India’s gig workers are in an uproar, alarming for tech firms
In an attempt to incorporate the doctrine of universalization of social security, the gig workers are brought into the ambit of the labour laws for the first time, with the provision of some welfare measures under the Code on Social Security, 2020. The three other codes are silent on the policies toward gig workers. While the codes are yet to be implemented, there are many questions pertaining to the clarity of the codes and how to implement them effectively to meet the intended objectives.
India’s gig workers are in an uproar, alarming for tech firms
When the Indian government imposed a covid lockdown in 2020, gig workers were hailed as Covid-19 heroes. The accolades masked gig workers’ growing discontent with fluctuating payouts and incentives. Now they want their share of the winnings.
Naspers-backed Swiggy, which delivers food and groceries, found itself grappling with driver protests late last week. They have been called off for now, but there is no guarantee they won’t flare up again.
Rival Zomato saw some of its fleet strikes in March against a reduction in incentives.
And last year, Urban Company, which provides home and beauty services, sued its female workers for protesting against rules that the workers say will hurt their earnings.
Ride-hailing apps Uber and Ola have witnessed many such actions since their inception.
While protests have largely been on and off and localized, there is a risk of them becoming more systemic—especially at a time of high inflation. App-based platforms, e-commerce, food, and grocery delivery, and ride-hailing all depend on their large contract-worker base for fast and efficient deliveries. These companies are grappling with driver shortages, as traditional service-sector jobs return with the ebbing of the pandemic. Predictable payouts for workers make business sense—even given pressure to cut costs amid a tough economic environment and tech funding winter. Firms calculate payments depending on factors such as distance traveled, orders a day, total tenure at the firm, and mode of transport used.
India’s gig workers are in an uproar, alarming for tech firms – For Zomato, delivery and related charges are its largest expense
For Zomato, delivery and related charges are its largest expense. Brokerage Macquarie believes that unit costs will fall in coming years as economies of scale kick in and customers become more willing to pay directly for delivery costs. However, as long as the company remains focused on aggressively acquiring customers it will be difficult to avoid continuing to substantially subsidize drivers.
Big economies like the U.S. and China have been pushing for better protection for gig workers, with mixed success. The Indian government, meanwhile, has been slow to implement labor reforms approved in 2020 that would make app-based workers eligible for social-security benefits. According to a law firm and a specialist in human-resources law, the absence of basic laws protecting gig workers means that it is left to each employer to determine the standards of protection.
Such a laissez-faire environment, mixed with high inflation, means that the conditions for more wide-scale labor problems for firms are ripe.
In the long term, gig work could add up to 90 million jobs to India’s nonfarm economy, and account for $250 billion of transactions, according to a report. That could include one million net new jobs over the next two to three years—if companies do more to align their own near-term incentives with those of their workers.
A more substantial, disruptive breakup between India’s delivery firms and its workers isn’t inevitable. But to avoid it, some relationship counseling will be required.