Minimum Wage Policy and Gig Workers

 

Context

• Recently, the fifth annual study conducted across 12 e-commerce platforms by Fairwork India, presents a grim picture of working conditions for India’s gig workers.

Major Findings of the Study

1. Minimum Wage and Worker Alienation: 

1. The study highlights that only three platforms, including Bigbasket, Flipkart, and Urban Company, have minimum wage policies to ensure workers earn at least the local minimum wage.
2. However, no platform guarantees that workers earn a living wage. This year's study explores how working conditions contribute to segregation, which is often linked to discrimination based on factors such as caste, class, gender and religion.

2. Safety, Contract Clarity, and Worker Protections:

1. Some platforms also offer accident insurance coverage and compensation for income loss due to accidents or medical reasons.

• Additionally, companies have taken measures to ensure contract clarity, data protection, and processes for dealing employee issues, such as appealing disciplinary action.

2. Unfortunately, no platform received points for Fair Representation, indicating a lack of recognition for collective worker bodies despite increased worker collectivization in recent years.

Gig Economy in India

1. Growth Scenario: 

1. According to the Economic Survey 2020–21, India has emerged as one of the largest countries in the world for flexi staffing, or gig workers.
2. As per Niti Aayog’s report on Gig Economy, the latter employs about 7.7 million workers, with the number expected to rise to 23.5 million by 2029-30, comprising around 4% of overall livelihood in the country.
3. Currently, about 31% of gig work is in low skilled jobs such as cab driving and food delivery, 47% in medium-skilled jobs such as plumbing and beauty services, and 22% in high skilled jobs such as graphic design and tutoring.

2. Major Issues Faced by Gig Workers:

1. Gig workers are often excluded from social security and labor legislation due to their ambiguous employment status.
2. Social security and other basic labor rights like minimum wage, limits on working hours, etc. hinge on “employee” status, the independent contractor status of gig workers excludes them from getting such benefits and legal protections.
3. In the event of disability or a worker's death, Social Security provides benefits to eligible individuals and their families.

• Gig workers may have less coverage for these benefits, which can affect their financial security in challenging circumstances.

3. Government’s Initiatives:

1. The Code on Social Security (2020) contains a separate section on ‘gig economy’ and imposes an obligation on gig employers to contribute to a Social Security Fund to be handled by a government-led board.
2. The Code on Wages, 2019, provides for universal minimum wage and floor wage across organized and unorganized sectors, including gig workers.

Minimum Wage Policy of India

Way Forward

1. Skill Development: Encourage continuous skill development and training for gig workers to enhance their employability and earnings potential. Government and industry partnerships can help in providing training programs tailored to gig economy needs.
2. Worker Classification: Define clear guidelines for the classification of gig workers (e.g., independent contractors, employees) to ensure they receive appropriate legal protections and benefits. India's labour laws have been evolving to address this issue, and the distinction between gig workers and traditional employees is a key consideration.
3. Wage Protection: Implement mechanisms to ensure gig workers receive fair compensation, and consider setting minimum wage standards for specific gig roles to prevent exploitation.
4. Social Security and Benefits: Explore options for providing gig workers with access to social security benefits, such as retirement savings, health insurance, and unemployment benefits, potentially through a portable benefits system.

 

 

 

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