Strengthening India’s Gig Economy

In recent years, India’s gig economy has expanded rapidly, reshaping the employment landscape and providing new opportunities for millions. However, this growth has also exposed key challenges, especially concerning the social security of gig workers.

To address these issues, the Union Ministry of Labour and Employment is in the process of drafting a national law that will extend social security benefits to gig workers. Additionally, the government is updating the definitions of gig workers to ensure they are more inclusive and aligned with the evolving nature of employment.

Who are gig workers?

Gig workers are individuals who participate in the gig economy by taking on temporary or flexible jobs, rather than traditional full-time positions. The NITI Aayog Report 2022 categorizes gig workers into two groups—platform workers and non-platform workers.

Platform workers use online algorithmic matching platforms, such as Amazon or Uber, to connect with customers, whereas non-platform workers are engaged in sectors like construction, day labour, and other temporary work that doesn’t rely on technology platforms.

India currently ranks fifth in terms of gig economy workers and is projected to rise to third place by 2030.

Opportunities for Gig Workers Evolving in India

• Market Growth and Employment Potential: India’s gig economy is valued at approximately USD 20 billion and is expected to grow at a rate of 17% annually until 2027. According to NITI Aayog’s report, India’s Booming Gig and Platform Economy, the gig workforce is projected to reach 23.5 million (2.35 crore) workers by 2029-30. By that time, gig workers are expected to constitute 6.7% of the non-agricultural workforce and 4.1% of the total livelihoods in India.
• Diverse Opportunities Across Sectors: Companies such as Uber, Ola, Zomato, and Swiggy continue to expand their services, thereby generating more gig employment opportunities. In the fiscal year 2023, Zomato processed 647 million orders for 58 million customers, with a total order value of ₹263.1 billion across more than 800 cities in India. Additionally, global platforms like Upwork, Freelancer, and Fiverr allow Indian professionals to offer their services worldwide. The Indian freelance workforce is expected to grow at a compound annual growth rate (CAGR) of 17% from 2021 to 2025.
• Flexible Work Arrangements: The gig economy provides flexibility that traditional jobs often lack, allowing workers to choose their hours, select projects, and work from different locations. This adaptability is particularly appealing to younger generations, including millennials and Gen Z, who prioritize work-life balance and autonomy, thus contributing to the rise in gig employment.
• Technological Advancement and Start-up Culture: The rise of digital platforms and mobile applications has streamlined the gig work process, making it easier for workers to find jobs and for companies to hire them. India’s start-up ecosystem is also rapidly evolving, with many start-ups preferring to hire contractual freelancers for non-core activities, thereby reducing the high fixed costs associated with full-time employees.

Major Challenges Faced by Gig Workers in India

• Ambiguous Employment Relations in Gig Work: Gig workers are classified as informal laborers, placing them outside the traditional employer-employee framework. Employment relationships in the gig economy are often obscured, with gig workers labeled as independent contractors. This classification prevents them from accessing the institutional social security benefits that formal workers typically receive. In 2023, Swiggy delivery workers staged major strikes in several Indian cities, demanding better working conditions, fair wages, and enhanced benefits.
• Institutional Social Security vs. Informal Social Security Schemes: There is a significant disparity between the benefits offered under institutional social security systems and those available through informal social security schemes. Gig workers may have access to some social security schemes, but they are not entitled to comprehensive protections like paid leave or maternity benefits.
• Lack of Minimum Wage and Occupational Safety Protections: Gig workers are not covered by minimum wage laws or occupational safety regulations. Many of these jobs, such as delivery services or ride-sharing, involve physically demanding tasks that expose workers to health and safety risks. Moreover, gig workers are excluded from the Industrial Relations Code 2020 and its dispute resolution mechanisms, leaving them vulnerable.
• Precarious Employment and Income Insecurity: Gig workers can be easily disconnected from the platforms they rely on, resulting in the sudden loss of income and livelihood. Their earnings are also unpredictable, often fluctuating based on demand, which makes financial planning difficult. The Fairwork India Ratings 2024 report highlights the lack of commitment from digital labor platforms to ensure local living wages and acknowledge workers’ collective rights.
• Exploitation and Unfair Treatment: Without adequate legal protections, gig workers are subject to exploitation due to the power imbalance between themselves and the platforms. Some workers face unreasonable conditions, such as being required to meet targets before being allowed to drink water or take restroom breaks.
• Lack of Collective Bargaining Power: Gig workers are generally isolated and lack the ability to unionize or collectively bargain for improved working conditions and pay. This power imbalance makes it difficult for them to assert their rights or negotiate better terms with the platforms they depend on.

How can India Empower the Gig Workers?

• Defining Aggregators as Employers: To safeguard gig workers, labor laws should explicitly classify aggregators as employers and acknowledge the formal employment relationship between them and gig workers.
• Registration of Gig Workers: Aggregators should be responsible for registering gig workers on the Labour Ministry’s e-Shram portal to ensure their inclusion in social security and welfare schemes.
• Establishment of a Tripartite Governance Structure: A tripartite governance system, involving the government, gig platforms, and worker representatives, should be created. This structure would facilitate effective dialogue, collective bargaining, and the development of industry-wide standards for fair working conditions, grievance redress mechanisms, and worker welfare programs.
• Fair Pay and Algorithmic Transparency: Platforms should be held accountable for maintaining fair pay structures and ensuring transparency in the algorithms that determine pay rates and task allocations for gig workers.
• Gig Worker Data Portability: Standards for data portability should be implemented, allowing gig workers to transfer their work history, ratings, and skill certifications across various platforms. This would reduce reliance on a single platform and enhance worker mobility and opportunities.
• Skill Development and Upskilling Initiatives: Efforts should be increased to provide gig workers with opportunities for skill development and upskilling, enabling them to adapt to the current market and transition into higher-paying roles or pursue entrepreneurial

A balanced approach that fosters innovation and flexibility while ensuring fundamental protections and fair working conditions is crucial for creating an inclusive and secure future for gig workers. Collaboration among policymakers, businesses, and gig workers is essential to establish a fair and equitable system. This system must strike a balance between flexibility and security, ensuring that gig workers in India can thrive in the evolving economy with their rights fully safeguarded.

The End of the Blog: Strengthening India’s Gig Economy