What Does the Karnataka Bill Promise Gig Workers? | Explained

What’s in today’s article?

• Why in the News?
• What is Gig Economy?
• Who is a Gig Worker?
• What is the Size of Gig Economy in India?
• What is the Average Age/Income of Gig Workers in India?
• Challenges Faced by Gig Workers
• What Needs to be done in Order to Improve the Living Standards of these Gig Workers?
• News Summary
• Key Features of the Draft Bill

Why in the News?

• On June 29, the Karnataka government published the draft of the Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill, making it the second Indian State to initiate such a move, the first being Rajasthan.

What is Gig Economy?

• A gig economy is a free market system in which organisations hire or contract workers for a short span of time.
• Simply put, the positions are temporary to meet the company’s requirements by having short-term engagements.
• Startups like Ola, Uber, Zomato, and Swiggy have established themselves as the main source of the gig economy in India.

Who is a Gig Worker?

• According to the Code on Social Security, 2020 (India), “A gig worker is a person who performs work or participates in work arrangements and earns from such activities, outside of the traditional employer-employee relationship.”
• They are independent contractors, online platform workers, contract firm workers, on-call workers and temporary workers.

What is the Size of Gig Economy in India?

Image Caption: Gig Workforce in India

• A NITI Aayog study on “India’s Booming Gig and Platform Economy” has estimated that at present, about 47 per cent of the gig work is in medium-skilled jobs, about 22 per cent in high skilled, and about 31 per cent in low-skilled jobs.
• These figures clearly indicate the importance of the gig working community in the Indian economy.
• Ensuring the comfort and security of this community is investing in a more progressive and prosperous future.
• Research studies by Boston Consulting Group (BCG) have indicated that participation in the gig economy is higher in developing countries(5-12 percent) versus developed economies(1-4 percent).
  • Most of these jobs are in lower-income job-types such as deliveries, ridesharing, microtasks, care and wellness.
• These studies further estimate that in 2020-21, 77 lakh workers were engaged in the gig economy. 
• The gig workforce is expected to expand to 2.35 crore workers by 2029-30.

What is the Average Age/Income of Gig Workers in India?

• The median age of Indian gig workers is 27 and their average monthly income is Rs 18,000.
• Of these, about 71 per cent are the sole breadwinners of their families. Additionally, gig workers operate with an average household size of 4.4.

Challenges Faced by Gig Workers

• While platform companies have created avenues of employment, it has often been marred by low wages, unequal gender participation, and a lack of possibility for upward mobility within an organisation.
• This has triggered protests from workers at companies like Swiggy, Zomato, Ola, Uber, and Urban Company, among others.
• Gig workers are typically hired by companies on a contractual basis and are not considered their employees.
• As a result, they do not receive some of the benefits that an on-roll employee of the company may have.
  • This means they often do not receive benefits like paid sick and casual leaves, travel and housing allowances, and provident fund savings, among other things.

What Needs to be done in Order to Improve the Living Standards of these Gig Workers?

• Fiscal Incentives:
  • NITI Aayog in its report ”India’s Booming Gig and Platform Economy” has said that fiscal incentives such as tax-breaks or startup grants may be provided for businesses that provide livelihood opportunities where women constitute a substantial portion of their workers.
• Retirement Benefits:
  • The report also recommended firms adopt policies that offer old age or retirement plans and benefits, and other insurance cover for contingencies such as the Covid-19 Pandemic.
  • Such plans and policies may be envisaged under the Code on Social Security, 2020.
  • Businesses should consider providing income support to workers as it would be a “critical step in providing assured minimum earnings and social security from income loss in the wake of uncertainty or irregularity in work”.
  • It also suggesting offering paid sick leave to workers apart from insurance cover.
• The Rajasthan Platform Based Gig Workers (Registration and Welfare) Act 2023:
  • Recently, the Rajasthan State Assembly passed the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act 2023.
  • Under the Act, a board will be established to ensure gig workers’ registration and welfare, addressing their vulnerabilities and providing a platform for collective bargaining and negotiations.
  • The board can serve as an independent grievance redress mechanism.
  • The Act also has a provision of establishing a social security fund funded through a fee on every transaction.

News Summary

• On June 29, the Karnataka government published the draft of the Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill.
• The Bill seeks to regulate the social security and welfare of platform-based gig workers in the State and is expected to be placed in the monsoon session of the Assembly.

Key Features of the Draft Bill

• According to the draft Bill, the contract between the aggregator and the worker should contain an exhaustive list of grounds on which the contract would be terminated by the aggregator.
  • It also stipulates that the aggregator shall not terminate a worker without giving valid reasons in writing and prior notice of 14 days.
  • Arbitrary terminations have been a major complaint raised by gig workers for many years now.
  • Instances of blacklisting workers or terminating them from work without hearing out their side have been aplenty.
• Also, the draft mandates aggregators to make payments at least every week and to inform the worker about the reasons for payment deductions if any.
• As per the new draft, a worker will have the right to refuse a specified number of gigs per week with ‘reasonable cause’ without any adverse consequences.
• Welfare Fund:
  • A welfare fee will be charged either on each transaction between the worker and the company, or based on the company's total revenue.
  • This fee, along with contributions from the Union and State governments, will go into a fund.
  • All gig workers must be registered, and the companies must provide the government with a database of these workers.
• The aggregator must also provide reasonable and safe working conditions for workers, although the draft does not delve into what constitutes as ‘reasonable.’

Q1. What is an Unorganized Sector?

Unorganised sector means an enterprise owned by individuals or self-employed workers and engaged in the production or sale of goods or providing service of any kind whatsoever including domestic work and where the enterprise employs workers, the number of such workers is less than ten.

Q2. What is the purpose of the Employees' Provident Fund?

The primary purpose of the PF fund is to help employees save a fraction of their salary every month so that he can use the same in an event that the employee is temporarily or no longer fit to work or at retirement.

Source: What does the Karnataka Bill promise gig workers? | Explained.