e-Commerce: The New Boom

What does the Karnataka Bill promise gig workers?    


From UPSC perspective, the following things are important :

Prelims level: Who are Gig workers?

Mains level: Why are safeguards necessary for Gig workers?

Why in the News?

The Karnataka government released the draft of the Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill, becoming the second Indian state to take such an initiative, following Rajasthan.

Who are the Gig workers?

Gig workers are independent contractors, freelancers, or temporary workers who are hired for specific projects or tasks, often through online platforms, rather than being employed in traditional long-term employer-employee relationships.

Key highlight of the Bill proposed for the welfare of gig workers:

  • Social Security and Welfare Fund: Establishment of a welfare boards, social security and welfare fund for gig workers, funded by a welfare fee on transactions or company turnover, and contributions from the Union and State governments.
  • Grievance Redressal Mechanism: Introduction of a two-level grievance redressal mechanism to address workers’ complaints and ensure transparency in the automated monitoring and decision-making systems used by platforms.
  • Fair Termination Procedures: Requirement for contracts to list exhaustive grounds for termination, with a 14-day prior notice and valid reasons in writing needed before terminating a worker.
  • Payment and Deductions: Mandate weekly payments to workers, with clear communication regarding any payment deductions, and the right for workers to refuse a specified number of gigs per week without adverse consequences.
  • Safe Working Conditions and Contract Transparency: Obligation for aggregators to provide reasonable and safe working conditions, registration of all gig workers, and contracts to be written in simple language with a 14-day notice for any changes, allowing workers to terminate the contract without losing existing entitlements.

What are the impacts of the labour market in a larger domain, and why are safeguards necessary? 

  • Lack of Basic Rights and Social Security: Gig workers are often classified as “partners” rather than employees, leaving them security outside the purview of labour protection laws and without access to basic rights and social benefits.
  • Arbitrary Terminations and Lack of Grievance Redressal: Instances of arbitrary terminations, blacklisting, and dismissals without hearing the worker’s side are common in the absence of regulatory laws. Automated monitoring and decision-making systems often make these decisions, leaving no room for grievance redressal.
  • Reduced Payments and Exploitation: Over the years, gig workers have faced reduced payments, arbitrary deductions, and exploitation due to the lack of regulatory laws governing the gig economy.
    • The wide gap between the purchasing power of these workers and the affluent consumers they serve raises questions about the long-term sustainability of this model.
  • Need for Transparency and Fair Contracts: The absence of transparency in automated monitoring systems and decision-making by platforms, as well as the lack of fair contracts, has led to the exploitation of gig workers.
    • There is a need for the state to review contract templates and ensure fair contracts with gig workers.
  • Lack of Access to Credit and Skill Development: Gig workers often lack access to credit and skill development opportunities, hindering their growth and formalization.
    • There is a need for enabling platforms to provide these benefits to gig workers.

State-level and National level Initiatives taken previously: 

  • Code on Social Security, 2020: At the national level, the Code on Social Security, 2020 recognized those who freelance or work under short-term contracts. It mandated employers to provide benefits similar to those of regular employees to gig workers.
  • Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act: Rajasthan became the first state to introduce a bill for the welfare of gig workers in 2023.
    • The bill, which became an Act in September 2023, sought to establish a welfare board and fund for gig workers.
    • However, the Act has gone into cold storage after the changed government in November 2023.
  • Haryana Gig Workers Welfare Board Bill: The bill aims to establish a state-level board dedicated to the social and economic security of gig workers involved in delivering goods, services, and food at doorsteps.

Case study: 

  • In California (USA), the Proposition 22 ballot measure allows app-based transportation and delivery companies to classify drivers as independent contractors while providing them with some benefits like a health insurance subsidy and minimum earnings guarantee.
  • New York City (USA)  has passed legislation requiring food delivery apps to provide workers with benefits like paid sick leave and minimum pay.

Way forward: 

  • Unified Legislation: Introduce a comprehensive national-level legal framework specifically addressing the rights and welfare of gig workers. This legislation should encompass social security, fair wages, occupational safety, and grievance redressal mechanisms.
  • Strict Enforcement: Ensure robust enforcement of these laws through dedicated government bodies and regular audits of gig economy platforms. Penalties for non-compliance should be substantial enough to deter exploitative practices.

Mains PYQ: 

Q Examine the role of ‘Gig Economy’ in the process of empowerment of women in India. (UPSC IAS/2021)

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