Daybreak - Why India's first law for gig workers doesn't live up to all the hype

Episode Date: August 6, 2023

The voice of the gig worker is getting louder, and it's coming to a point where neither delivery companies nor the government can afford to ignore it for much longer.Last month, the Rajasthan government came up with a new law that aims to establish a welfare board and a dedicated social security fund for platform-based gig workers in the state. One could say the new law sets a precedent for gig workers across the country.However, that is so only if you take it at face value.Once you look beyond the headlines and go through the technicalities of the law, it doesn't paint as rosy a picture for the aggrieved gig workers.Tune in to find out more.RecommendationGig-worker strikes are just the tip of the iceberg, unionisation lies beneathIndia's first law to protect gig workers is surprisingly good news for their employersDoes the delivery-partner fee you pay 'fully go to them for their time and effort'? NopeDaybreak is produced from the newsroom of The Ken, India's first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

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Our country has over 8 million gig workers, and the number is expected to grow by over three times in the next six to seven years. Now, almost every month or so, over the past year, we've been seeing these workers calling strikes against their companies, Blinket, Urban Companies, Swiggy, Dunzo, you name it. Last month, it was urban company partners. Before that, it was blanket workers.

And what have they been asking for? The most basic things that you could expect from a company that you work for. They want a proper employee-employer relationship, which means fair wages, social security and better working conditions. Indian startups like Ola, Uber and Dunzo are among the worst performers in giving adequate working conditions to gig workers. This is based on a study carried out by Fairworks. So what were earlier kind of disorganized, isolated protests have now turned into something much bigger. We are now seeing organized pan-country strikes by these gig workers.

The voice of the gig worker is getting louder and louder, and it is coming to a point where neither these companies nor the government can afford to ignore it for much longer. Because think about it. The entire delivery company sector is standing on their business. back. But there is nothing to protect them against the whims and fancies of the platforms that they work for. Now though, even if it is slow, the tide does seem to be turning. At the beginning of last month, the Congress government in Karnataka announced a free accidental and life insurance cover worth $4,000 for gig workers. And then at the end of the same month, July, the Rajasthan government

came up with a new law that aims to establish a welfare board, and a dedicated social security fund for platform-based gig workers in the state. Super cheerful and celebratory headlines followed the next day. Gig workers' first major victory in India, Rajasthan leads the way. Rajasthan passes bill extending social security to gig workers' son's debate. We always fulfil promises made to hardworking people. Rahul Gandhi after Rajasthan passes bill for gig workers. So what is this act all about?

It is going to enable the Rajasthan government to establish a welfare board, register both platform-based gig workers and aggregators operating in the state through a unique ID, and also set up social security benefits including a welfare fund. It all sounds amazing, right? I mean, one could say that this kind of sets a precedent for gig workers across the country. But that is only if you take it for face value. If you move beyond the headlines and actually go through what the law aims to do in detail, it does not paint as rosier picture as you think.

Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nagda Sharma, and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 7th of August. The thing is, India's existing labour laws do not recognise or cover gig workers in any form. The only framework that kind of comes close is the Social Security Code of 2020, where Chapter 9 talks about social security for unorganised gig and platform workers.

The code, though, is yet to be implemented. But like I said, the discontent among gig workers is only getting louder, and now they're not waiting for something good to happen in their favour. Even market forces are now shifting against larger companies with gig workers beginning to assert their power. The balance is tipping in favour of smaller companies where the terms and regulations are kinder to gig workers. Strikes and protests have only increased

in both frequency and intensity over the last few months, which kind of explains the new law being passed in election-bound Rajasthan. While it is being hailed as a huge win for gig workers, there are many ambiguities surrounding this law. My colleague Shivani Warma spoke to legal experts and some labour leaders to find out more. Stay tuned. To begin with, let us look at how Rajasthan's new law defines gig workers. According to it, a gig worker means a person who performs work or participates in a work arrangement and earns from such activixt. outside of traditional employer-employee relationship,

and who works on contract that results in a given rate of payment based on terms and conditions laid down in such contract and includes all peace rate work. Now, this definition itself brings some questions. Gotham Modi, the General Secretary of New Trade Union Initiative, or NTUI, which is a New Delhi-based Federation of Independent Trade Unions, explained it to us. He said that this categorization very conveniently ducks one of the most biggest demands of gig workers across the world,

which is recognizing a one-on-one employee-employer relationship between gig workers and their aggregator platforms. In his own words, and I'm quoting, the definition excludes the employer-employee relationship, which means establishing this will be a new hurdle to overcome. Even the petition in which the Indian Federation of Application-Based Transport Workers demanded adequate social security measures said that the denial of an employer-employee relationship deprives gig workers of their statutory benefits. That's one big loophole. The next one is the section on welfare fee. This fee, according to the Act, is supposed to be collected from aggregators.

But the Act does not even stipulate a specific percentage. that is to be charged, which is left entirely on the state's executive. The explanation of this part of the Act says, and I'm quoting, for the purposes of this section, the value of each transaction shall not exclude any tax paid or payable, and such a fee shall be collected by the state government in such manner and within such time as may be prescribed. Modi thought that this was not clear at all. He said that actually ensuring a reasonable welfare benefit is a battle that has been left for another day.

He told Shivani that a minimum defined benefit should be enshrined in the law and should be left to the arbitrariness of the executive power. The deductions and contributions under the two most powerful social security instruments, which is the Provident Fund and the ESIC in this country are even secured by the legislation. the legislature must protect the defined benefit as a right of the gig workers. Also, this Act is silent on Provident Fund and pension benefits that gig workers are currently missing out on. But even if you keep the question of how much this welfare fee should be a site, there is still another big question that surrounds this Act. Who is going to end up paying this welfare fee? Will this cause be borne by the aggregators who are already struggling,

with low margins and losses? Or will it be transferred to the customer who is very cost-sensitive? Mayankarora, who's an advocate and expert in new age labour law and employment issues, told again that there is no guarantee that this welfare fee will not come out of the workers' existing wages. So, in a way, they may be funding their own security and welfare. Modi, for his part, pointed out that the new law restricts itself to giving gig workers a few possible monetary benefits.

But what it avoids is addressing the larger issues like structural exploitation, fair pay, working hours, health and safety, etc. Clearly, this Act is not placing enough responsibility on aggregators, except maybe the welfare fee which we are still not sure of and expecting them to make tech changes so that they can share transaction level data with the government. We at the Ken have been talking about the gig worker strikes for a while now. We have newsletters, articles and podcasts on the subject. So if you're really interested, do check out some of the links that I have added to the show notes of this episode.

That's all for today. I'll catch you again on Wednesday with a news story. Daybreak is produced from the Newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only, apps and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.