Topic 4: The Gig Economy Crisis & Regulatory Response

 

Syllabus Mapping

• GS Paper 3: Indian Economy (Employment); Inclusive Growth; Changes in Industrial Policy.

• GS Paper 2: Government Policies and Interventions for Development in various sectors (Social Justice/Labor Welfare).

 

Why in the News?

The gig economy witnessed a coordinated nationwide strike on December 25 and 31, 2025, by workers of major platforms (Swiggy, Zomato, Blinkit, Zepto, etc) protesting against "10-minute delivery" pressure, opaque incentive structures, and declining real wages.

 

Key Highlights

• The Scale of the Sector:

  • Employment Source: Gig workers are estimated to touch 23.5 million by 2029-30 (up from 7.7 million in 2020-21), becoming a critical source of youth employment.

  • Current Numbers: In Q2 2025-26 alone, Zomato had ~5.5 lakh and Blinkit ~3.39 lakh monthly delivery partners.

• Core Grievances (The "Humane Factor"):

  • Safety vs. Speed: The "Quick Commerce" model (10-minute delivery) forces drivers to break traffic rules. Bengaluru police recently noted a spike in reckless driving fines among delivery partners.

  • Wage Volatility: 47% of gig workers earn 10-25% less than permanent employees for similar work. After fuel and platform commissions, many earn below minimum wage.

  • Financial Vulnerability: A NITI Aayog survey (2024) revealed 90% of gig workers lack savings, making them vulnerable to shocks like accidents or illness.

• Policy Intervention (New Labour Codes):

  • Social Security Code: Effective from November 2025, it mandates aggregators to contribute 1-2% of their annual turnover to a dedicated social security fund.

  • Benefits: Workers registered on the national digital platform are now eligible for accident insurance, health benefits, and maternity cover.

 

Critical Analysis:

• Significance:

  • Algorithmic Accountability: The strikes highlight "Algorithmic Despotism"—where opaque algorithms determine work allocation and penalties (e.g., deactivating IDs for taking leave) without human oversight.

  • Sustainability of Business Models: The protests signal that the "cash-burn" model of subsidized delivery is unsustainable if it relies on "labour arbitrage" (underpaying workers).

• Challenges:

  • Implementation Gap: While the Labour Codes exist on paper, enforcing the 48-hour work week limit in an informal, piece-rate sector is administratively difficult.

  • The "Race to the Bottom": In a labour-surplus economy, platforms have high bargaining power. Without strict regulation, "flexibility" becomes a euphemism for exploitation.

 

Value Addition (State-Level Precedent)

• Rajasthan Gig Workers Act, 2023: While the central Labour Codes are now being implemented, Rajasthan was the first state to pass the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023.

• Unique Feature: It established a "Welfare Board" with tripartite representation (Government, Aggregators, Workers) and a unique ID system for portability of benefits—a model that experts suggest should be the template for the national board mentioned in the central code.

 

Mains Question

Q. "The 'Quick Commerce' revolution is often predicated on the 'Slow Violence' of unsafe working conditions and wage precarity." Critically discuss this statement. Can the Code on Social Security effectively balance the flexibility of the gig economy with the need for social protection? (250 words)

 

Preliminary Question

Q. With reference to the Code on Social Security, 2020 (and its recent implementation rules), consider the following statements regarding 'Gig and Platform Workers':

1. The Code defines a 'gig worker' as a person who performs work outside the traditional employer-employee relationship.

2. It mandates that aggregators must contribute between 1% to 2% of their annual turnover to a social security fund for these workers.

3. The contribution by aggregators towards this fund cannot exceed 5% of the amount payable to gig workers.

Which of the statements given above are correct?

 (A) 1 and 2 only

(B) 2 and 3 only 

(C) 1 and 3 only 

(D) 1, 2 and 3

 

Answer: (D) 

 

Explanation:

• Statement 1 is correct: The Code formally distinguishes gig workers from traditional employees.

• Statement 2 is correct: Aggregators are required to contribute 1-2% of their annual turnover to the social security fund.

• Statement 3 is correct: The law places a cap stating that the contribution (1-2% of turnover) shall not exceed 5%of the amount paid or payable to gig and platform workers. This protects aggregators from excessive liability relative to their wage bill.