Do you remember when Zomato co-founder and CEO Deepinder Goyal decided to deliver food himself? In October 2024, Deepinder decided to be a delivery worker for a day. At one point during delivery, he had to pick up an order from a Haldiram’s, which was in Ambience Mall, Gurugram, but security at the entrance refused to let him in and told him to use the service stairs. When he asked if there was a lift he could use, he was, once again, directed to use the stairs and after climbing 3 flights of stairs, it turned out that he couldn’t enter the place; he had to wait in the stairs section with other delivery partners. Then, when the security guard at the staircase took a break, he was able to pick up the food order for delivery.
To some extent, it’s admirable that an entrepreneur, who has scaled such a big company in India, is trying to keep in touch with the on-the-ground realities of his company’s stakeholders. But, this incident, also, makes you think about some of the rough conditions that gig workers face.
What’s a gig worker, you ask? Think of some of the apps you frequently use, like Zomato, Swiggy, Ola, Uber, Zepto and more. Their agents do short-term work that’s task-based; they aren’t really regular employees, but they’re more like independent contractors, so they have some flexibility in choosing when and where to work. But, they wouldn’t really get the benefits that traditional employees would get when they have a 9-5. These may be closer to temporary jobs and they may find work through apps or online platforms, so the platform could be like a middleperson that sets the rules for how they’re paid and what kind of work would be assigned. The downside, however, is that work isn’t always unavailable and income could be unstable.
But, this, also, means that they may not have much say in how they’re treated & could be penalized or deactivated without a moment’s notice. If they’re travelling and moving around, they may be responsible for covering expenses, like fuel and mobile data. It seems like a lot of gig workers are in the service sector. The opportunities for gig workers may be plentiful, keeping in mind the uptick in activity and growth in India’s entrepreneurial ecosystem. The gig economy in India is said to be valued at around $20 billion in India.
A person at home could get a lot of things delivered to their home in even 10 minutes and could order a cab at their doorstep in 5 minutes. But, what about the gig worker shuffling around at the command of a notification on their phone? How are they doing? Beyond all the personalized notifications and snazzy ads, is there a less-than-glamorous reality for gig workers?
There’s a report called the Fairwork India Ratings 2024 produced by Fairwork India that analyzes and determines the work conditions of gig workers on these platforms in India. So, what does the report measure? There are a maximum of 10 points to get. Unfortunately, the report outlined that no platform hit more than 6/10.
There are 5 principles used as metrics:
#1: Fair Pay
Urban Company and BigBasket were said to have earned one point for a minimum wage policy that they implemented. The first point is to ensure that their workers would earn at least the local minimum wage after all the work-related costs are deducted, which could be troubling for other gig workers if their earnings are slashed by commissions and work-related expenses. But, no platform could get that second point, because none of the workers were said to be earning a living wage, which is a higher standard than just meeting the minimum wage. So, there may not really be financial security for workers.
#2: Fair Conditions
This metric is to ensure that gig workers have safe working environments and are protected from any potential health risks. Many platforms, like BigBasket, Swiggy, Urban Company, Zepto and Zomato scored the first point under this for offering basic safety equipment and occasional safety training for workers. Zepto, Zomato, BigBasket, Swiggy and Urban Company were awarded the second point for giving workers accident insurance coverage at no additional cost and if there’s any loss in income, like due to medical reasons, there was said to be monetary compensation.
#3: Fair Contracts
This metric is to make sure worker contracts are transparent and accessible and that their data is protected. Platforms, like BigBasket, Swiggy, Urban Company and Zomato, were awarded the first point under this for ensuring the contracts were comprehensive. There were, also, said to be protocols to protect and manage the data of their gig workers.
#4: Fair Management
This metric is to ensure that workers have some say in the decisions that affect them, while looking at whether there are mechanisms for workers to appeal unfair decisions or disciplinary actions. Platforms, like Zomato, BigBasket, Amazon Flex and Urban Company, were awarded the first point for providing due process and offering media for that, while platforms, like Swiggy, BluSmart and Zomato, earned the second point for conducting external audits to make sure there were no biases in how work was allocated.
#5: Fair Representation
This metric is to ensure that worker voices are heard. Irrespective of employee classification, this metric would indicate that workers would have the right to organize in collective bodies & the platforms should be ready to co-operate and negotiate with them. Unfortunately, no platform was awarded points for this metric.
And who came out on top? Who didn’t do well?
According to this report, the companies that did poorly were:
- Ola
- Uber
- Porter
And which companies emerged as top performers?
- BigBasket
- Swiggy
- Urban Company
- Zomato
Out of the 11 platforms, none, unfortunately, met all 5 principles.
So, maybe the autonomy that might have attracted workers to the gig economy might have been replaced by a sense of entrapment. At the same time, there are said to be proposals in Karnataka and Jharkhand to improve conditions for gig workers, which could be through provisions for social security benefits and more defined worker rights. Should there be regulatory frameworks that could hold platforms more accountable for the treatment of gig workers? What about less convoluted payment algorithms? How well do gig workers understand how their earnings are calculated?
Would the treatment of gig workers be a reputational risk for startups in India and how they receive funding? Maybe, with the ESG phenomenon gaining traction in recent times, investors may pay closer attention to labour standards. Could this mar India’s platform economy and deter responsible investment or negatively impact valuations?
At the same time, there has been an existing notion to outsource work from the West to countries, like India, because it’s cheaper. Does this reinforce that idea? Or will investors not care about this aspect as much as long as other fundamentals are covered?
But, maybe the onus may not be entirely on startups. Startups have to look at how expenses are allocated and how more money can come in. If these platforms increase the fee for consumers by hiking delivery rates, does that hurt them in the long run? Because an increase in operational costs may be likely passed on to consumers in the form of higher prices. Remember the grumblings when Indian FoodTech companies added a platform fee of just ₹6? Would consumers in Tier-II or Tier-III or Tier-IV cities in India be okay with higher prices? Or would there be a segment that would pay a premium for equitable services? That could be hard in a price-sensitive market, like India.
So, ideals have to be approached with a pragmatic lens, especially for entrepreneurs looking to scale.
As it is, many startups in the service sector may be operating on razor-thin margins and then, they have to offer discounts as well to appease consumers. Investors may be putting a lot of financial pressure on startups, so could these ideals push them into unprofitable territory? Maybe, a call for fair labour practices may be better adopted by more mature companies that have steady revenue streams and that have captured significant market share. For a new and growing startup, prioritizing labour costs could inhibit their growth and limit how competitively they price. A consumer may just go for the cheaper alternative of a platform.
On the other hand, the nature of a gig platform is to be flexible. If there are too many labour restrictions, does that erode the inherent flexibility of the gig economy? Would that mean that startups would make the gig economy closer to a traditional employee-employer arrangement?
So, why has the gig economy been thriving in India so far? Maybe, because it’s seen as a modern alternative to traditional employment that’s tech-driven. But, there are stark realities to face. With the rise of the Indian startup ecosystem, especially the service sector that relies on gig workers, the gig economy may not be a niche aspect of the labour market.
Is the gig up? Will India’s rapid and unstoppable digital expansion hurt some stakeholders? Will those who help power India’s startup ecosystem really be left behind?
