The Struggles of Gig Workers: How Companies Can Step Up for Fair Treatment

Has ever this happened to you -

You book a cab and hop in, and the driver asks you not to pay through the app but to make an online payment or give cash directly to them.

Or perhaps, you are looking for a graphic designer or a developer on some freelancing site, and they ask you to get connected over mail or WhatsApp when it comes to payment.

A "gig" is a short-term, flexible job or task managed through digital platforms, such as freelance projects, rideshare driving, or delivery services. Initially a part-time alternative to supplement full-time jobs, gig work has evolved into a primary career choice for many.

Adam Smith once said, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

This quote reminds us that the primary motivation for most people in the economic system is to provide for their families. Gig workers are no different. While the gig economy offers flexibility in choosing work and hours, it also presents significant challenges, including job insecurity and low wages.

Over 54% of gig workers do not have access to employer-based benefits, leaving them vulnerable to financial risks. Only 40% have medical insurance, 25% have dental insurance, 20% have life insurance, and a mere 5% have short-term disability insurance. [Source: https://teamstage.io/gig-economy-statistics/ (the given data is based on the USA market)]

To understand the gig economy and the condition of gig workers more deeply, we need to look into the sub-classifications of gig workers:

Knowledge-Based (White Collar)

These individuals can be found on platforms like Freelancer.com , Upwork , Fiverr , FlexJobs , and other freelancing sites. They typically engage in desk-based jobs such as web development, UI/UX design, graphic design, and video editing.

Compared to other gig workers, those in knowledge-based roles often enjoy better work-life balance due to the nature of their tasks and flexible hours. However, they face their own set of challenges, including intense competition and the need to self-promote. To mitigate platform fees and other associated costs, many freelancers in this category eventually create their own websites or agencies. This transition allows them to reach clients directly and offer their services with greater autonomy and profitability.

For example, many successful freelancers start by building a strong portfolio on these platforms and then leverage their reputation and client base to launch their own businesses. Strategies such as networking, investing in a professional website, and utilizing social media can be crucial in this transition.

Service-Based (Blue Collar)

The situation of service-based gig workers is much worse than their white-collar counterparts. Particularly in countries like India where the unemployment rate is very high and the literacy rate is low, people often seek gig-based work as their career options. Even college students who come from small towns or villages to metropolitan cities, engage themselves in delivering goods and cab driver-related work to meet their day-to-day financial requirements like paying for their rents and college fees.

Although these people are referred to as partners by several companies in this field, the benefits that they get are perhaps even worse than lots of unorganized sector workers in India.

Recent news reports have criticized Ola and Uber for their treatment of gig workers in India, particularly highlighting their poor working conditions:

1. The Fairwork India 2023 report evaluated major digital labor platforms and ranked Ola and Uber among the worst for gig workers. Both companies scored poorly across key areas, including Fair Pay, Fair Contracts, and Fair Representation. Specifically, neither platform provided evidence that workers earned a living wage after accounting for work-related expenses like fuel and vehicle maintenance, leading to substantial dissatisfaction among the workforce (Business Standard , Trak )
2. In response to ongoing protests by gig workers across the country, the state of Rajasthan introduced the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, 2023, which aims to provide social security and other benefits to platform-based workers. Despite these regulatory developments, Ola and Uber have been reluctant to negotiate with workers' collectives or unions, further exacerbating tensions. Labor rights groups continue to call for structural reforms to improve the conditions for gig workers, underscoring the need for stronger protections (Trak )

However, in response to increasing criticism, particularly in India, these companies have acknowledged the need for better social security measures. For example, Uber has pointed to its initiatives to provide drivers with access to insurance and financial assistance during the COVID-19 pandemic. Despite these efforts, critics argue that these measures are insufficient, with significant gaps in the overall protection and benefits offered to gig workers. Ola and Uber's management have yet to fully address concerns about the fundamental working conditions and the lack of a formal employer-employee relationship, which remains a major point of contention (Policycircle )

The founders of Ola, particularly Bhavish Aggarwal , have largely emphasized the role of their platform in providing flexible work opportunities and contributing to the economy. However, there has been limited direct commentary from Ola's leadership specifically addressing the detailed criticisms regarding the exploitation of gig workers. Ola has often highlighted its efforts to support drivers through initiatives like financial assistance during emergencies, but critics argue that these measures fall short of addressing the broader systemic issues related to fair wages and working conditions ( Policycircle )

Grocery and food delivery platforms in India, such as Swiggy, Zomato, and Blinkit, have faced significant criticism for the exploitation of gig workers. These criticisms center around declining earnings, increased work hours, and inadequate social protections.

