Our growing gig economy must treat workers fairly

The gig economy, which has grown in importance especially in the aftermath of the pandemic, has been praised for its ability to provide an alternative source of employment. Also, platform companies such as Uber and Amazon have found that countries and country-groups such as the UK and the European Union have questioned their stance on treating such employees as “contractors”. They have either ruled against him. This stance, or questioned it, expected companies to classify employees as “workers”, with attendant benefits such as minimum wages, holidays and pensions.

Gig economy refers to “economic activity that involves the use of temporary or independent workers to perform jobs, typically in the service sector.” This includes both temporary blue-collar workers and white-collar ‘independent contractors’ and consultants in delivery and other services. Hired in various sectors through digital platform. While this business model looks promising, it is fraught with problems for platforms that may be more practical than legal.

Platform businesses have to manage a workforce that is seen as less committed, given its temporary engagement, and also perceived as “less productive”. UC has sought to increase productivity by introducing a ‘membership system’, which includes a minimum guarantee scheme that includes a minimum target of completing 40 jobs every month, requiring workers to pay a deposit of Rs. 3,000 (for Salon Prime) and 2,000 (for Salon Classic) advance to the company. It is alleged that failure to meet this target will result in forfeiture of deposits. Workers have the option to exit. But this would result in them being placed in the “flexi” category, where work would be allocated only on high demand days (usually weekends), with priorities based on the speed of worker responses.

Increasing productivity in this way is questionable. With major losses, employees will probably opt for a flexi plan to avoid them. This increases the importance of the temporality of such employment, with the flexibility afforded by the gig economy seen as a curse rather than a blessing.

Platform companies evaluate gig workers’ performance on a rating system based on customer feedback. While companies use this feedback to improve performance, gig employees often reject it. This is especially true for service-dominated platform businesses, where a close association between service-provider and recipient results in a high potential for negative feedback from the customer, and such poor ratings are perceived as personal and unfair. Overall, rationality prevails, and employees demand fairness, as they view customer ratings as subjective and their use as exploitative.

A better approach would be for UC to take responsibility for any poor performance and then work to improve ratings by training and motivating workers. This will also ensure the loyalty of the gig workforce. With UC’s operations in India, Dubai, Australia, Singapore and Saudi Arabia, and plans to expand to 50 new cities, another challenge lies in a culture of geographically dispersed temporary workers who have a strong understanding of company values, There is a dearth of anchors offered by traditions and culture. May be available to full-time employees. The company will need to ‘imprint’ its cultural norms, so that even temporary employees possess shared values ​​and are inspired by the same passion.

Photos of women protesters at UC’s Gurugram headquarters will be clear and readily available to other gig workers, both within and outside the company. Many would also be aware of bills such as the Social Security Code introduced in Parliament in September 2020, as well as the frequently raised demand for adequate safety nets for gig workers.

A joint report (on.bcg.com/3z19jpA) by Boston Consulting Group and the Michael & Susan Dell Foundation in March pointed to the potential of India’s gig economy with the potential to sustain 90 million jobs in India’s non-farm economy. pointed to. alone, in addition to adding 1.25% to GDP. However, the road to a new economy based on platform businesses can be thorny. The current business model, based on unequal relationships, may not only fail to deliver a lasting competitive advantage, it may actually initiate the destruction of platform businesses. This is the reason why such businesses in the US spend huge amounts of money on public relations campaigns to influence the results of a law called AB5 which may affect their future prospects. Similarly, 25 gig drivers was enough to bring Uber to its knees a few months back in the UK.

To reap the real benefits of the gig economy, Indian companies like UC need to understand the long-lasting behavioral aspects of exploitative gig relationships, in addition to its potential legal implications.

Tulsi is Professor of Economics at Jayakumar Bhavan’s SP Jain Institute of Management and Research. These are the personal views of the author