Platform economy

Entitlement extension should be calibrated

The Union government’s think tank, NITI Aayog, has released a new policy brief titled “India’s Booming Gig and Platform Economy”, which has catalysed significant discussion. The brief, which claims to offer “perspectives and recommendations on the future of work”, provides a handy guide to this increasing segment of the labour force — but also some recommendations, which need to be more widely discussed. There is no question that at least some coherent thinking needs to be applied to gig work in India. As the brief points out, as of now almost 8 million workers are part of India’s gig economy, and this number is projected to grow to almost 24 million by the end of the decade. About a third of this number, according to the NITI Aayog, are in “low-skilled” segments of the gig economy.

There have indeed already been questions about the compensation of and protections due to these workers, particularly those dependent on large and well-financed platforms. Some platforms have also been hit by labour action, and have had to alter their policies. This is the normal stuff of labour relations in India. While no grave emergencies seem to threaten the sector yet, such questions will of course only grow with time, especially if the size of the workforce expands as projected. However, some of the recommendations in the policy brief must be evaluated with care. It might not be a good idea to force contractors and workers in the gig economy into the straitjacket of employer/employee roles designed for the formal sector.

The gig and platform economies are fundamentally different from legacy formal workplaces, and creating a set of entitlements due to participants in the gig economy might well throttle employment growth in the sector and cause everyone to be worse off. The government would be well advised to not mandate social security for those in the gig and platform economy in India at this point in time. After all, it is barely able to ensure that the minuscule formal economy itself follows existing mandates on social security. According to the recent data from the Periodic Labour Force Survey (PLFS), more than half the salaried employees covered by the survey do not have any kind of security. The new Labour Code, which has not yet been implemented, also expands the scope of social security and employer participation thereof in a manner that may not be sustainable at this stage.

Given the rapidly changing nature of the employment landscape — which the NITI policy brief has in fact underlined — these issues need more debate and discussion to discover a consensus. Expanding entitlements blindly is rarely the wise answer. Growth in the number of jobs is clearly the first priority, and thus the impact on growth-creating platforms and gig contractors should also be closely scrutinised before new mandates or entitlements are implemented. Further, it is vital that such mandates be taken seriously. The PLFS findings about salaried employees need to be looked into first. Why is the formal sector failing to provide security as expected? Let the government ensure that social security benefits are available to salaried employees first, as has long been the mandate, before extending it further.