Recent studies and reports highlight that food delivery workers in India are earning less now than they did a few years ago, despite working longer hours. For instance, a study conducted by the National Council of Applied Economic Research (NCAER) found that the average real monthly income of food delivery workers decreased from 2019 to 2022. This drop in income is particularly concerning given the rising costs of living, such as fuel prices, which have further eroded workers' earnings. Workers also lack health insurance and other benefits, leaving them vulnerable to financial instability. Despite these challenges, platforms have continued to tighten incentive structures as they shift focus from market expansion to profitability, leading to further dissatisfaction among workers (India Today , Hindustan Times ).

This exploitation has become a central issue in discussions about the gig economy in India, with workers expressing growing frustration over deteriorating working conditions. The lack of social protections and the precarious nature of gig work have led to calls for better regulation and worker rights, yet the platforms have largely remained silent or have downplayed these issues, focusing instead on the growth and formalization benefits their platforms provide (India Today ).

These issues reflect broader challenges in the gig economy, where the pursuit of efficiency and profit often comes at the expense of workers' well-being.

What Can Be The Solutions?

Based on the above two categories, the solutions have to be multifaced based on several criteria (based on stuff like addressing issues of income stability, social security, and fair treatment) for both kinds of gig workers:

For white-collar gig workers -

1. Contract Standardization: Governments can implement standardized contracts for freelance and white-collar gig work that clearly define terms of payment, deadlines, and intellectual property rights. This would help in reducing disputes and ensuring timely payments.
2. Freelancer Rights Legislation: Laws specifically designed to protect freelancers and consultants, ensuring they have access to the same legal protections as traditional employees, such as protection against non-payment and access to social security.
3. Income Averaging Mechanisms: Platforms or third-party services could offer income-smoothing services that help freelancers manage periods of low work by averaging their earnings over time or offering advance payments on future contracts.
4. Portable Benefits and Pensions: Establishing portable benefits accounts that move with the worker across different contracts, ensuring continuous health insurance, retirement contributions, and other benefits regardless of the employer.
5. Professional Networks and Support: Creating stronger professional networks and guilds specifically for freelancers, offering not just networking opportunities, but also legal support, group insurance rates, and training programs.
6. Skill Development: Access to ongoing training and certifications to help white-collar gig workers stay competitive and adapt to industry changes.

For blue-collar gig workers -

1. Minimum Wage Laws: Governments should enforce minimum wage laws that apply to gig workers, ensuring that all workers receive fair compensation for their time and effort. This could include adjusting pay to account for work-related expenses like transportation or equipment.
2. Health and Safety Standards: Introducing regulations that require platforms to ensure a safe working environment for gig workers. This could involve providing personal protective equipment (PPE) for delivery workers or ensuring vehicles are maintained.
3. Mandatory Insurance Coverage: Platforms could be required to provide basic insurance coverage for their workers, including health, accident, and life insurance. This would help protect gig workers from financial instability due to illness or injury.
4. Retirement Plans: Introducing pension schemes or mandatory savings accounts for gig workers, ensuring they have financial security in the long term. Contributions could be shared between the worker, the platform, and the government.
5. Unionization and Collective Bargaining: Encouraging or mandating the formation of unions or worker collectives for gig workers, allowing them to negotiate better pay and conditions collectively. This could be supported by legislation that prevents retaliation against unionized workers.
6. Legal Support Services: Providing access to legal services for gig workers to help them resolve disputes with platforms, such as non-payment or unfair termination of work.

By addressing the specific needs of both white-collar and blue-collar gig workers, these solutions can help create a more equitable and sustainable gig economy, where workers have the security and support they need to thrive.

Further references

1. Reality of India's Workers! by Dhruv Rathee
2. Are Zomato and Ola REALLY helping the workers? by Mohak Mangal