What are issues with Gig Economy

• Gig Economy has two sets of agents (i.e. Buyer and Seller), which interact through intermediaries or aggregators.
• Gig Worker is not an employee on the company’s payroll. Instead, they are treated as Independent Service Contractors. 
• They are paid in terms of ‘piece rate’ (depend on gigs completed) and ‘rewards’ (dependent on the rating given). The company doesn’t pay them a fixed salary.
• Gig Workers (or contractors) aren’t eligible for social security incentives such as provident fund, insurance, pension etc., provided by the company. 

• Uber: It is the most famous company that employs the gig economy. It has re-defined the gig economy. 

• Udemy: In Udemy, instructors develop courses and sell them on the platform to those who want to learn that skill. Udemy is just the host of the content and pays the instructors according to the sale of their courses after cutting their share.

• Airbnb: Airbnb provides a platform to the house owners with extra space to rent their space to the travellers. Airbnb provides the platform to connect buyers and sellers and take the commission in return for services. 

For Workers

• Job Creation: The gig economy generates a large number of jobs.
• Flexibility: The gig economy provides flexibility in terms of working hours.
• Independence: Gig workers operate as independent contractors and aren’t answerable to any boss (because they are their boss)

For Consumers

• Lower Cost of Service: The gig companies can provide the same service at a lower cost due to economies of scale and efficient use of resources.
• Quality of Service: The quality of service is higher as the Aggregator companies ensure quality of service and compliance.

For Companies

• Optimization of Resource Utilization: It provides an easy way to monetize resources like vacant spaces in homes (Airbnb) and ordinary vehicles (Uber and Ola).
• Cost Efficiency: It guards companies against fluctuations in demand as they don’t have to pay workers if there is a lack of demand.

• The gig workers don’t have the cover of social security such as provident fund, pension etc.
• There is no security of a job in the gig economy.
• The income of the gig workers is not fixed, and companies enjoy large powers vis-a-vis workers enabling them to exploit workers. 
• The gig economy is not adequately regulated and gives a lot of opportunity to the companies to evade taxes and harass workers.
• Stress on the gig-workers due to pressure from algorithmic management practices and performance evaluation on the basis of ratings. E.g., monitoring of Ola and Uber employees. 
• Limited opportunities for skill up-gradation and career progression that are attached to traditional jobs.
• Potential exploitation of workers due to the individualistic nature of gig work, gig workers cannot form unions and bargain collectively.

Steps taken by Indian Government

1. Budget 2021-22: The Government has announced that the law on minimum wages act and Employee State Insurance Corporation will apply to all firms. 
2. Regulation: Central Government has announced that Taxi-hailing apps can’t charge more than 20% commission from driving contractors. Along with that, contractors cant work more than 12 hours per day.
3. Rajasthan Government’s Initiative: The Rajasthan government has formed the Tripartite Board to automatically register gig workers upon joining a platform. The registered gig worker will be eligible to
   • Medical and accident support
   • Educational aid for workers’ children.
   • Access to other welfare schemes.

International Examples

• In 2021, the UK Supreme Court ruled that Uber drivers should be considered workers and not freelance contractors, making them eligible for all employment-related benefits such as minimum wage, annual leaves, and insurance.