The State government of Karnataka will work towards framing guidelines for the emerging ‘gig economy’ comprising cab aggregators, food delivery platforms and e-commerce firms to ensure all relevant labour benefits for those working in the sector.

  • The decision came after his meeting with representatives and workers of companies in the sector.

What is the issue?

  • The firms claim the workers are freelancers, but for all practical purposes, they are employees who are working in appalling conditions without any security. 
  • Unions of cab drivers and food delivery personnel in the city pointed out that they were termed ‘partners’. They are not given appointment letters and are not considered ‘employees’ denying them all relevant benefits.
  • There are no benefits like PF, ESI or medical insurance to the delivery boys working for food delivery companies even though they work beyond 12 hours. 
  • The firms change the incentives at will. The incentives are not uniform for all delivery personnel and cab drivers, which is unfair. 
  • The ‘gig economy’ is a new phenomenon that cannot be wished away. The government has the responsibility of ensuring social stability for youths working in the sector while not creating hurdles for the businesses.

Tripartite labour mechanism by the Government of Karnataka

  • Labour department will re-introduce the tripartite system with labour unions, management and the government to resolve disputes.
  • The government will review The Contract Labour (Regulation and Abolition) Karnataka Rules.

What is the gig economy?

  • The gig is a temporary or contractual job. It signifies a short-term contract or a freelance work as opposed to a permanent job.
  • The contract employee gets paid once he finishes the work.
  • Workers are paid for each individual gig they do – such as food delivery or a car journey – instead of monthly salary/days wage/hourly wage, i.e. OLA, Uber etc.
  • This concept is very common in advanced countries like the US, Europe, who hire part-time workers.

Issues in the Gig Economy:

  • The gig economy is remunerative and gives a wide range of choices but it also leads to casualization of the labour.
  • There are some scamster-companies in the gig economy; and here, the risk of not getting paid for the work one has done is high.
  • There are certain platforms that do due diligence and filter out fly-by-night operators and list only genuine jobs, but having a listing on these platforms is expensive.
  • Due to the lack of proper regulation, the gig economy offers both the employer and the gig worker, many challenges to deal with.
  • Workers do not have bargaining power in a gig economy. Workers can be terminated anytime here in a gig economy.

Factors contributing to a Gig economy:

  • Work from home comfort – In a modern digitized world, it is easy to work from home with the click of a mouse. It is independent contract work and workers don’t need to go to the office for work but can work remotely from home too.
  • More choices – There is a wide range of choices for the employment seeker as well as the job provider as proximity to the workplace does not matter here. People also change jobs several times.
  • Uncertain business climates – As the nature of jobs is changing (i.e. by automation, artificial intelligence), there is no need to hire permanent employees.
  • Experimentation – Gig economy is a reflection of experimentation too.

Draft Social Security Code, 2019

After years of deliberations, the union government has finally circulated the draft social security code, a key labour law proposal that seeks to amalgamate a clutch of existing laws and proposes several new initiatives including universal social security for unorganized sector workers and, insurance and health benefits for gig workers including the Ola and Uber drivers.
  1. Insurance, PF, life cover for unorganized sector employees: The draft code says the “Central Government shall formulate and notify, from time to time, suitable welfare schemes for unorganised workers on matter relating to life and disability cover; health and maternity benefits; old age protection; and any other benefit as may be determined by the central government". There may be unorganized sector social security boards at the centre and state levels.
  2. Corporatization of EPFO and ESIC: “The Central Government shall also appoint a Financial Advisor and Chief Accounts Officer to assist the Chief Executive Officer in the discharge of his duties," draft code said. 
  3. Maternity Benefit: The draft says subject to the other provisions of this Code, every woman shall be entitled to, and her employer shall be liable for, the payment of maternity benefit at the rate of the average daily wage for the period of her actual absence, that is to say, the period immediately preceding the day of her delivery, and any period immediately following that day.
  4. Existing labour laws that the code will merge: The Code on Social Security, 2019 once in place will merge eight existing labour laws including Employees' Compensation Act, 1923; Employees‘ State Insurance Act, 1948, Employees‘ Provident Funds and Miscellaneous Provisions Act, 1952; Maternity Benefit Act, 1961; Payment of Gratuity Act, 1972; Cine Workers Welfare Fund Act, 1981; Building and Other Construction Workers Cess Act, 1996 and Unorganized Workers‘ Social Security Act, 2008.

Also read: California passes Bill that will reshape gig economy US State Passed a Law On Gig Economy Source