Economy

The ‘gig’ economy is creating lakhs of jobs, but workers don’t see a future

Delivery staff take a break between orders.

Delivery staff take a break between orders.   | Photo Credit: M. Vedhan

They cite a lack of job security, amplified by complex contracts, the changing rates of incentives, the lack of control over impossible targets that demand more than 12 hours of work daily, often without holidays

Slim and soft-spoken, Venugopal S. is nearly always on the move. In the only time he has for himself — when stuck in one of Bengaluru’s notorious traffic snarls or waiting in the shade by a busy restaurant — he gets busy tweaking or sending out his resume to prospective employers.

The 25-year-old graduated with a diploma in mechanical engineering, and worked on an eight-month contract on VVPATs before the Lok Sabha elections. Then Venugopal got a part-time job in a factory assembling machines where he earned ₹14,000 a month, but “I am the sole earner for my parents and younger sister,” he says. “This can’t see us through loans and expenses. I need a full-time job.” With the auto-sector in decline and mechanical engineering firms not hiring, eight months of search yielded nothing.

Last month, a rather desperate Venugopal enrolled on a food delivery app. After his 6 a.m. to 2 p.m. shift ends at the factory, he changes into the black shirt now synonymous with a popular food delivery app, and begins the drill: he rides from restaurant to customer dozens of times until 11 p.m. On holidays, he works up to 17 hours in the hope of the incentive promised when a set target is met. “If we don’t meet the target, we feel like we’ve worked the whole day for nothing. It is only with incentives that the earnings are good,” says Venugopal.

If he devotes all his working time to app-based deliveries, he can earn double the average starting salary in an average mechanical engineering firm. But Venugopal dismisses the idea. “There is no life in this. We’ve to work double the hours. Already, our salary and incentives are lower than those who joined two years ago, and we don’t know if the incentives will stop. Each day carries with it insecurity and stress.”

Venugopal’s story echoes with thousands of urban youth and recent migrants to cities where technology-based gig jobs — such as Uber, Ola, Swiggy, Zomato, Dunzo and many others — outnumber available opportunities in the formal employment market.

The recent Periodic Labour Force Survey from the Ministry of Statistics and Programme Implementation shows unemployment rate at a 45-year high, at 6.1%; the highest levels of joblessness is among urban youth. Other reports show that over the past two years domestic consumption has reduced, industrial growth has flatlined, private investments are lower, and market volatility has hit drivers of employment. And so, not surprisingly, many, including undergraduates and diploma holders, now look at the gig economy as a stop-gap solution until the market turns.

Diploma holder Venugopal joined Swiggy last month after failing to find a job in the auto sector.

Diploma holder Venugopal joined Swiggy last month after failing to find a job in the auto sector.   | Photo Credit: Bhagya Prakash K.

Short-term goals

Human resources firm TeamLease estimates that 13 lakh Indians joined the gig economy in the last half of 2018-19, registering a 30% growth compared to the first half of the fiscal year. BetterPlace, a digital platform that does background verification and skill development in the informal sector, estimates that of the 21 lakh jobs that will be created in the metros in 2019-20, 14 lakh will be in the gig economy. Food and e-commerce delivery will account for 8 lakh positions and drivers will account for nearly 6 lakh positions, says the report, based on 11 lakh profiles in over 1,000 companies. Delhi, Bengaluru and other metros are expected to be the biggest drivers of this sector. And two-thirds of this workforce will be under the age of 40.

Can the rise in gig-based digital labour compensate for the crunch in the formal labour market? Niti Aayog, the Centre’s think tank, seems to think so, going by its vehement objections to the unemployment report leaked before the elections. Its reasoning was: how could unemployment be on the rise when Uber and Ola itself had cumulatively created 22 lakh jobs?

Most deliverymen and drivers I speak to believe the gig economy has indeed increased their incomes, but they overwhelmingly disagree that this can be a full-time option. They cite a lack of job security, amplified by complex contracts, the changing rates of incentives, the lack of control over impossible targets that demand more than 12 hours of work daily, often without holidays.

Born and raised in Karnataka’s drought-prone Yagdir district, Bheemashankar Badigar, 22, dropped out of his para-medical diploma course and headed to Bengaluru a year and a half ago. The family could no longer subsist on the cotton they grew in their marginal landholding. A friend from his village had told him about jobs in the food delivery sector. “Depending on the hours I put in, I earn between ₹17,000 and ₹20,000 a month. I can live a frugal life in the city and send money back to my parents,” he says.

However, exhaustion is apparent in his tone. Incentives are never guaranteed, targets are often missed, and the work hours take a toll. “I don’t know how much longer I can do this,” he says. But, permanent employment is hard to find.

On Bengaluru’s New BEL Road in Sanjay Nagar, known for its string of restaurants and pubs, Raju works with a pizza chain. Between 7 p.m. and 3 a.m. it is his job to ensure that deliveries are made within 30 minutes of an order. “I earn ₹14,000 a month, but my hours and holidays are fixed and irrespective of the orders, I know I can get a fixed salary, employee benefits, insurance and promotions,” he says. Did he ever consider the gig economy? “Not even once. It is the other way around. They (app-based food delivery boys) ask me if there are openings here.”

Photo: Sudhakara Jain

Photo: Sudhakara Jain  

Overworked, underpaid

It’s this sense of being a hamster on a wheel that made Ahmed Shariff quit the ride-hailing app he worked in for three months. “The kind of work needed for incentives was not worth it. It took away my time with family. I’ve gone back to driving for companies; they may pay less, but the job is more dignified,” he says.

