From UPSC perspective, the following things are important :
Prelims level : Not much
Mains level : Regulation of Gig Economy
Since the pandemic, there is a growing concern about the pay-out and job-securities of the delivery persons and other gig workers of the e-commerce companies.
E-com boom in India
- E-commerce in India is a nascent industry that is probably less than 13 years old.
- In this short period, it has captured the collective imagination of the nation.
- The covid-19 crisis has accelerated its adoption, and even die-hard fans of shopping at a physical store have switched to shopping online.
Various issues faced by the gig workers
- Harsh working conditions
- Quality of work and the temporary nature of engagement
- Absence of a social security net
- Long hours
- Delayed pay-outs
- Pressure to maximize speed of delivery (at the risk of road accidents)
E-coms under scanner
The bigger an industry gets, and the more successful it is perceived to be, the more responsible and thoughtful it needs to be in everything it does.
- Fairness in employment: Some of the concerns are fair and call for introspection on the part of e-commerce companies.
- Premature regulation: There is a rising demand for regulation of the gig economy created by them.
Significance of e-commerce sector
Anyone complaining about the quality of jobs being created by the e-commerce industry probably needs to spend some time understanding the history of job creation in India.
An attractive sector for India’s ‘jobs problem’
- Ample workforce: India is a demographically youthful nation, and every year between 17 and 20 million people look for jobs.
- Attractive sector: This includes around 5 million people who are abandoning highly exploitative and less remunerative farm jobs every year to find employment in other sectors, mostly in the nearest urban districts.
- Limited success of service sector: The IT and business process outsourcing industry has less than 200,000 jobs a year during its 25 years of existence. This is just a minuscule 1% of the total number of jobs that need to be created.
Data justifying un-steady flow of income
- According to CSO, only about 17% of India’s workers are regular wage earners and less than 23% of Indian households have a regular wage earner.
- In other words, 77% of our households did not have a steady flow of income.
- Self-employed (46%) and casual labour (33%) together account for nearly 80% of the workforce and claimed to earn less than ₹10,000 per month.
- These are the realities that cannot be ignored.
E-commerce: A game-changer
- The new-age platforms have done is nothing short of a miracle both in terms of creating jobs as well as paying a fair wage.
- It can be well established that it has provided a better remedy for unemployment in India.
Why do e-marketplaces matter?
- Failure of Skills: Neither skill nor knowledge is enough to ensure one generates income.
- Technology dependency and free market: Efficient marketplace which are enabled by technology, matters.
- Common platform: A startup such as the Urban Company is an example of a technology-powered marketplace for common services such as plumbing, carpentry, beauty, and house-cleaning, among others.
- Single marketplace: They brought consumers and suppliers of services (based on skills) on a common platform and made the whole process of matching demand and supply pretty seamless.
- Decent pay: A consumer of a service is willing to pay more for better quality of service if there is a consistent and reliable process of evaluating the capability of service providers.
- Self-employment: Most of these workers are always self-employed and even with these platforms, they operate in a gig mode which isn’t structurally different.
- Better livelihood: Youth from rural India had been joining the Ola and Uber platforms in large numbers, many of whom were either unemployed or heavily under-employed.
- No skill-compulsion: When skilling is voluntary and driven by a free market mechanism, the outcomes are magical.
- Industrializing the services: These platforms did ‘industrialize’ the services—industrialization allowed effortless consumption and created structured mechanisms to scale services and service capabilities.
- New consumption pattern: The technology enabled markets resulted in ‘new consumption’ which, in turn, led to creation of more goods and service providers.
- As far as the e-commerce industry is concerned, there are several obvious lessons that can contribute towards its growth, going ahead.
- Also it is not fair to paint the entire industry as exploitative or be unduly critical of the gig model which is actually a very good model.
- Many of the gig workers themselves would be reluctant to take up full time and fixed salaried jobs. Pushing for premature regulation could be lethal.
- And finally, it is unrealistic to expect the e-commerce industry to create jobs that are probably as well paying like the IT industry.
- Creating high-paying jobs was never easy and will never be easy.
- Nor is it realistic that everyone, or even a majority of the 20 million, will be employed in high-paying jobs.