Gig Workers--Independent Contractors or Employees?

Introduction

'Gig workers' are employed in occupations across the Indian economy. The term 'gig' originated from the employment of musicians to play for a particular set or for an evening performance. Now it is used to describe a wide range of employments--cab drivers, food and other products delivery partners, personal care attendants, dog walkers, accountants, editors, lawyers and business consultants. As the range of employments indicates, the gig workers do the same work as do traditional workers. Rather than skill or training, they are distinguished by the form of contract and employment relations of work, not the technology or the type of work (Friedman, 2014). In traditional employment, a worker's position and earnings depend on current performance. By contrast, in gig employment workers are hired on the spot for the job without much regard for their past employment, with no promise for future employment, legacy pay, or deferred compensation. Making employment and wages flexible, gig employment shifts the risk of economic fluctuations fully onto the workers.

The gig economy in the country is witnessing accelerated growth due to the rapid spread of start-ups that connect and mediate between buyers and sellers in a range of markets, particularly markets for in-person services. This growth has generated employment for millions of people in India, but may not be the best model for j ob creation in the country, which is struggling to realise the full potential of its demographic dividend (The Economic Times, October 25, 2019). The quality and longevity of these jobs are highly suspect. In Bengaluru, thousands of delivery partners working with Zomato, Swiggy, and UberEats wanted to submit a memorandum to the labor department about their plight: 15 to 16 hours of work per day, for less pay, with no time to attend to family or personal work; 60 hours of mandatory clock-in time per week; no reimbursement for fuel expenses; and harassment from traffic police (The Times of India, October 2, 2019).

In many developed economies, particularly the United States, work has been radically overhauled, since the 1980s, in pursuit of greater labor flexibility and cost savings. A growing number of employers want workers waiting to be called when needed instead of engaging them through long-term contracts that are meant to foster commitment and loyalty. The wisdom that companies seem to rely on is that "the only way to succeed in an era of global competition is to take advantage of the benefits of a largely unregulated, non-unionized, and low-wage environment" (Pfeffer, 1998). The result for many workers has been increased insecurity of employment and earnings, the loss of in-work benefits, and the splintering of internal and external career paths (Healy, Nicholson & Pekarek, 2017). The situation is so well entrenched that economists classify poverty as out-of-work and in-work poverty. Post the onset of economic liberalization in the early 1990s, many Indian companies too followed their western counterparts and put in place employment practices to leverage numerical labor flexibility and labor cost advantages. The numerous employment types that were introduced then --temporary, trainee, casual and contract --continue to proliferate even now. The advent of the gig economy has introduced one more employment type, the independent contractor or partner. These employment practices were, and continue to be, the major cause of labor unrest and industrial strife in the country.

In this paper, we discuss the logic that companies could use to arrive at an employment policy. In particular, platform companies or start-ups need to use a logic on employment that is perceived to be fair and reasonable from the Indian stand point. Moving beyond the immediate benefit of cost savings, an 'investment' approach should be adopted for the gig workers. We also argue that platform companies have the scope to take a longer term and strategic approach to human resource management.

India's Job Market

India's job market faces the huge challenge of a burgeoning working-age population with a decrease in agriculture and organized sector jobs. The estimates vary between 20 and 25 million people attaining the age of 21 years and entering the job market every year. In a few decades since the country's economic liberalization and despite changes in the overall make-up of public and private sector employment, the fundamental structure of employment and self-employment in India has not altered significantly. Only 17 percent of the workforce earns a regular wage or salary and almost half of the working population is either self-employed or casually employed (Calvao & Thara, 2019). Thus far, India's economic growth has spurred only modest or sluggish job creation. Considering the expected increase in the working-age population over the next decade, this jobless growth will spell major trouble for the future. Manufacturing sector, particularly the automobile industry, has been a major contributor for regular j obs, But, in recent times, this industry is in a big swoon. Even otherwise, the manufacturing sector is the most susceptible to automation and job reduction is the most likely outcome. The education sector employs a large workforce (24.5 percent of all service jobs). But the entry barriers for this sector are several and high. The online retail sector, with fewer and lower entry barriers, was held out as a hopeful avenue for large scale job creation. But, despite a strong growth of this sector, e-commerce and related services accounted for only about one million jobs in India due to high productivity and minimal labor input (KPMG and Snapdeal, 2016). Today, the job creation promise is largely being made by platform companies or start-ups. Food-delivery start-up Swiggy says it employs around 2.10 lakhs delivery partners and intends to increase the number to 5 lakhs in the next 18 months. Scores of others such as Swiggy's rival Zomato, on-demand delivery service Dunzo, and cab-hailing companies Uber and Ola together employ millions of workers (The Economic Times, October 25, 2019). But these workers are not considered 'traditional employees' and are paid per order or ride. They are termed independent contractors or partners. Several prominent Indian gig economy entrepreneurs are of the view that the gig economy is creating more 'bad' jobs than 'good', the kind of jobs that are far likely to be eliminated or automated soon (The Economic Times, October 25, 2019). We now turn to discuss whether gig workers, particularly delivery partners, are independent contractors delivering service to platform companies or they are employees.

Gig Workers

Generally, platform companies have maintained that those working via their apps are independent contractors or partners. The argument is that contractors choose when and where to work, and must invest their own capital (e.g., a car or a two-wheeler) to set up in operation. Further, these new types of working arrangements have positive consequences for those seeking more flexible work arrangements, such as people with other jobs, caring responsibilities and mobility issues. Students, who would like to earn some income working part-time and those individuals who find it very difficult to get regular jobs would also benefit from these work arrangements. A study commissioned by the Department of Business, Energy and Industrial Strategy (BEIS) and undertaken by the Institute for Employment Studies (IES), UK, in 2018, (Broughton, Gloster, Marvell, Green, Langley & Martin, 2018) identified four categories of what they term independent workers: about 30 percent are free agents, who actively choose independent work and derive their primary income from this; around 40 percent are casual earners, who use independent work for supplemental income by choice; around 14 percent are 'reluctants', who make their primary living from independent work, but would prefer traditional jobs; and around 16 percent are the 'financially strapped', who do supplemental independent work out of necessity. Another study, in 2018, of the gig economy through the lens of Uber and its drivers in the UK found...