It is perhaps the combination of being overworked and the mismatch between promise and reality that causes the high attrition in the gig economy. The BetterPlace report pegs attrition between 40% to 300% for some companies, with half the workforce below the age of 23 leaving within three months. People either change jobs or leave for their home towns. “Employee benefits like health, and insurance, etc., should be the key focus areas for higher retention,” says the report. Most gig economy companies do not provide any benefits, except incentives.

But there is little stopping the gig economy now; it will likely diversify and spread, driven by the services sector and urban consumption. “Compared to U.S. gig markets, India’s is just beginning to grow, evolve and is narrow in scope. It is now mostly in the transportation services while in the U.S., it is in a broad range of skills,” says K.V. Ramaswamy, a researcher specialising in development economics, labour and industry studies at Indira Gandhi Institute of Development Research, New Delhi.

However, this growth is being fuelled by the informal market and not by the formal labour market. “Platform-based companies can create more opportunities for informal workers who do not have to wait at the gates of a factory for work or be limited by the demands of a company,” he says.

Labour rights

The consideration of labour rights, however, should not be far behind. This includes stipulation of minimum earnings per day, health and accident insurance, provident fund contributions, and true freedom for the freelancer to work with multiple platforms, says Prof. Ramaswamy. “We need to set up institutional mechanisms (labour court systems, for instance) for grievance redress for independent contractors,” he says.

For now, it’s the companies that set the rules; and workers may get the short end of the stick. Oxford Internet Institute’s FairWork Foundation report, which studies working conditions in the digital market, finds that none of the contracts of 12 popular platform companies analysed in India (e-commerce to taxis to grocery delivery) “genuinely reflects the nature of the relationship” between a “self-employed” worker and the contracted company. Just three “actively improved working conditions”, and five provided policies to protect workers from job risks.

Photo: S. Gopakumar

Photo: S. Gopakumar  

Since 2015, Aditi Surie, a researcher at the Indian Institute of Human Settlements in Bengaluru, has been looking at the nature of employment in platform economy companies in India, particularly among cab drivers. In a paper published in 2016, she found that 92% of those enrolled were professional drivers previously. The paper argued that the platform economy had allowed a stable, mid-term period of time to accumulate wealth, which in turn had allowed them to make large investments, that is, vehicle loans.

In her most recent study, she finds that just 22% of the interviewed drivers were “professional” drivers earlier, while 28% were agriculturists or garment workers driven to cities by agrarian distress. Now, no driver in the sample considers platform work a long-term livelihood option.

Plug in Pull out

By 2017-2018, incentives had crashed to a point where their investments would not pay off. “Older drivers are on the platform only to pay off debts. The gig economy now functions as a plug-and-play option, offering service sector work to those who come to the city without networks or social capital,” says Surie.

This model has allowed Bheemashankar Badigar to migrate from Yadgir with some confidence, while for others, it has given a chance to monetise idle time. For instance, a young bank employee uses his evenings and off days to deliver packages for an e-commerce giant, earning ₹500 for two-and-half hours of work. Another growing section is college students who freelance on these apps to earn pocket money.

None of this is really akin to formal employment, which comes with job security that allows personal and professional investment. “I’ve argued that the gig economy is not about formalising labour. Rather, it only organises labour; it allows those in the informal sector access to more tasks,” says Surie.

Customer or worker?

Technology will be transformative for the sector, she believes. However, in the case of platform companies, any long-term positive impact must first answer an ethical question of business practice: should companies continue to subsidise the customer over the labour rights of the gig worker? “There needs to be a different imagination for these companies, a cooperative mechanism that we haven’t seen yet,” she says. Last month, in fact, restaurants across the board boycotted food delivery apps through the #LogOut movement to protest the huge discounts the apps were offering customers.

The gig economy used the carrot-and-stick approach to hire. Informal sector workers were lured with higher incentives, which in turn created aspirations and a huge number of loans were taken. Once incentives were lowered, there was tangible bitterness against the companies that had ‘organised’ the labour.

Tanveer Pasha is the president of Ola, TaxiForSure and Uber Drivers and Owners Association. Pasha became the face of the driver protests in Bengaluru in 2016. Pasha used to work for various travel companies with his own cab until 2013, when he shifted to app-based taxi services when they first entered the market.

Ola and Uber taxi drivers during a strike in New Delhi to protest the withdrawal of their incentives.

Ola and Uber taxi drivers during a strike in New Delhi to protest the withdrawal of their incentives.   | Photo Credit: Shiv Kumar Pushpakar

With incentives, his daily earnings jumped from ₹2,000 to ₹5,000. The period saw a boom in taxi registrations and vehicle loans: commercial taxi registrations in Bengaluru grew 40% every year between 2014 and 2017. By 2017, incentives were cut, the drivers’ earnings reduced, and debts piled up. As attrition increased and registrations dipped, commercial cabs have grown at a relatively modest 11% in Bengaluru over the last two years.

“We’d been tricked,” the drivers say. “We’ve gone back to earning ₹2,000 per day, but with more hours of work and with heftier commissions to aggregators than we paid to travel companies,” says Pasha.

It was too late to go back. The disaggregated cab rental companies had meanwhile suffered severe declines, facing the consumer shift to cab aggregators, driver attrition, and self-driving car rentals. Here too, the average earning per day had crashed to ₹1,500.

As Pasha says, “It’s a bit like a drug. We had been hooked, and our options taken away from us. Now we rely entirely on what these app companies decide for us.”

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Printable version | Apr 4, 2020 3:19:57 PM | https://www.thehindu.com/business/Economy/the-gig-economy-is-creating-lakhs-of-jobs-but-workers-dont-see-a-future/article29299673.ece

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