Economy needs growing gig workforce
Thousands of gig workers of Blinkit, the Zomato-owned quick commerce firm engaged in home delivery of consumables ordered online, have been protesting since early April against a new payout policy that they say will halve their monthly income and make it impossible for them to hang on to their jobs. A look at the economics that underlines the whole conflict will tell us why gig workers are important for the economy and why a resolution of the conflict, systemically important, has been elusive till the time of writing.
Earlier, workers used to be paid Rs 50 per order executed. This was first reduced to Rs 25 per order and now it is Rs 15 per order, with the payment varying according to the distance covered. As per the new system, delivering an order requiring travelling, say 5 km, will not fetch the same amount as the one requiring travelling 2 km. If in a day you end up executing more long-distance deliveries and, therefore, fewer orders, then under the old system, you would be worse off than a worker executing more short-distance delivery orders. But it is not so under the new system.
The dispute seems intractable because both the sides appear to be engaged in a do-or-die battle. The workers in question earn so little and they and their families are so dependent on what they earn every day to survive (they are in a daily business as they are not employees earning a salary and enjoying social security benefits, no matter how meagre) that they cannot give up even a tiny bit of their income.
Normally, unorganised workers spread over large areas would have never been able to get sufficiently organised to engage in industrial action. But the same digital technology that created the gig jobs in the first place, by enabling online ordering and payment, has enabled the protesting workers through WhatsApp groups to select location and timing of protests in such a way that their protests deliver the maximum punch.
It is understandable that workers at the bottom of the income ladder earning Rs 500 or a bit more for a 12-hour day and no weekly off cannot negotiate anything at all, but why is Blinkit being so firm? In its own way, it is at the end of the tether. It is losing heavily and unless it cuts back on expenses (workers’ earnings is a major head), it will not survive. If it closes down — innumerable startups do — then the workers will have no employer to fight against and zero income, to boot.
To understand the underlying reality, it is imperative to comprehend the gig economy landscape. It covers those who engage individually and contractually with businesses which are typically enabled by platforms. The gig economy has grown along with the spread of the Internet, smartphones, digital technology and, of course, platforms where information is exchanged.
Critically, the gig economy and the gig worker have a crucial ally — the Central Government. Why? Because the government realises that no urban economic activity has a greater potential to create jobs among the educated youth, say those who have been up to high school or thereabouts, than the gig economy. And it goes without saying that for social peace and a stable economic environment in which development can take place, this group of youngsters has to be engaged in delivering a service that helps both themselves and society.
Given the government’s interest, Niti Aayog has done a comprehensive report on the subject which looks not just at the opportunities and challenges on hand but also global best practices. The report’s aim is threefold — create more job security for these non-formal workers, enable them to be better trained and create an economic environment that can lead to more such non-formal jobs.
Since gig workers thrive and multiply through digital platforms, how can these be taken forward? Through pushing ‘platformisation’ by simplifying official procedure which they have to go through, by offering financial support to them and spreading social and financial inclusion. Unless more and more people have a minimum amount of spending power and the skill to operate digitally, plus, of course, a decent smartphone, platforms cannot go forward. And unless they do, gig workers cannot grow in numbers. Niti Aayog’s estimate is that the number of gig workers will grow from 77 lakh in 2020-21 to 2.25 crore in 2029-30, that is three times in nine years.
When the government wants the gig economy and platforms to grow, why is Blinkit being contrarian? This is because it is losing money heavily. In Q3 of financial 2023, it lost Rs 288 crore, against a revenue of Rs 300 crore. Such a situation is unsustainable. Things cannot continue the way they have been doing till now as Blinkit is now owned by Zomato, which is listed. So, losses of such dimension can neither be swept under the carpet nor digested. In January, for the first time, Zomato’s bottomline, of course, very carefully defined, turned positive if, and this is a big if, you left out Blinkit. Remember, all this is taking place at a time when investor cash for startups is drying up.
Unless a successful working model for Blinkit-like ventures can be found, platforms cannot be created, for example, for the home delivery of rural, regional and urban street food, or for a passenger-carrying three-wheel scooter. Ideally, you should be able to book a ride on a three-wheeler scooter and pay for it online the same way you book a ride on an Uber car.
Upcoming platforms cannot grow as rapidly as well-fed adolescents do unless they can access institutional finance. This can be done by the funders financing the platform-based business’ working capital, the need for which can be ascertained from the platform itself.
Gig workers are here to stay and for the benefit of the greater social good. Countries like Indonesia and Singapore are extending social security to their gig workers. Indian platforms engaging them have to survive so that their gig workers not just survive, but thrive too.
