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Synopsis: India needs to create more formal jobs and provide protection to gig economy workers through labour reforms.
Three years ago, CEO of Walmart had said that the Flipkart-Walmart combination would generate 10 million jobs in India, which is roughly equal to India’s annual job creation requirement.
But, Flipkart didn’t say these jobs would materialize in one year. Similarly, Ola and Zomato have boasted of large employment generation too.
The problem is that these jobs are not traditional in nature. They belong to the gig category.
How the job creation by platform economics has high uncertainty?
No stable and secure employment: These so-called jobs do not provide health insurance, nor pay for overtime with no sick leave.
Lack of income security: There is no room for wage negotiations, and unions are absent. In the gig economy, job creation should be seen as the provision of livelihoods for entrepreneurs.
Grievance redressal mechanism: For instance, when Ola and Uber started cutting back incentives, the drivers in Mumbai decided to go on ‘strike’.
But there was no clarity against whom they were striking. When the strikers agitated at a local transport commissioner’s office, he had to tell them that he did not regulate the hail-a-taxi business.
How the slogan “be a job giver, not a job seeker” is misleading?
Type of job: most people want a stable job with a salary at the end of the month. That is not the same as job security. It is about their ability to take risks.
Existing poverty: Since India has a large population below or near the poverty line, their vulnerability to an income shock is very high.
Risk-handling capacity: due to poverty, it is low and hence youth display risk aversion toward entrepreneurship.
India lacks social security for the temporarily unemployed: The huge popularity of the National Rural Employment Guarantee Scheme is because it acts as a proxy for unemployment insurance. It also acts as a wage floor in rural areas.
Why India needs to create stable jobs?
Huge population dependent on agriculture: A national survey revealed that nearly 40% would gladly leave farming if a stable job was available in industry.
No protection to agri-labourers: A recent report indicates that farmers in India are earning more by serving as labour on someone else’s farm than cultivating themselves. But their labour does not get any protection from labour laws.
Emerging gig economy: it is such that there is no employer-employee relationship. It is more like a business partnership, with gig workers often serving as independent contractors. Gig economies door for exploitation. For example, the food delivery guy who has to beat a 30-minute deadline.
Informalization of workforce: Nearly 90% of India’s workforce is estimated to be in the unorganized or informal sector, and much of the labour law framework anyway does not apply to most Indians at work.
What is the way forward?
First, focus on declining labour force participation rate and one of the reasons is the gig economy.
Second, define gig workers as labour and not just contractors or partners.
Source: This post is based on the article “Gig economy workers need more protection of their rights” published in Livemint on 21st September 2021.