by them, the hours or delivery volume.
  • Gig economy is in stark contrast to the traditional market of full-time workers, in which they don’t often change jobs and instead focus on a lifetime career.

Offers flexibility to workers and employers:

  • In this digital age, majority of the workforce uses mobile phones; they can be contacted from anywhere, therefore job and location can be linked easily.
  • Freelancers can select among many temporary job offers and projects around the world.
  • Employers can also select the best individuals for specific projects from a larger pool that is available in any given area.
Image result for gig economy

Why Gig workers are upset?

  • The firms looking to expand fast earlier gave big incentives to the gig workers.
  • But now, some firms that have grown very big are looking to cut costs and have changed the payout level for every delivery. For example, delivery executives at food delivery companies must now deliver more orders to earn the same amount of incentives they did earlier with a smaller set of orders.
  • This means they have to work longer hours a day to hit delivery targets that bring promised additional inducements.
  • These workers also usually miss out on the benefits that traditional full time employees get.

What additional benefits gig workers are provided?

  • Currently, most online companies offer a basic accidental coverage to platform workers, but its details, including terms, are not disclosed.

What governments are trying to do?

  • Recently, the central government proposed additional benefits for gig or platform workers.
  • The government has proposed changes which would ensure gig workers get life and disability cover, health and maternity benefits, old age protection and any other benefit it may determine as helpful.

How it could hurt everyone if not done right:

  • Industry:
    • The proposed changes by the government has divided industry stakeholders who play a critical role in India’s nascent gig economy.
    • Companies are getting anxious as they fear their operational costs will jump.
    • Industry players say that trying to push the gig economy into a structure could essentially lead to killing it at its birthing.
  • Gig workers:
    • Executives of these platforms say that any regulation without caveats would end up hurting workers instead of helping them.
    • Companies could cut down hugely on the number of gig workers they employ.
    • Flexibility for workers will also be hit if benefits proposals are not framed in a balanced way.
    • Some other industry executives said gig workers won’t be able to optimise their earnings based on the demand they see on different platforms if a company offers social security benefits.
  • Consumers might also be hurt as they may have to pay a more.

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