Why in news?
Studies have found that the earnings of gig economy workers, especially in the transportation sector, have been falling at an alarming pace.
What is gig economy?
- In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees.
- A gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career. e.g Employee models of Uber, Ola, Swiggy etc
- Sectors such as media, real estate, legal, hospitality, technology-help, management, medicine, allied and education are already operating in gig culture.
Who are the workers affected?
- The freelance-drivers attached to taxi aggregators such as Uber or Ola is affected badly.
- It is proving that critics were right on the existence of a wage bubble in the gig economy.
- This trend is noted across the globe.
- A recent study showed that the average monthly income of transportation workers in the gig economy fell by 53 per cent in the United States.
What factor contributed to this situation?
- According to a report, ‘The Online Platform Economy in 2018: Drivers, Workers, Sellers, and Lessors’, there has been a considerable increase in the number of ‘driver partners’ (with Uber, etc.).
- The average monthly payments to those who worked for a transportation app in a given month declined to $783 from $1,469.
- The most important factor as pointed out by labor rights activist is that gig economy companies are unleashing predatory and exploitative work practices.
- In particular they introduce lax and complex clauses in their agreements with workers so that they can escape legal scrutiny when it comes to social security and labor protection issues.
- The report, however, shows gig-workers in the hospitality industry (Airbnb, etc.) saw their incomes grow 69 per cent during the period.
- There is an uneven pattern in the income growth across the gig economy.
What are the major impacts of gig economy?
- Gig economy companies say that they had introduced innovative systems and methods to the labor market.
- These methods are offering workers flexibility and the freedom to choose how and when they work.
- This chaotic and amoebic environment has helped create an environment of exploitation where workers get minimal protection and low wages.
- A government study in the UK recently established that a quarter of the people working in the country’s gig economy are being paid below the national minimum wage.
- As most of the gig economy companies act as an aggregator and digital companies, their interaction with the laborers and customers is minimal
Source: Business Line